Great ideas don’t always make for great franchises

Not every business, and not every person, suits the franchising model – which is hard to explain to an enthusiastic entrepreneur.

We field many calls from a range of business owners and managers who are interested in franchising their business. Some have been prompted by reading an article about how to grow their business. Others are prompted by passionate customers who are so excited by the brand that they want to buy in and get their own piece of the action.

Many of these businesses are great concepts, perhaps serving a market niche, and are generally unique in their offering and method of operation. They might also have distinctive brands, and have a strong and consistent visual presence. Ordinarily, such businesses might lend themselves readily to be franchised, until we look below the surface and examine profitability, systemisation, and the owners themselves.

Unfortunately what we often find here is that the business is not profitable, or not generating adequate profits, to justify franchising. Reviewing business processes to improve operating systems can help in this regard, but some business “systems” may be so closely tied to the specific range of work experiences, innate knowledge and qualifications of the business owner as to be near impossible to document and harder still to transfer to a franchisee.

Finally, in looking at the business owners themselves, we often find that few are capable of undertaking the journey. For some it might be financial reasons. To franchise a business costs money – most of which will be sunk into the business for some time before it starts to generate a return.

For others, the idea of selling franchises to solve their problems in dealing with staff or customers is based on a false premise. Franchising will replace these problems with other, altogether different problems of an equally challenging nature, but it won’t eliminate problems altogether.

If franchising a business was easy, everyone would do it. For those who are determined to go the distance, getting the right advice at the outset will vastly increase their chances of success.

Jason Gehrke has a passion for franchising. He has been involved in the sector for 17 years as a franchisee, a franchisor, provided PR and marketing services to more than 30 leading Australian franchise systems, and presented to literally thousands of potential franchisees and franchisors over the years. He is a director of the consultancy Franchise Advisory Centre and is the immediate past CEO of automotive paint and plastic repair franchise, Kwik Fix International, a 2004 Australian Franchise System of the Year winner.

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