Many organisations see franchising as the ideal business model to grow their company. Unfortunately, far too many of them don’t take the time to build the right foundations and secure a bright future for their business.
The short term thinker typically sees franchising as a “quick win” – an opportunity to generate some much needed cash and increase the size of the distribution network. Such companies rarely succeed over the long run. They simply have not built the necessary foundations to successfully scale the business.
By contrast, DC Strategy
advisory service recommends a more holistic approach; take the time to build a strong and scalable business by focusing on the longer term gains, recurring revenue streams and a scalable support structure. Of course, such a view must always consider the capital required to grow the business. Here, the balance between the number of company owned and operated stores and franchised stores is a major consideration.
Building a strong and scalable business infrastructure and governance processes will help ensure franchisors are able to provide the necessary support to their franchisees. The pay-offs are obvious – well supported franchisees are more motivated, generally perform to a higher level and have a better view of the franchise opportunity. These three elements help drive the brand’s reputation and perceived value amongst potential franchisees.
Properly planned and executed, franchising is an excellent business model to drive growth. However, as with any business model, poor planning, undue focus on short term outcomes and inadequate execution raise the risk of failure to unacceptably high levels.
James Howell
DC Strategy -
franchise consultants6-Aug-2008