The good news

• Franchising profits are up according to the latest survey from PricewaterhouseCoopers.
• Franchisor profits rose an exceptional 19 percent, while franchisees showed growth about twice the rate of the Consumer Price Index.
• The current franchise profit levels of about six percent are set for a huge jump to just under 46 percent over the next three years, the report indicates.

The bad news

• The sector does face challenges, not least the funding of franchisees who are unable to get the appropriate finance from banks, an issue 73 percent of franchisors cite as a major hurdle.

The really awful news!

Have you been reading about the chaos surrounding the demise of Allied Brands? Franchisingplus believes that this debacle is a blight on the franchising sector.
The company’s shares remain suspended from trade on the Australian Securities Exchange, its Cookie Man chain is in the hands of liquidators and reports from disgruntled creditors are growing.
The company is also locked in a dispute with the global owner of the Baskin Robbins brand, US company Dunkin Brands.
To add to the chaos The Department of Immigration & Citizenship has accused Allied Brands of breaching immigration laws by running an elaborate immigration rort where it sponsored a group of Korean nationals to work in administrative roles under 457 visas, put them to work in Baskin Robbins stores and in some cases sold Baskin Robbins stores and in some cases sold Baskin Robbins franchises to their family members.

To add to the bad press, the CEO admitted last week that the company has fallen behind on some employee’s superannuation payments with employees acknowledging they have little hope of being recouped for their losses.

Any prominent negative media story like this affects all franchising personnel:
               
             Franchisors selling franchises
             Franchisees trying to onsell a franchise
             Franchise advisers who establish new systems
             Any franchise professional who does not want the
             reputation of franchising to be further tarnished.
             Financiers who are nervous about putting all their
             financial eggs in one basket. If a Franchisor goes down and
             they have funded many of the Franchisees in that system, the
             impact for a lender can be severe.

These bad news stories only reinforce why creating and then maintaining responsible, sustainable  franchise systems is so vital for the benefit of the reputation of franchising and all  involved in the franchising sector.

© franchisingplus

Author ; Carolyn Dufton Dip.Bus(franchising)

Carolyn is the principal of franchisingplus. franchisingplus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.

The content displayed is franchisingplus copyright and can only be reproduced or re-published with the acknowledgement of the author Carolyn Dufton. www.franchisingplus.com.au/contact/

What is a Franchise Advisory Council?

These organisations can operate under many titles and you may choose to call yours a;

•  Business development group         
• Filter group
• Advisory committee
• Network council

and really anything else that appeals to you!  I would suggest that you don’t get too hung up on the name and that you keep it simple.

So the name aside, why and how would you form a franchise council within your franchise network? or if you have already one, how could you improve what you’re doing now?

Some franchise councils are formed specifically to address a particular niche of the business. This could be ;

• Marketing
• Product R and D
• Conflict
• Service

In general terms the group should be formed to aid consultation on matters of deemed priority by The Franchisor and The Franchisees.

Most franchise councils do not cover specific topics and are broad based discussion groups.

Many Franchisors are apprehensive about forming franchise councils as they fear that will become group “whingeing” opportunities. Continue reading →

Sharing a business through Franchising

Has anyone ever asked you if they can “buy into” your business?

A business has been approached by a third party who has expressed interest in buying into their business.

This prompts the business owner to consider if and how they could include the interested party in their business.

• Could they offer them a partnership?
• Could they sell them a licence?
• Could they become an agent?
• Or should they consider franchising?

The reality of the situation is that a business cannot choose whether to call themselves a franchise.

Franchising is a regulated industry and is governed by the Franchising Code of Conduct. If you are operating within certain parameters you are by definition a franchise and have to conform to the franchising code.

Nor can you engage a franchisee without having provided the legally required franchise documentation.

What are the franchising parameters?

 A franchise exists by definition when;                                   

• one party (the franchisor) grants another party (the franchisee) the right to carry on the business of offering, supplying or distributing goods or services under a specific system or marketing plan
• the franchise business will be substantially or materially associated with a trademark, advertising or a commercial symbol owned, used, licensed or specified by the franchisor
• the franchisee is required to pay, or agree to pay, a fee to the franchisor before starting or continuing the business.

Simply because a business is called a licence or distributorship does not mean it cannot be a franchise. If a licence or distributorship meets the above definition, it is most likely a franchise and must comply with the code.

Franchising is not a dirty word

So what if the system that suits your business best should fall within the franchising definition? Well don’t be scared, franchising is nothing to fear if approached professionally.

In fact…. franchising your business could be the best thing you ever did! Continue reading →

How to keep your Franchisees Happy

Oh to wave a magic wand and have instantly satisfied franchisees.

Is this a reasonable objective, and is it really possible to have perfectly satisfied franchisees?

Human nature would suggest not.

However it is essential that a Franchisor’s prime objective should be to nurture an environment of franchisee satisfaction. Satisfied Franchisees sell franchises.

So how does one approach this?

Let’s consider;

Income

If a franchisee is running profitably, the chances are that they are happier than a franchisee who is not operating a profitable operation. Does your system have methods in place to discuss the franchisees financials on a regular basis?   Continue reading →

A Master Franchisee can also be known as a sub franchisor or Master franchisor. Whichever term you choose to adopt, be consistent with the usage in your organisation to avoid confusion.

Master Franchising allows people or corporations to purchase the rights to sub-franchise within a certain territory. This allows the Master franchisee the opportunity to grow a viable business in a fairly short timeframe.

 The Master franchisee should enter into this role with both sales and management experience, since he or she will not only operate a unit, but will also be responsible for the smooth operation of several other locations as well. Additionally, a Master franchisee holds the responsibility of obtaining and educating other franchisees. He or she needs to be available for continuous support for the other franchisees.

Here’s how it works: Continue reading →

“Has anyone ever seen a franchisor that has sold franchises without an open, operating, and successful company owned location?”

This was a question posed on Linked in by Kelcey Lehrich a US franchising consultant.

This question turned into a discussion that was contributed to by many players in the franchising industry.

In essence, there were two camps. The one camp that maintained that it is not necessary to operate a business prior to franchising and who stated:

“Franchising is its own industry. A Franchisor can achieve the same results with a franchisee who purchases the first franchise and uses it as a “showcase” facility. Out of the 76 industries that franchisors are presently franchising more and more are NOT opening company operations. Most franchisors that do have company operations will sell them after starting to franchise.”

 The reply to this was;       Continue reading →

Franchising Fears

So you’ve undertaken a franchise feasibility study, and franchising seems to be a workable option.

The franchising consultant has helped you assess the viability of franchising and the numbers and you’ve ticked the boxes;

•  The business has long term viability
•  There is sufficient profit within the business to create a Win-Win   situation for Franchisor and Franchisee alike.
•  The business has been tested and has been running efficiently and profitablity
•  The system can be taught and replicated
•  All the numbers stack up ensuring long term profitability for the franchisee
•  All intellectual property matters have been acknowledged and are in hand.

So now, there’s a decision to be made. To franchise or not to franchise?

It is common for prospective Franchisors to get cold feet at this stage……and that’s good!

Franchising should never be undertaken lightly.

No responsible franchising professional should ever persuade a business to franchise.

Franchising should be a decision based on………        Continue reading →