What is the Franchise Council of Australia’s (FCA) view about established systems?
How you would gauge whether or not a franchise system can be described as established?
The FCA runs the Excellence in Franchising Awards — the premier franchising awards program in the southern hemisphere and probably the most sought after category is the Established Franchisor of the Year Award.
As part of the criteria, an established franchise system is defined as a system which has been franchising its brand for more than five years.
What should a franchise prospect be looking for in an established system?
As well as looking for a system that has been franchising its brand for more than five years, anyone looking to invest in an established franchise should search for franchisors with solid processes in place that provide franchisees with efficient supply of goods and services, at a competitive price.
The brand of an established franchise system should have a certain amount of exposure and recognition within the target market of consumers. Increased brand recognition is one of the most important benefits of aligning
with an established system.
Prospective franchisees should also look for strong communication principles and practices; effective, thorough training; ongoing engagement in business development; strong brand values; consistent, timely disclosure,
including past and present franchisee contact details and track record of dealing with business challenges.
What are the other benefits of an established system?
Other benefits include business confidence which starts from a strong base and continues to grow; increasing revenue; and sustainable or growing profitability.
Large established franchises
Greg Hodson at PricewaterhouseCooper has outlined the following characteristics:
- An established brand, 50 to 100 units plus
- Franchising for 10 years plus
- A detailed expansion strategy
- Specialist support employees
- Effective franchisee meetings, advisory council and satisfaction survey
- Low level of disputes and franchise termination
- Established and documented processes and manuals
- Franchisee communication plan
- Intellectual property standards and controls
- Use of technology
- Advertising and marketing initiatives
- Developed training programs
- Strong supplier relationships
- Bank accreditation (by least one major)
- Centralised manufacture/supply
- Caring attitude to franchisees
- Involvement in the industry and its associations