The Elegance of Franchising : By Steven Emmons
By Steven Emmons on December 11, 2013
The word “elegance” can be defined as “ingeniously simple.” Put another way elegance is combining effectiveness with simplicity. If your business depends on several retail units to reach your customers, franchising may well be the most elegant business structure available to you. Here’s what you should consider.
The basic components of successful, multi-unit retailing include:
- Customers spread too far to be serviced from one outlet;
- Capital needs met;
- Local knowledge, significance, and decision-making;
- Quality control and improvement; and
- Increasing brand power.
So how does franchising fulfills those fundamentals?
- REACHING WIDELY DISPERSED CUSTOMERS -- As we’re well aware, several, very successful, franchised concepts currently span the earth, from Chicago to Shanghai, from Miami to Moscow, from Boston to Bangalore to Buenos Aires. Franchising empowers, trains and guides an operator (the franchisee, who could be operating anywhere on the globe) to use the trade marks, trade dress, trade secrets, systems and procedures of the owner (the franchisor, who could be based anywhere on the globe).
- CAPITAL NEEDS MET -- It takes significant capital to grow a business from one location to two or ten or hundreds or thousands of locations. Franchising allows the franchisor to grow its business using the capital of others, the franchisees. That allows the business and the brand to grow much faster.
- THE POWER IN BEING LOCAL -- In developing new retail units, franchising also uses the local knowledge and significance (including political sway) of the franchisees to obtain the best locations at the best prices and to clear the governmental permitting hurdles most efficiently. In trying to develop a new geography with additional retail units, a non-franchised business will likely send out to a city or county an employee with no knowledge of what the up-and-coming neighborhoods are, the local real estate values, what brokers are best, what contractors perform, what local individuals would make the best unit managers, etc. A locally-based franchisee, equipped with guidance from the franchisor, is likely to out perform the out-of-towner on all these issues. And, in operating the unit for several years, the franchisee’s local knowledge will continuously be an advantage in hiring, compensating, marketing and promoting the business and in maintaining, refurbishing, and even replacing the business’ operating facility.
- QUALITY CONTROL & IMPROVEMENT -- There is a myth in the world of multi-unit retailing that franchisees do not achieve the same quality or consistency of operations, because the franchisee is not an employee of the franchisor. Don’t believe the myth! A well-run franchise system should and will have better and more consistent operations than company-operated systems, and it will achieve those better, more consistent operations through its use of appropriate agreements, coaching, communications, and the magic of local, on-the-spot decision-making in the execution of the franchisor’s systems and procedures. Also, the best franchisees develop valuable innovations for their operations, and the best franchisors incorporate those innovations into the systemwide procedures to improve the whole System’s performance.
- INCREASING BRAND POWER -- A successful multi-unit retail business should over time develop a powerful brand. In any given community there will be entrepreneurial individuals that will desire to invest their own talents, focus, political sway, and capital in that brand in order to share financially and emotionally in the power and success of the brand. A smart business owner will enthusiastically accommodate and develop those desires by expanding the power of the owner’s brand and the reach of the owner’s business through franchising. As the number of successful units increases, so does the power of the brand. As the power of the brand increases, so does the success of the individual retail units operating under the brand.
In a nutshell, the elegance of franchising lies in the combination of a uniform program executed locally with consistency and power.
What is the best way for a franchisor to get the most out of franchising’s elegant structure? Answer: Successful franchising results in and from shared success. The structural elegance of franchising is enhanced when a franchisor enthusiastically subscribes to the concept of shared success.
A franchisor with vision understands that the franchisor succeeds best and fastest by sharing the franchisor’s successful business formula and profit-making with its franchisees, who in turn share (or invest) their own talent, focus, political sway, and capital in the franchisor’s brand. The visionary franchisor’s driving objective is to ensure the success of its own franchisees. In turn, the franchisees, through developing new units, pleasing customers of the brand, and paying royalties, drive the power of the brand and the financial fortunes of the franchisor, while those same franchisees are profiting through their use of the franchisor’s systems and brand. It becomes the cycle of success breeding success breeding success…
If you are ready to develop your business and your fortunes by sharing your success with others who are eager to contribute their time, talents, and treasures to the continued growth of your brand, then it’s time you seriously considered franchising.