Franchising – no such thing as a free lunch!

I’ve worked in franchising for a long time, both as an adviser and training franchisors and franchisees.

There’s no doubt, franchising is an excellent way to expand a business – just look at MacDonald’s; they do alright.

Franchising can be a way of growing a business, getting a brand out into the market place and making some profit with potentially less risk than organic growth or acquisition. The fact that the risk of growing the business is, to a large extent transferred to other people – the franchisees – and then spread across lots of them, is attractive. It’s a bit like hedging.

But time and again I’m asked to work with business people who want to franchise on the cheap. And it just doesn’t work.

There was this business, which I won’t name because the guy who ran it was a six foot mountain of muscle. The business as a small, family run limited company was perfectly sound. But it was operated by the six foot son and his mother. They had no systems and no processes. They had a good idea, but everything else was tucked away inside their heads.

This needn’t be a problem in franchising, as long as the owners are prepared to set aside time, energy and, yes, money, to getting everything out of their heads and onto paper so it can be transferred to franchisees. The business I was talking about (the one owned by the bionic man) was not prepared to invest to create a sound operating system for franchising. They wanted to do it on the cheap and quickly.

This got me thinking.

Why was it that they weren’t prepared invest today for something that could have made them an awful lot of money?

The answer, when it came, was blindingly obvious. They hadn’t made the mental leap of faith needed to become a really good franchisor. Let me explain my flash of insight to you. Let’s pretend this business made burgers, just like MacDonald’s. They didn’t, but let’s pretend anyway.

The preparation and sale of burgers was their life. They enjoyed making the meat patties and then grilling them to perfection. They didn’t realize that they needed to think in a different way, that, in essence, they would no longer be a burger company and that they would be a franchisor first and foremost. They would be in the business of franchising and it would just so happen that their output was burgers.

So, if you are considering the franchise route for your business, please remember that it takes a leap of faith – a huge jump to make it really work.

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