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Bulletin

Do You Have What it Takes to be an Exceptionally Successful Franchisor?

Fasken
Reading Time 6 minute read
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Franchising Bulletin

Are there traits that distinguish franchisors whose results and achievements put them well ahead of their competitors?

In my experience, there are six characteristics that distinguish those whose franchising success can be described as exceptional:

A Vision That is Truly Infectious

Unfortunately, the term "vision" is today used as such a catch-all that it sometimes loses its real meaning.

Franchisors that have had exceptional success have done a better job than their competitors of identifying an unmet need or gaps in the way the need was being met, as well as a better way of profitable meeting this need.

Jean Coutu, for example, had the "vision" of an easy-access big-box style of pharmacies offering a wide range of products (not just drugs and medications) at genuinely competitive prices.

However, having a vision is not enough to become an excellent franchisor; that vision must also be shared.

Unlike entrepreneurs who bring their vision to life themselves, through their own business whose destiny they control in their own way (and according to their own vision), franchisors must recruit franchisees who fully adopt and share their vision. This is a characteristic of networks that succeed in the medium and long terms, which may sometimes even exhibit some of the qualities of a tight-knit clan, in terms of the extent to which franchisees appropriate the franchisor's vision and feel that they belong.

A Shared Passion

Franchisors who achieve exceptional success exhibit an unbridled passion for their concept, their network, and their franchisees.

At the age of 90, Jean Coutu was still paying regular visits to the pharmacies in his network, even those of his competitors, and chatting with franchisees, employees and customers. He was still full of ideas for improving his concept, launching new projects, embarking on new initiatives, and more.

The same fire could be seen among many major international franchisors, such as Ray Kroc (McDonald's restaurants), Harland David Sanders (the "Colonel Sanders" of KFC) and Dave Thomas (Wendy's restaurants).

Just as is the case with vision, a franchisor must be able to convey that great passion (often by example) to its entire network, so that it motivates all of its organization, including its franchisees and their employees.

We can see the importance of that trait by examining cases of franchisors in whom it is absent.

For example, when a franchisor seems to be motivated by profit alone, or if a successful franchisor is acquired by what are essentially financial corporations (for example, venture capital firms), we often see growth in the franchise network fall off and major problems arise in franchisor-franchisee relations.

This is true even though those organizations generally have excellent managers working for them (often much better, strictly in terms of management competence, than the ones the franchisor had before).

What ingredient are they lacking to maintain the growth of the franchise network? Passion!

Clear and Consistent Values, Communicated Properly From the Outset

Another trait of franchisors that enjoy a great deal of success is the presence of values that are clear, consistent and properly communicated (particularly to franchisees and to suppliers of goods and services).

To start with, these values must be genuine and not merely theoretical.

It is easy to write up a code setting out a fine set of values (for example, open doors' policy, integrity, respect, humanity, etc.).

However, if those fine values are not the ones that actually guide the franchisor and all of its network in their decision-making and day-to-day actions, the values will have no impact—at least, no positive impact.

Franchisors that achieve well above average success have values that may not always be written down, but are clear and well known to their franchisees, their managers, their suppliers and their other partners.

Those values mean that every participant or partner in the network is better able to foresee and understand the franchisor's decisions and actions and is also able to share them.

They also represent a reassuring and unifying element that helps to preserve the strength and coherence of the network.

Leadership That is Strong, but Which Still Listens

Like any business, a network needs strong, reliable leadership so that its efforts can be focused in one unified direction.

In franchising, however, that leadership must continue to listen, for information, opinions, comments and suggestions from franchisees.

Franchisees are the antennae of the network with regards to its customers and its market and are also in close contact with everything that goes on at the network's sales outlets and in the franchisees' respective markets.

Since franchisees are themselves entrepreneurs and business managers, each also has experience and knowledge that can be beneficial to the network.

Franchisors that are very successful are able to quickly collect and channel their franchisees' knowledge, skills and market information for the benefit of the entire network, while still preserving and fully performing their role as leader, in order to expand and improve their network and support its growth.

Trust That is Earned

After an initial honeymoon lasting a few months, the level of trust that franchisees have in their franchisor often tends to fade when a divergence, real or perceived, appears between the franchisor's interests (in continually increasing the number of sales outlets in the network, maximizing sales, and increasing earnings from franchisees) and the franchisee's interests (in maximizing the profitability of his sales outlet or outlets).

A recurring characteristic trait of franchisors that achieve well above average success is their ability to maintain a high level of trust on their franchisees' part, in spite of that divergence between their interests and those of their franchisees'.

That does not mean that their franchisees always agree with the decisions made or are always happy about the actions taken by those franchisors. What it does mean is that they are satisfied that in both the actions taken and the decisions made, the franchisor gives equal or, in the case of the very best franchisors, even greater consideration to the interests of the entire network than to their own interests.

In fact, franchisors that achieve exceptional success understand (not just intellectually, but also in their decision-making and management processes) that their success in the medium and long terms and the success of their franchisees are interdependent.

One of the direct effects of the fact that these franchisors act, consistently and continuously, with the interests of the entire network uppermost in mind is their ability to maintain a high level of trust on the part of their franchisees, which plays an important role in their success in franchising.

Organization, Planning and Discipline

It is impossible to properly manage a businesses' network (particularly when they are each owned and operated by an independent entrepreneur) without a high degree of organization, planning and discipline on the part of both franchisor and franchisees.

This means that a sixth characteristic trait of franchisors that enjoy success is their high degree of organization, planning and discipline.

That characteristic is visible in all aspects of the management of their networks, from the selection process for new franchisees to their approach to disputes with a franchisee or in dealing with a franchisee experiencing difficulties (financial, management, personal, or other).

Successfully managing a network of franchises therefore calls for unparallelled resources and skills in management and communication, and for tools, systems, plans and documents that make it possible to both convey the norms, rules and methods of the network effectively to franchisees and be able to implement them rapidly and in a structured manner when the need is felt.

Fasken has all the expertise and resources that are required to properly advise and support you in all aspects of the start-up, management and expansion of your network everywhere in the world.

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