Franchise Program Development
A franchise system requires the development of the economic and commercial structure, the commercial policies, recruitment and training processes, network roll out plan, legal documentation, business systems and the operations infrastructure. The quality of the franchise system has a significant impact on the future success of the franchise due to the influence the franchise system has on the core business and its ability to scale. Franchising is one of the most sophisticated business models in existence and its purpose ranges from capital raising and customer service, to a sophisticated people management strategy. It is a business model widely recognised as a growth strategy for small and medium business and increasingly a business strategy for large corporates to enhance service and tenure of the best people.
Issues
- Franchising is more than a legal agreement and the process of selling franchises
- The franchise model is a live system and needs continual innovation and modification to keep it relevant to the business and customer
- Franchisors ultimately secure the franchisees they deserve and quick short cuts will yield poor, unsustainable results
- The line between franchising, licensing and agency is often misunderstood leaving channels with inappropriate structures
- There are too many people entering franchising for the wrong reasons with the wrong business model and unprofessional advice
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Recruitment Strategy
The process of recruiting, selecting and screening franchisees requires a defined transparent approach that balances the legal requirements and the commercial objectives. The strategy for recruitment of franchisees requires a distinctly different approach to hiring people and there are many poor processes that organisations adopt over time that can have a significant, negative impact on the ability to attract and secure franchisees. The process itself requires best practice to be redefined every 12-18 months, reflecting the continual changes in the marketing mix and the competitive pressures in most global markets to secure franchisees. Compliance with the relevant regulations and legal structure is a non-negotiable requirement for every franchisor.
Issues
- There is a distinct and long lasting difference between selling a franchise and granting a franchise
- The recruitment process is seldom re-evaluated on a regular basis which impacts its success
- The continual diversification of offline and online marketing methodologies increases the pressure on franchisors to be more strategic
- The successful transition from recruitment to the commencement of training has a profound impact on early success of new franchisees
- The franchisee recruitment role within any franchisor is a senior position that requires the appointment of a very particular type of resource
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Franchise System Review
The redevelopment of a franchise system structure is an extremely difficult decision for many franchisors to make. The franchise system is often a much larger contributor to the success or failure of a businesses performance than is realised. The typical life span of a franchise system is 5-7 years before significant adjustments or changes need to be made to reflect changes in consumer behaviour, product or service mix, breadth or depth of brand reach, the evolving governance structure, or to cater to the increased or decreased scale of the group. The catalyst is often the sale or acquisition of the network, a drop in financial performance or a desire to reposition the business for further expansion.
Issues
- Many franchisors spend more on evaluating products, brands or the customer than on the core business model
- A redevelopment of a franchise system is much more complex than the preparation of a new legal agreement
- Many franchisors leave it too late to redevelop the franchise system often waiting for a negative catalyst to force the decision
- Any change needs a well defined process to manage the perceived threat of litigation
- The adoption of new ideas from a new employee with past franchise experience seldom creates the required change
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Distribution Strategy
The primary objective of any distribution strategy is to distribute a product or service to customers. The distribution strategy structure and design have a considerable effect on the growth and profitability of every business and tend to evolve in cycles of 5-6 years. Distribution strategy is the focus on structure, form, depth, breadth, product range, pricing, branding and overall reach and performance of a channel in achieving the identified objectives. There are many different types of distribution strategy across both business to business and business to consumer relationships. These can include: agency, license, employee, broker, commission models, cooperatives, dealerships, franchise, and reseller relationships.
Issues
- Depth vs. breadth and its consequent impact on profitability
- The distribution strategy can be multi dimensional - for instance a product, in store and dedicated retail presence
- The number of layers between head office and the customer and the consequent impact on profits
- The quality of service and product representation rather than simply pushing product to a customer
- The product mix and how a distribution strategy can increase breadth or reach in the market
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Operations and Training Procedures
The operations and training practices in a business are focused on institutionalising the norms to achieve a consistency and depth of understanding to improve performance. A franchise system by its very nature requires consistency and an ability to have operations in multiple locations reproducing the same customer experience. The underlying structure extends beyond simple documentation and sporadic bursts of updates or additions to existing material or ideas. A world class operations and training foundation requires continual commitment to develop and enhance the practices that make a business relevant and enable people to function in the most efficient and effective nature.
Issues
- Franchise systems place insufficient focus on developing the operations procedures and practices in a manner that is scalable
- Training requires a strategy to intertwine its outcomes with the every day practices of individuals on a consistent basis
- Training material continues to be documentation based with heavy reliance on delivery methods that fail to benefit the user
- The use of online and mp3 based technology can create outcomes that reach well beyond normal boundaries for training people
- Any operations structure needs to be established in such a way that balances the need for structure with entrepreneurialism
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Board of Management
A strong Board of Management is the back bone of a strong performing business as it creates the opportunity for practical and focused decision making. The process of working 'on' the business rather than 'in' the business can be drawn out at every level of an organisation. The ability to structure decision making is the balance of entrepreneurialism and structure and it should be defined and flexible all the way to the customer. Governance extends well beyond the board room and the factors of people, skill sets, frequency of communication, KPIs, focus, open culture and number of people are all relevant and need to be evolved constantly.
Issues
- The lack of governance in small and medium business is a constant challenge both in form and functionality
- Customers are lost every day due to a lack of governance which impacts the customer end of the business
- The composition of a management team and board are often overlooked in the face of day to day challenges
- The inability to formulate and execute a decisive course of action has brought about the end of many strong businesses
- Focus needs to remain on decision-making, not a process that produces an irrelevant agenda, discussion and documentation
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Conference Attendance
Conferences have the potential to add real value, motivate and reinvigorate attendees and serve as a catalyst for change. Critical components are the conference form, content, timing, location and attendees. The involvement of DC Strategy offers the opportunity to deliver an objective and specialist message in conjunction with the management and leadership of the business. A conference must be designed in such a way to motivate the attendees, and the mix of activities and topics chosen must evolve each year.
Issues
- A one-sided conference will have an unfavourable legacy if it fails to create momentum
- Most businesses feel their way from conference to conference guided only by past experience which impacts the success
- The conference must have structure to ensure actions can be implemented after the conference
- The governance at a conference must ensure all attendees have an equal contribution
- There is always the risk a few attendees dominate the conference to the detriment of others attending
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