To become a successful franchisor, it is necessary to first demonstrate that the business is not only replicable but also profitable for both the franchisor and their franchises, otherwise the business will fail. franchises are working for themselves but protected from many of the uncertainties, traps and pitfalls associated with a conventional start-up business.
Franchising is a business relationship between the franchisor (the owner of the business which provides the products or services) and their franchises who are given the right to use the franchisor’s business name and to market and distribute their goods. Full format franchising has been increasingly popular in Australia since the 1960’s. It now generates nationwide sales of more than $169 billion each year, and is continuing to expand.
Without franchising, many small investors would never have the opportunity to own their own business. This said, the franchise relationship can be a difficult one, and systematic, close evaluation of the proposed franchise system is essential if the parties, the franchisor and their eventual franchises, are to make an intelligent long-term investment decisions and avoid pitfalls.
Franchising is normally a “turn-key operation” – the franchisor assists a franchise in the setting up and running of their operation. A comprehensive operations manual outlines standards and procedures; training is provided, continuing guidance and supervision, together with a marketing plan and planned promotion of the individual operations. Both franchisors and franchises benefit from a highly regulated industry with its own association, the Franchise Council of Australia, and a mandatory Franchising Code of Conduct.
Over the years we have crystallised our thoughts on franchising into:
THE FOUR ESSENTIALS OF FRANCHISING
1. The Business must be profitable and capable of replication
2. The Franchise System must be fair and equitable for all parties
3. The Management team should have or be able to acquire the expertise to:
Operate a single unit
Operate multiple units
Manage a franchise system
4. The business should have access to the capital required to underwrite the expansion and deliver the services promised to franchises.
THE THREE IMPERATIVES OF FRANCHISING
1. You need to market your franchises to qualified applicants
2. You must make your franchises successful
3. For the franchises you can’t make successful, deal with the resulting problems in a timely and effective manner
To discover the process, benefits and costs of setting up a franchised operation, discuss your requirements at an initial free consultation with Franchise Systems Group and benefit from our many years of experience in setting up and improving franchise businesses .
For further information, contact Bill Lockett on 1300 658 311