I was reminded of the critical components of a “good “ franchise system at a recent franchisees’ forum where the initial discussion centred on the global financial crisis and the perceived difficulties reported in the press of both emerging franchisors and even supposedly well established systems, especially in the retail sector. There is no doubt the GFC has impacted on the retail sector and certainly such emerging franchise based sectors as education.
The consensus however was that the franchise model was an effective and robust means of living through the present difficult trading conditions.
The discussion focussed in the end on the heightened need for the participants, both Franchisor and Franchisee, to assist each other in countering the downturn.
Reduced consumer spending and reduced margins entailed belt tightening for all the parties. For the Franchisor especially, the increasing difficulty in expanding the brand’s footprint and in growing the total system due to lack of sources of capital (rather than lack of franchise enquiries) was also apparent.
As the group wrestled with the situation they naturally turned to reviewing what it was that bound them together and created a cohesive group and what it was that was critically important if they were to grow and prosper.
The reason for belonging to the system for the individual franchisee was clear. From their perspective they saw the system as just as much their’s as the Franchisor’s. They agreed that the franchise model could stand them in good stead so long as they reacted positively to events and changes in economic and legislative requirements. They saw themselves as a family of companies with a common culture based on collaboration and mutual support.
Individually owned but mutually bonded by the brand and centralised support, they still enjoyed their own distinctive local identity and the ability to respond differently to local challenges.
The most obvious ingredient in the franchise system was the ethical standards inherent in the group. The standards flowed from their franchise agreement and the operating systems and manuals into the attitudes of the participants towards each other. Most of all they felt the Franchisor provided a platform for them to expand, to adapt and to meet challenge. The system was proactive to their changing needs. However the most valued ingredient for all was trust. Trust in the Franchisor, the system and in each other.
Franchise systems whether emerging or established are a work in progress but the critical factor for both is that it is built on fair and firm foundations.
About Mike Padden
Mike is one of Australia’s most experienced consultants and advisors in franchising and was the Founding Vice President of what is now the Franchise Council of Australia.
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