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3 Ways Franchisors Must Drive More Defensively

20 June, 2018

Have you noticed how people today are more interested in what’s happening here on the Internet than “real life?”

They drive down the road with both eyes on their lap. And this is on major highways.

With their attention glued to online likes and instant messages (that is why they’re looking at their lap right?) they risk catastrophic injury to themselves, their family and others.

How about you, as a Franchisor, do you drive your franchise business that way?

After all, the effects on your business and family from making assumptions about where you’re headed could be just as disastrous as that inattentive driver.

Let’s look at a few ways you could drive your business more defensively:

 

Perform Effective Due Diligence in Choosing Franchisees

The most proactive way to ensure success is to start with a strong, qualified franchisee network in the first place.

We’ve all heard the adage, “A bird in the hand is worth two in the bush.” To be sure, no one likes to miss out on an opportunity.

But if a franchisor takes this adage to heart they will not do his or her due diligence in choosing the best franchisees that fits their business’s brand.  

Without spending adequate time and effort choosing the right franchisee, you are implying that their franchise licence fee is the only value they bring. There’s that squawking bird in the bush again.

As a franchisor, you don’t want to be in the position of taking money from anyone who will give it to you.

The money comes and goes. When it’s gone, you’re left with massive issues to deal with, such as incompetent dreamer franchisees, franchisees who don’t follow your franchise rules, and not following those rules casts an eventual sloppy, inconsistent perception on your brand.  

 

What criteria can you use to choose your best franchisees?

Mark Siebert, Franchise Consultant for Start-Up and Established Franchisors in  Entrepreneur says one of the most important factors in choosing a franchisee is capitalization.

 

Undercapitalization Concerns

Inadequate capitalization is the leading cause of franchisee failure. That’s why every franchisor must scrutinize the franchise candidate’s liquid net worth, net worth and their credit score.

Franchisees may want a business that nearly runs itself. But it’s common wisdom that running a business is hard work. As a franchisor, you need to look for work ethic to show up in various forms, such as their hobbies and what their typical day looks like.

This should determine if they are more interested in spending time on the golf green as an absentee-franchisee or committing the time required to run a successful franchise.

Speaking of which, sometimes franchisors wonder if having a go-getter, entrepreneurial franchisee is a good idea.

 

Entrepreneurs That Clash

The problem a franchisor faces when doing business with a franchisee with an entrepreneurial mindset is their perception that rules don’t apply to them. As you may have noticed, this flies in the face of how a successful franchise works. 

You’ve done a massive amount of due diligence on your franchise candidate and preventing an entrepreneurial drive is only one of several factors to consider.

 

Prevent Franchisee-Franchisor Relationship Issues

Traits such as honesty, personality and compatibility play an important role in choosing your franchisees you select, as you’ll be living with that decision for many years to come.

Relationship issues between franchisees and franchisors is very common.  Fighting with franchisees is a waste of your physical and time resources.

To avoid wasting those resources, it’s a good idea to think like your customer.

Sales and motivational speaker Zig Ziglar once said, "You can have everything in life you want, if you will just help other people get what they want."

In this case, your customer is your franchisee. Thinking about what Ziglar said, what does your franchisee want? Franchisees want to see that business is being funneled to them.

Your franchisees want more than a licence to use your brand name. They want clarity in what is expected of them in the relationship.

When you as a franchisor gives them clarity, you greatly mitigate fights with your franchisees and by extension, your risks of litigation.

I’m no Deepak Chopra, but that looks like a win-win, doesn’t it?

That’s what I thought too.

Since we’re already on the topic of developing better franchisee-franchisor relationships, what if we explored another win-win idea?

 

Take a Community-Branded Approach

Just as choosing your most effective franchisees ensures a strong business foundation, so too can having a clean and clear operational model.

With a clear operational model at work, you as the franchisor proactively set the rules and see to it that those rules are followed.

To save you time and hassle, you are able to perform batch updates to all franchise locations with the same language for example, without having any unwanted changes on other franchise’s websites in other regions.

 

Use A Clear Operational Model

Having a clear operational model also means having a website that is ready for your business’s needs, with the ability to embrace uniqueness in different regions you serve.

Although every community is different, you are able to support each community’s uniqueness. For example, there are distinct language and dialect differences from French speaking in parts of Quebec, Canada, English or Spanish in regions of the United States and English in the United Kingdom.

Each industry has their own specific needs whether that is the energy industry in Fort McMurray, Alberta, Finance in New York, retailers in London, United Kingdom or a manufacturer in Singapore. Not only that, you are the brand advocate no matter where you are.

With that functionality, your franchisees understand they can run their own business that’s completely branded. When franchise owners have all the digital tools they need to update both their web and social media-based digital presence, you can be sure you maintain your brand standard.

Ensure they have all the digital tools they need out of the box, to update their website and digital presence in general in a way that ensures you maintain your brand standard.

Another big benefit is that how you do it in 2018 and beyond is far more real-time. You can simply and clearly tell your franchisees, “We’re giving you the tools you need, you just need to tailor them to suit your community.”

If this type of system is not in place, how will you address hundreds (or even thousands) of different communities?

 

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