Franchising is an attractive option for many people seeking to own their business, however Westpac’s general manager of commercial and regional business, Jeremy Dean, says that it’s often hard to keep ahead of the competition.

“When you buy a franchise you’re often buying into a network with an established name and well established systems and processes. This can often be a real competitive edge for small business,” Dean says. “There are always enterprising business owners looking to franchise, and franchisees employing sound strategies to build, consolidate and maximise profit and value over the next three to five years, will be the ones who keep ahead of the competition.”

First up on his list of key areas that distinguish a flourishing franchisee from a struggling one is business building and that starts with dynamic business planning. “Set realistic targets, allow for strong growth and be the leader in what you supply to customers. Review your business strategy regularly with input from staff,” he says.

Your franchisor has created the brand you have bought into, so support your brand and maintain high standards of presentation and services, he suggests. “There is a considerable risk that your franchise system could be sidelined by bigger, better and stronger competitors, that could outgun you with advertising, marketing, service and network development.”

You need to be on your toes and do your bit to keep up the brand development so budget for, and devote your energies to, your marketing plan.

Are there opportunities to expand your operations? It’s tempting to grow if business is going well but do your research as expansion can eat up capital and distract management from current business, he says. Growth has to be for the right reason.

Cash flow and profitability are the backbone of a business. “You have to forecast and track cashflow against actual income,” advises Dean. “Check whether or not your cash is working for you and stock take regularly to assess if you have too much or a lack of stock.”

He also highlights the opportunity to maximise advice from your financial institution. So what sort of banking relationship do you have? A business banker can help you build your business so make sure you are getting as much help as you can.

Of course customer service is key to your success, but ask yourself these questions, suggests Dean. How well do you know what your customers want and what is their response to your products and services? Do you regularly analyse consumer trends and know what’s driving them? Are you aware of what your competitors are offering and what are the marketplace trends? Are you maximising sales and customer opportunities?

Tap into your franchisor’s expertise to help your business achieve its true potential. A franchisor can be an invaluable source of suggestions for store improvements, promotions and team building, reminds Dean. But you can also share ideas with other franchisees and participate in meetings and conferences. What about your staff? Are you an employer of choice? The quality of staff and the knowledge staff transfer to your customers are keys to unlocking your success.

“Training is critical to survive the even more intense competition that will surely develop in the future,” cautions Dean. Staying ahead of the game means you cannot afford to overlook regular, relevant training for you and your staff. Not only does it keep everyone motivated but essential skills are honed and improved, which means greater efficiency and superior service. He believes the best way to keep on track is to budget for training by dedicating a percentage of your total costs to this purpose.

Many franchisors encourage community involvement on the part of franchisees; it helps build brand awareness and is seen positively by customers. Could community involvement be part of your growth, perhaps sponsoring a local endeavour with mutual promotional opportunities?

As a franchisee you will benefit not just from your own efforts at beating the competition, but from the strategies and actions employed by your franchisor on behalf of the entire network. And that’s a real bonus, when you are an owner-operator. James Brouillard, national franchise manager for Howards Storage World has a view that even without direct competition, you cannot afford to let down your guard.

Keep stores well stocked and inviting, he suggests. “In our particular retail offering we do overlap with a number of retail establishments and there are a few Mom and Pop stores that attempt to duplicate what we do.

“As we are a franchise, our field support managers do competition shop similar products and check out those stores trying to imitate us. That info is brought back to our group office where buying, marketing and merchandising and retail operations will take that into account when sending out their directives.

“Franchisees keep on top by following the system, supplying superior customer service and keeping their stores well stocked and inviting.”

Kristy Shepherd, Mortgage Choice, sees differentiation and transparency as the key, for both franchisors and franchisees. “From a franchisor perspective, the main top tip is differentiation and transparency _ ensuring the company has a high-quality, unique selling proposition that is supported and endorsed by the franchisees, while exercising transparency at all times during customer and franchise network interaction. This goes a long way to creating an environment where the franchisor and franchisees are walking together, shoulder to shoulder and therefore always steps ahead of the competition.

“From a franchisee perspective, the main top tip is differentiation and transparency. Ensuring your business has a high-quality, unique selling proposition that is supported and endorsed by your stakeholders (such as the local community, media, staff, franchisor and so on), while exercising transparency at all times during interaction with these stakeholders _ your customers first and foremost.”

One thing is certain, if you aren’t knowledgeable about your business, your system and the market, you won’t be making the best of running your own business. So be informed, says Spiro Vournazos at Redcat, a management support company.

“Franchising is a complex and competitive business. With more than 400 different food based franchise systems to choose from in Australia alone, customers and franchisees are certainly not short of choices. Competition can come from other franchise systems as well as from standalone businesses, and in some cases from other franchisees in the group.

“The most important tool for any franchisee and franchisor to ensure they stay ahead can be expressed in one word: information.” And some of the most useful information is usually available at the Point of Sale for retail business, he says, yet it is unfortunately ignored because of an inability to capture it effectively, a lack of integration making the information too difficult to analyse, or a lack of training on how to use it effectively.

“Good operators don’t only track sales revenue through their POS but integrate it with a financial system to manage their payroll, track their inventory costs, and a loyalty scheme to reward and market to their customer base. The savviest operators also leverage central management and reporting tools to allow benchmarking and comparisons between sites to quickly identify weak points and the strongest performers in a group and then learn from this to quickly apply appropriate changes for the benefit of all franchisees.”

None of this is new information and clever business owners have already been allocating time to collate and analyse this information from multiple sources for a long time, he says. “A good point of sale solution should not only be a provider of software and hardware, they should be a partner in your business, and you should expect them to work with you to provide tangible, long-term benefits and a return on your investment through increased profits, labour reduction, and reduced business costs.”

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