Franchising – A powerful opportunity

You’ve worked hard for many years, perhaps all your life; You’ve saved, have money to invest, and have dreamed about striking out on your own, doing something you love everyday, and owning your own business. Where do you go from here- will you jump in, take the leap, and make it happen? Are you ready, or still pondering? While nothing can make small business operations easy, franchising can take some of the worry out of where to begin, and how.

From my own perspective of being a part of a family bagel business in Northern California in the 70’s and 80’s, and doing everything top to bottom ourselves, I saw firsthand what was required to set up a business, run it, and keep pushing it forward. Now, understanding what a franchisor can bring to the table from my years of being on the the front lines working for a franchisor, I can tell you there are many, many advantages to the Franchise system- it can be quite powerful.

You, of course, bring franchisors a wealth of talent and education;  franchisors are lucky when they find that wonderful alchemy of desire and vision in a franchisee that wants to build something extraordinary for themselves and the franchise organization.

Naturally, in today’s times, it takes real nerve and tenacity to start a new business. With a franchise, the additional investment required puts the key elements in place to achieve success, and provides a structural safety net, direction and an operational roadmap.

Franchisees can expect a more turn-key and more stable business more quickly than their non-franchise counterparts, and to be part of a community and brand.  They have support.  However, nothing is foolproof or guaranteed, not even a franchise. Before deciding and jumping in, it simply takes understanding what the expectations of retail franchising really are, thoroughly investigating all choices, and knowing if it’s right for you, on every level. The rest is planning and attitude. Here’s 6 basic concepts to consider when embarking on a retail franchising venture:

1. Consider the everyday demands of being a retailer.

Do I like working with the public, am I patient? Do I like fixing problems, helping customers with returns, truly meeting their expectations? Do I really love the products I am working with? Do I have a sense of commitment and passion? Will I care what colors/flavors/sizes that product comes in, or do I just want to make a sale?  Do I understand the importance of my reputation with every transaction I make?  Am I as enthusiastic about fixing a problem as I was about making the sale?

Will I like working with a staff that I will train and manage? Many franchisees find this one of the most challenging areas of running their business; Ask yourself: Do I like the idea of, and will I be good at, finding and keeping help?

2. Having extra capital for business & life, beyond what the Franchisor recommends, is a good idea.

What unforeseen things might arise? And when it happens, will I just try and run my business lean if I get a little behind? For example, not having a manager and customer service staff while you’re trying to market your business, order products, open a new store, pay your bills, and train new staff will not work- can you accept that you can’t do it alone, and its worthwhile to pay for help?

Think about your income too. Needing to rely on the business for an income similar to what you did in your successful career before your franchise may be burdensome to the business; don’t count on paying yourself right away, and don’t have multiple large incomes to pay out from the business until its really justifiable and necessary.

Also, allow the business plenty of time to succeed- if the typical time period for profitability is 6 months, plan on one or two years- especially in this economy.

3. A national franchise with a well-recognized brand is a terrific start, but marketing efforts only begin here.

Expecting a name and location alone to bring in your customers will not be a good long-term marketing and client base-building strategy.

The marketing budget should just be an automatic and on-going cost of business factored into your overall budget from day one.

From there,  it’s important to understand that the brick and mortar store is  an important first step, but just the beginning; here’s some additional marketing best practices:

Ö  You need a presence in and to be networking in, the community (i.e.. sponsor a 10K, go to Chamber of Commerce meetings,  provide product for radio give aways in exchange for PR).

Ö   You need to belong and regularly contribute to a cause or charity that is philanthropic, but also provides PR;

Ö   You need your own local marketing initiatives in addition to national franchisor sponsored ones (hold in-store events,  anniversary events)

Ö   You need to continually try different avenues until you find which ones reach your constituency, learn how each part of your audience wants to hear from you, and then keep a steady & regular diet of marketing efforts:  print, radio, internet, billboard, sandwich board, movie-screen preview placement ads, professional sports team half time big screens,  cross-marketing efforts with complimentary businesses, grass-roots & guerilla marketing, etc.

4. Technology is a key operating component, even for a brick & mortar business.

To ignore the internet is to shoot yourself in the foot. You must be findable on the internet- at the least, with a digital presence, providing your business address & hours; you must harness a real web presence also, though most franchisors have policies about individual franchise websites, and so this may be done by the franchisor on the franchisees behalf. Many franchisors take a single aggregated company website approach, and don’t allow for individual sites; some provide pre-approved templates for sites.

You need to understand & be active with social media, and understand that it is a legitimate and necessary branding/PR mechanism:
Ö   Customers are beginning to expect real-time responses to challenges & issues

Ö   Businesses now hire a Social Media Manager or give this function to employees:

• Consider the story of the customer who learns at the airport that their Southwest flight was cancelled, Tweeted about it on Twitter, and
within a half hour had a response from a Southwest customer service agent who found them another flight.

Ö  You must use software programs to understand the metrics of your business:

• How much & why do customers buy, and when?
• What are the trends you see in your customer’s tastes & needs
• What products do they return to, again and again?
• What do you need more of, what should you drop?

Responses to both web promotions and your own internal systems give you these metrics, and help you ascertain what to do next.

Ö You must push out educational and informative news in a regular way to your aspirational customer base and loyal customers.

This can be in the form of a e-newsletter, an educational portion on a website, educational videos, etc. This gives you credibility as an expert, and shows value to the client that you have the knowledge, which in turn helps earn the right to sell product to them.

5. Your brand is serious business.

Branding 101 for world-class brands:

Ö  Products are important to the brand, so think about what you sell as a representation of the brand as a whole. Do the categories, price points and selection make sense? Also, you wouldn’t sell incense at a pet store or sell cookies for your daughter’s scout troop- ask yourself what would other well-established brands do. Would the Gap do that?

Ö  Do you have the same products in-store that are offered on-line or in print? Nothing is more frustrating than a bait-and-switch to customers! If it appears in print or in your marketing, make sure it is highly visible in stores, and well-stocked.

Ö  Do you see that every touch point with a client is part of the brand, from the paint on the walls to the bags that you hand them, and the way you answer the phone? Is your store a reflection of the best practices? Cleanliness, shopability. . .is it inviting, friendly? Do you follow established franchisor policies and procedures for your operations?

Branding is in your service and reputation. Will you cut corners, because it’s easier and you don’t have enough working capital (point #3 above)? This may come in the form of not carrying enough inventory, or being short-staffed on a busy day, to name a couple of examples. Is your decision making customer-focused or operational focused?

Not being customer-focused (point #1 above): What kind of reputation are you building, and do you care? Is every client that walks through the door treated well?

Will you go on auto-pilot? Can you afford to have the attitude that the business should do such-and-such because that’s what it did last year, and that’s what similar franchises are doing in similar markets?  BAH! With customers, take nothing for granted! Track your customers, get to know them, keep good records of their purchases and speak directly to them with your marketing.  And, do you stay actively involved in daily operations? Managing the business means being there on site; don‘t go into retail if you want a business that “runs itself’-  absentee owners can’t expect it will just come together.

Will you set aside time to understand the competition, research it, and actively plan counter-strategies?

Are you ready for retail calendar cycles, and ups & downs? Retail rarely closes (if you’re competitive), and there is always the next season, the next promotion, a floor move of product or addition of new product, and all of this must be planned and executed; it is non-stop, when you’re doing it well. And the ups & downs? Depending on the business, most have slow periods. . . what if people aren’t coming through your doors, or just aren’t buying? You should prepare for those times, know when they’re coming, and what you’ll do about it.

Keep all operational efforts strong and crisp, it’s the backbone to your brand’s efforts, and shows: Will you bring in other experts to help you? At some point or another, you could need help from accountants, a PR agency, a payroll service, delivery service, lawyers, etc. Plan on this, and budget for it.

6. The Franchisor & Franchisee partnership-working within a franchise system.

Franchisors will have expectations- they are paid a franchising fee because of their brand, expertise and experience, and they’ll expect you to want to work within their network and support the goals of the franchise company overall.

Consider the pros & cons:

Of course, franchising means inheriting and conforming to a system and business practices, and paying on-going royalties.

On the pro side, it means you’ll gain a national brand & presence (in most cases) that helps catapult you from the beginning. But there’s much, much more. . .

What else they can do for you: Franchisors have thought through your set-up,  down to the individual product SKU, how many of which product you’ll need and turn each year, in inventory; they have your visual merchandising down, know how the store should look, be shopped, and where you need to tell your contractor to install electrical outlets and what needs to be front and center; they’ve  negotiated on your behalf for your signage, fixtures, and product; they can help you find a perfect location and negotiate your lease. They give you operating procedures and a point of sale system; they provide training and on-going support.

They may have contracted with services on behalf of the franchisees, like a PR agency, ad agency, national customer database, or a celebrity spokesperson. They do on-going research and product development to keep you and your products current. They’ve identified your target customer, and are actively courting that customer- they know which elements work best to reach your target. And with their national operating budget, they can put professional catalogs, commercials and advertisements in place that individual business owners could not afford, nor have the creative talent to produce.

Franchising is a powerful choice, and can help business owners get where they want to go quickly, with expert direction and knowledge. A strong franchise company (franchisor) is made great by the strength of it’s franchisees, who use their talents to bring their vision to reality, and make the brand and company stronger by their efforts.