Accreditation system ready for rollout

MELBOURNE: “The greatest thing ever to touch franchising.”

It’s a big call but ROCG Rose Consulting principal, Nathan Rose, is happy to make it on the impending launch of a Franchise Industry Quality Accreditation (FIQA) system.

FIQA will provide a universal measuring stick for franchises. It is a concept that has invited some industry debate in recent times but is now here and ready to go.

ROCG Rose Consulting – in conjunction with two other business groups – has been focused on developing a system that will likely be welcomed by budding franchisees as well as franchisors keen to improve their place in the market.

“We were engaged to find a solution to the problem of the absence of a standardised system,” Rose explains. “We have conducted extensive testing and research for over six months to make sure it is done well.”

It is almost 40 years since McDonald’s fried its first fry and the franchising concept has been simmering away steadily ever since. In fact, it is more like a rapid boil in countries such as Australia, which currently boasts over 55,000 franchised businesses.

But, although the principle has permeated almost every corner of the globe and is widely accepted as a successful vehicle for duplicating businesses, the absence of an accredited system of benchmarking has not, until now, made its way off the drawing board.

In an article in the July-August 2005 issue of Franchising (Spotlight on Benchmarking, p.144) key industry players leant their support to the overall concept of an accredited system.

ACCC Commissioner John Martin acknowledged the importance of painting a clearer picture for both parties when franchisors are being matched to potential franchisees. Cheryl Scott, industry specialist franchising with the Australian Trade Commission (Austrade) focused on the advantage an accredited system would provide for companies that find themselves significantly “under-done” when deciding to head off-shore.

“Sometimes it is difficult to get them to understand that there are certain costs involved and a lot of things to consider,” she said.

Three separate businesses have combined to create FIQA: ROCG, Franchise Point and Point Management Group. All have worked tirelessly in recent months to create the concept and the heads of the three groups are clearly excited by its impending benefits.

Franchise Point managing director, Michael Anthony, has been passionate about the need for such a system for some time. With a business focused on matching the right franchisee with the franchise business best suited to their individual needs and personality, it is no surprise he sees the new system as a godsend.

“Franchise Point will be happy to recommend franchises to people when we know the company has been nationally accredited,” he says. “It will help to know an organisation is committed to quality.”

Point Management Group director, Shane Rose, is keen to emphasise the substantial benefits a new standardisation system will bring to franchisors wishing to export their businesses.

“When someone assesses something it gives the full picture,” he says. “People in another country will know exactly what the business stands for and where it sits against others.”

The benchmarking process will allow companies and franchisees to compare apples with apples, Anthony adds.

The three-business partnership engaged ROCG Rose Consulting to implement the system partly because of its global focus. There are 45 ROCG offices throughout the world including North America, Europe and the Asia-Pacific region. The company has drawn on its experience in a wide variety of businesses and its broad knowledge of the global marketplace to develop an internationally standardised system that is practical and workable everywhere.

“The globalisation of accreditation will take time but we have no doubt the industry will like it,” says Anthony. “It is time to put Australia on the map.”

Although ROCG Rose Consulting has created the framework for FIQA, there is no question of the company controlling it. The group wants to form several global committees to assist in the coordination and formation of accreditation and independent boards to interpret results and make accreditation decisions. It would be appropriate, for example, to have a member of the Franchise Council of Australia as a committee member, as well as other representatives of Franchise Councils globally, and other industry representatives, the group members point out.

“Not only will the system improve the industry, our group also envisages certain earnings generated by the accreditation process flowing back into it, via industry support bodies,” says Shane Rose. “We see these funds, in turn, generating further industry improvements.”

So, what does the process involve?

First, a company asks for an FIQA assessment. The process takes approximately half a day and commences with 183 questions covering all areas of the business. Responses to the questions are brought together in the ratings system, after which systems are benchmarked.

“If you take a whole series of franchising systems together and aim for best practice, you have to benchmark them against other systems,” says Nathan Rose. “Then it is critical that you benchmark them against themselves.”

According to Rose, if a business believes itself to be worth, for example, a score of seven out of 10, the important question is: where should you be?

Local consultants will be used in the assessment process.

“It will not be a monopoly,” points out Shane Rose. “We have packaged this together and developed the methodology and any further work will be project managed by us. But it will be carried out by consultants affiliated with the various franchising associations or groups.”

The list of components to be rated is both thorough and extensive. It consists of management assessment and the external business framework that comprises competition, technology, business environment, shareholder circumstances, franchisees and customers, and industry.

The internal business framework is made up of vision, culture, structure and strategy, plus the operational areas – products and services, sales and marketing, human resources, systems and procedures, and finance. The financial assessment component of the ratings process will thoroughly assess the company’s key ratios (KPIs).

Importantly, putting yourself on the line for assessment is not the end of the story. If a particular system fails to achieve a quality standard within the benchmark of its industry, local consultants will be available to assist in raising the standard to the required level. Further, because there is no such thing as the perfect business, every system will come away from the assessment process with several action steps they can follow in order to improve.

Once responses to the ratings questions have been provided, they will be ranked, weighted, averaged and summarised. Approximately two weeks later, a written report will advise of the areas that need to be worked on. Companies that meet the qualifications will receive a mark, the necessary paperwork and the program constitution.

A biennial review involving a shorter evaluation process will ensure the accreditation is ongoing.

There is little doubt that franchising is ready for a quality benchmarking system.

A recent article in BRW highlighted the need for budding franchisees to be vigilant in their research. Anyone considering purchasing a franchise is warned about factors such as falling sales and rising rents, expiring tenancy agreements, heavy borrowings and the making of a purchasing decision based on emotion.

With retail trading conditions softening, franchisees face increased pitfalls. Indeed, a recent Deloitte survey suggests many franchisees are failing to carry out proper due diligence – further indication, according to Anthony, of the need for a fully accredited benchmarking system.

The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.

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