How to be a successful franchisor – by sacking yourself

If you’re thinking about franchising your business, be prepared to make yourself redundant. In fact, try to make yourself redundant anyway.

That doesn’t mean that you sell a few franchises and retire. Far from it; when you franchise a business you escalate your commitment to the business, not decrease it. The difference is that the nature of the commitment will change, so that instead of spending every day working in it, as a franchisor your job is to work on it – full-time.

This means that someone else has to work in it, and that someone else needs to be as good as (and preferably better) than you at the things you did when you were working in it.

So how do you make yourself redundant from the daily operations? Consider the following:

1. Ensure there is enough profit in the business to cover the costs of those personnel who replace you.

2. Document what you do, how you do it, why you do it that way, when it should be done and who it should be done by. Lo and behold, this will form the basis of your Operations Manual. Anyone who has read Michael Gerber’s E-Myth will appreciate the value of systemising their business operations, and the process of this creates opportunities to introduce improved efficiencies and monitoring controls. Remember, if you can’t measure it, you can’t manage it.

3. Identify those highly specialised tasks that can not be delegated because they require a unique blend of skill, flair and experience which only you have. Look at these in minute detail. Can you train someone else to perform these tasks? If you can’t, how will the business perform without these tasks altogether? Are they really necessary to the future of the business, or can this expertise be found externally?

4. Let go. Give your people defined and measurable responsibilities, then give them the freedom to get on with the job, including the freedom to improve the job itself as they find operational efficiencies. Your business can’t grow if you won’t let go.

5. Set targets and let your team share the future vision for the business via these targets. Get them to identify the best way to achieve the targets.

6. Measure, monitor and modify. Measure what people do, actively monitor the performance of the business across all relevant dimensions, and if you don’t like what’s happening, take steps to modify it.

In fact, whether you’re thinking of franchising your business or not, you should be working towards making yourself redundant anyway, so that should something happen to you, the business will go on regardless.

If your business can’t be operated without you, can you change the business, or can you change yourself?

Franchising isn’t the only way to grow

Some businesses come to the conclusion that the only way they can grow nationally and internationally is through franchising, and there is no shortage of successful systems that have grown to dominate the Australian market and which now have their sights firmly set on international growth.

But is franchising the right method of expansion for you and your business?

Often the decision to franchise is not based on a thorough consideration of all available growth strategies, but instead made in response to unsolicited requests for franchises from customers excited about the product or service and its potential demand.

Alternatively, businesses may be convinced of the benefits of franchising by a consultant or advisor, often overcoming the business owners’ own doubts about their preparedness and desire for exponential growth (and the hard work that needs to be done to get there).

We are all creatures of habit and therefore tend to operate within our comfort zones. I once heard a prominent Australian business researcher comment that he believed about 80% of Australian small businesses don’t grow larger than their current operations because the owners are quite comfortable with the size and complexity of their businesses in their current form. Perhaps part of the reason is that business owners don’t like to lose control, possibly because they don’t have the right systems in place to make themselves redundant.

So when the option of franchising is presented by keen and willing potential franchisees who will grow the business for them, is it any wonder business owners commence a journey into franchising without making themselves aware of their other options for growth? Compounding this problem is the mistaken belief among many small business owners that franchising is easy, because someone else (the franchisee) just has to follow what the original business does and the rest takes care of itself. (Never mind the need for training, systemisation, operations manuals, design templates, marketing protocols, selection procedures for sites and franchisees, relationship management, etc, etc).

So what other ways are there of growing a network?

Well, first of all ask yourself the question if you actually want to grow the business. Do you want to achieve higher returns in the long-term by accepting potentially lower returns in the short-term, and if so, what are you prepared to sacrifice or invest to get there? Any experienced and mature franchisor will tell you that franchising is not a fast way to an easy buck. It takes time, patience, hard work and money.

Alternatives to franchising

The alternatives to franchising as a growth strategy can include:

• Company-owned chain.
• Forming a co-operative.
• Selling to a competitor with the resources and talent to grow the business, or alternatively, buying out a competitor.
• Focusing on manufacturing and wholesaling goods or services, and outsource the retailing to a third party with greater expertise.
• Selling or licensing the rights to processes, trademarks, recipes, etc which are unique to your business and which can be more effectively commercialised by another party. (Please note however, that in some instances, licensing may well fall under the definition of a franchise under the Franchising Code of Conduct, and you should get independent legal advice in this regard).
• Servicing a national and multinational client base via the internet.

Until you have looked at these (and other options that might present themselves), you can’t be sure if franchising is right for you (and even by then you still might be unsure).

Understand your critical success factors

As part of your journey of discovery learning about growth options for your business, you should also be relearning what it is that makes your business work – its critical success factors.

But whatever you think your critical success factors are might be different from reality. In other words, to get to the real truth you’re going to have to do some research and analyse your business, your customers, your products and services, and work out just what makes it tick. These success factors might include:

• A defined target market and purchasing cycle
• Location
• Presentation and customer service
• Product/service mix
• The presence and activities of competitors
• Marketing and media opportunities
• Staff capabilities and availability

A first method of research is to analyse the data within the business already, especially sales data, which might reveal trends in what is purchased and when, by whom and for what purpose. This can provide simple benchmarks to predict the behaviour of other outlets if all other factors are equal.

In conclusion…

If you can sack yourself from the daily operations of your current business, you may be ready to consider franchising. However there are other methods of growing a business and franchising may not be the most attractive growth option in all cases. A thorough understanding of a business’ critical success factors may help determine the best growth strategy to choose.

Jason Gehrke is a director of the Franchise Advisory Centre and has been involved in franchising for 18 years at franchisee, franchisor and advisor level. He provides consulting services to both franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues.