Successfully managing a franchise isn’t an easy venture as you’re faced with many challenges. Several issues ranging from compliance obligations to disputes between the franchisor and franchisee, as well as recruitment and training, have to be dealt with. Here is a practical guide to running a successful franchise and few of the most common issues that arise with it.
Maintaining a superior quality of services and remaining consistent throughout all locations is one of the most complex aspects of running a successful franchise. Most franchisees often join at various stages of the business, which makes managing it a challenging task, making it essential to have clear communication of standards.
Another crucial aspect is to maintain openness when it comes to decision making that can potentially have an impact on the franchisees. This transparency will, in turn, help franchisees understand and accept the many decisions that are made by the management.
Franchisees need to receive equal and fair treatment. Although it might be slightly alluring to provide incentives like discounts to franchisees that are performing exceptionally well or have industry experience, you should avoid doing this at all costs. It can result in other franchisees becoming resentful. Be fair and unbiased and treat every franchisee equally, as this will provide better results in the long term.
Recruitment is another critical aspect of running a successful franchise. A key measure to determine the success of a particular franchise is to take a look at the number of franchisees in a franchise system. This makes it tempting to grow the network in a short period to increase revenue and boost brand recognition.
When it comes to recruitment, you must follow a balanced approach. This lets you focus on quality rather than quantity. You’d be making a colossal mistake by recruiting poor quality franchisees and is especially true if they fail at once or if it leads to lawsuits. Besides being incredibly stressful, it affects the entire franchise network financially as well.
Consider outsourcing recruitment to a consultant who has the knowledge and expertise in franchisee recruitment, and can assist with both the training and recruitment process. These consultants are often paid on a commission, for instance, 25% of the initial franchise fee. While this can be expensive, maintaining a long-lasting relationship with the franchisee and developing a quality network of franchises can pay off these costs in the long run.
To create a lasting relationship with the franchisee and to assist them in their success, proper training is essential, specifically in the initial training period. This is the time when franchisees learn the ins and outs of running the business. A loss in confidence can affect the relationship between the franchisor and franchisee. It is an incredibly overwhelming and terrifying experience when independent franchisees do not receive adequate support.
All franchisees are provided with an operations manual that explains how to run the business. It should contain all the necessary information that’s required to run day-to-day business and stick to the requirements in the franchise agreement. Pairing this with a structured training period will prove to be highly beneficial for the franchisee. It will provide them with the knowledge needed to succeed.
Putting yourself in the franchisee’s shoes will help structure training or preparation material. Using images, graphs, and videos will significantly help franchisees grasp programs and procedures. Such services can be enhanced by input from franchisees. Engaging an experienced professional trainer may also be a perfect way to get fresh insight and information on instructional programs and procedures.
Developing a tutoring system in which more existing franchisees support potential franchisees can be a good way to support franchisees. It helps in creating a network as they feel supported by the system.
Policies set have substantial requirements for franchisors. Recently, franchise requirements have become particularly stringent due to a variety of high-profile court proceedings. The Australian Trade and Consumer Commission (ACCC) tried to impose these duties on franchisors.
An example of these high enforcement standards is an introduction of laws such as the Protecting Vulnerable Workers Act. This regulation aims to keep franchisors liable for employee-underpaying franchisees. It enforces an exceptionally high standard because franchisors can now be held accountable for a franchisee’s actions.
Increasingly, laws emphasise the responsibility franchise owners have towards their franchisees. It would help if you took preventive measures to reduce the violation risk by training franchisees about their legal responsibilities. You may, for example, integrate an employment law curriculum into their preparation.
With any franchise system that has been around for years, franchisee-franchisor conflicts are likely to arise. It’s essential to plan for these circumstances. Don’t simply say you or franchisees won’t break the partnership agreement. Take action to avoid conflicts by:
Proactively avoid confrontation by consistent communication and assistance. This will help you to consider the problems impacting franchisees, and you can take measures to prevent escalating disputes.
You could create a strategic plan to fix franchisee-level concerns. This approach would likely include taking action to identify the causes of the franchisee’s issues and developing a strategy to resolve this concern.
For example, if the franchisee cannot employ suitable workers, the solution can include having them undertake a recruiting course or make them work with a recruiter. These action plans can also involve having discounted payments or financial assistance to get them back on the right path. The deal should be written, transient, and exclusively confidential.
It will demonstrate to the franchisee you care about them and are willing to partner with them to ensure shared success. Consider incorporating a structured process and protocol to handle staff and general grievances at franchisee as well as the franchisor level.
A successful franchise needs proper structuring and planning. There are changing laws that have to be observed closely and duties to be met. Continuous support and preparation and transparent processes and protocols will help prevent conflicts with franchisees. When a dispute occurs, you must resolve the issue professionally and supply the franchisee with the appropriate means to fix the situation.
If you want to know more, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form, and one of our experts will contact you as soon as we can.
Thanks for reading,
The Franchise Institute Team
1300 855 435