I could see it wasn't going to be easy. I couldn't give a franchise to any old greasy spoon. And I knew the chicken had to be cooked the way I told them to cook it if it was going to be as popular as it could be.
– Colonel Sanders
Entrepreneurs who have created a successful brand and business and that are considering franchising their business often fear giving up control to franchisees who may not operate their franchised business with the same level of dedication and care that the entrepreneur had in operating their location. Building the brand required the entrepreneur’s blood, sweat, and tears. However, franchisors will need to give up day-to-day control to franchisees, and they can do so without losing control.
Every franchisor will experience this same issue. Successful franchise systems create a consistent brand image and culture across each location. Every Burger King® restaurant, Hampton Inn® hotel, and Anytime Fitness® gym is more or less the same regardless of the owner and whether it is located in Minneapolis or Timbuktu (side note: successful franchisors, however, will tweak the system for local customs and tastes, including languages used and menu items, but the brand image and personality of the business remain the same).
So how can these entrepreneurs give up control without losing control as they embark on franchising? When is it okay to let go? How can franchisors ensure that all system locations are offering a consistent brand image and culture to customers? It boils down to 3 things:
- Pick the right franchisees
- Train the franchisees
- Impose restrictions on what the franchisees can and cannot do
Pick the Right Franchisees
Perhaps the most important mistake startup franchisors make is picking the wrong franchisees. Making the first few sales can be tough, and some franchisors will be ecstatic to accept a franchise application from the first qualified prospect. Just because a prospect has the net worth and liquid capital to purchase and build out the franchise, or has prior experience in the same industry, does not make that prospect a good fit for your system. Equally important is whether the prospective franchisee can color within the lines and follow specifications required by the franchisor.
In a prior blog post, Chuck Modell shared some questions a startup franchisor should consider before accepting the first few franchisees:
It is critical that your first franchisees reflect the type of franchisee you want in your system. Are they prepared to follow the system? Do they have the proper skill set to be successful in the business, whether that means a cheerful personality, a true passion for your brand, or technical skills required for the business? (The best answer is “all of these.”) Do they have the time and resources to devote to the business?
Further, Chuck believes choosing your first franchisee is one of the most important decisions you will make in franchising your brand – see his Rule No. 1.
Franchisors should have objective and subjective minimum qualifications that a franchisee must meet. And most importantly, prospective franchisees must fit within the culture and brand image of the business. These first few franchisees will also be brand ambassadors for the franchisor. By law, the Franchise Disclosure Document requires the disclosure of contact information of current franchisees, and many prospective franchisees will contact current franchisees to learn more about the franchise opportunity.
Train the Franchisees
With the right franchisees selected, the next step is to properly and thoroughly train the franchisees so they can operate their own business as a turnkey operation. The goal for the franchisor should be that a franchisee can operate its location to the same level of care and with the same level of success as the franchisor had with its company-owned locations.
How do you know if your franchise training program is successful? Customers should not be able to tell whether a location is franchisee-owned or franchisor-owned. If franchisees are operating their locations exactly the way you would like them to, your training program is on point.
In addition to an Initial Training Program, franchisors should provide a detailed Operations Manual which describes the customer service aspects of operating the business and the restrictions (see below). Moreover, in successful franchise systems, the franchisor is available for additional support on an as-needed basis; many offer no charge telephone or email support as again, the goal should be to train franchisees in consistently following the system and standards and not to nickle and dime them for training.
Impose Restrictions
The essence of a franchise system is uniformity. A strong Franchise Agreement and Operations Manual will dictate what the franchisee can and cannot do. The franchisor will not control every aspect of the business. However, the most critical aspects of the business, such as the use of the brand image, the design of the location, the approved suppliers that are used for customer-facing items in the business, the products or services that can be sold in the business, and the standards of customer service, should be mandated in the Franchise Agreement and Operations Manual. Others, such as who to hire and the how much to pay them, will have to be left to the franchisees to decide for legal reasons.
With a bit of due diligence up front and the right systems, training, and agreements in place, many franchisors have been successful in giving up control to franchisees while still maintaining a consistent culture and brand image at every location.