After developing my first successful franchise model; a nationally recognised pie business, in my home country of South Africa, I saw what I thought was an opportunity to replicate the business model in Australia. So I went ahead and immigrated to Melbourne with my family. Due to a number of factors – like the extraordinary difference between markets – my attempt to bring the pie franchise to Australia failed dismally and as a result, I experienced the lows of business.
Like most true entrepreneurs, this wasn’t going to stop me. I didn’t lose my mojo (so to speak) and went on to build up Franchised Food Company from the bottom up. After a chance deal that saw me acquire the iconic Mr Whippy brand, I got a taste for the fun treats market, and the rest, as they say, is history.
Here are a few tips for franchising your business, which I learned on my journey back from the brink of bankruptcy.
1. Is your business really successful?
When you start to think about franchising your business, you must be confident that you have a proven track record in your existing business and be sure that the current operation is not only sustainable but repeatable. Ask yourself some other key questions, like:
• Am I seeing a good profit in my business at present?
• Can other make similar profits if they merely copy what I do
• Do I have ongoing demand?
• Is my brand well known and respected?
If you can answer yes to all of these questions then you’re on the right track, and are likely to be running a positive business. If you can answer yes to only a few of these queries and can’t see these things falling into place over a reasonable timeframe, it’s unlikely you’re going to be able to replicate your business over various locations. When you have to rely on other people to be hands-on, you want to ensure that it all runs smoothly.
Take the time to do a proper review of your business and be honest with yourself. If it’s all there – great. If not, maybe step back and rethink what you can do to build your existing business before moving forward. You have to get it right for it to work again and again. Remember, success doesn’t happen overnight, so give it time.
2. Check your market
When we finally made the move to Australia, I was certain I could bring my pie business with me and reap the same success I had enjoyed elsewhere. My eagerness and my lack of knowledge of the Aussie culture made it all wrong and as a result I became victim to my own lack of research. I was under the impression that Australia and South Africa were very similar, but when I arrived I learnt that the only thing in common was the language (and even then they have their differences). This saw me take a hit, not only to my hip pocket, but also to my pride.
Lesson learned: always research your market thoroughly. Just because your business is working in your current location doesn’t mean it will work in other places with different demographics.
Before you look at franchising your business, you really need to understand the marketplace. Do you have the hard data that proves your idea can be replicated across the state, the country or even worldwide? Does your brand have strong defining factors that will let you stand out amongst your competitors? By offering something unique and sought after, the viability of expansion working is much higher… but don’t let this one element lull you into a false sense of security.
After purchasing Cold Rock Ice Creamery; which was in some need of tender loving care, one of the first things we did was review the processes in place. We wanted to find out how the model was for the franchisees and work out ways for us to improve it.
We have been able to develop strong systems, and offer each and every one of our franchisees (whether Cold Rock, Pretzel World, Nutshack) a well-supported environment, allowing them to focus on the growth of their individual store and not worry about the brand.
Processes are also so important and the ability to copy-cat ideas from business to business is fundamental to franchising. Realistically, a key reason people choose franchising over setting up their own business is that they are met with an easy to use system and a proven model.
If your processes are foolproof, and you believe a smart person with the right attributes and the right training could reproduce success with your brand, then why not look at expanding through franchising? If not, don’t embark on the franchising road.
Before you look at growing your business, ensure you have developed strong systems and processes that are clearly documented and can be shared from store to store, easily.
4. Pick your people
Australia is one of the most franchised countries in the world (per head of population), so it’s not surprising that we have a high level of awareness when it comes to franchising. However, that doesn’t mean that everyone understands the hard work and sacrifice that comes with starting a franchise business, the complexities it brings and the costs.
When it comes to selecting those people who are going out there to represent your brand and expand it into new markets on your behalf, you need to choose carefully. We receive numerous phone calls every day enquiring about franchises, but we only go forward with a small percentage of them. It’s all about finding the right people who are just as passionate about your brand as you are.
Screen potential franchisees. Ensure they understand the financial implications, the systems and processes, the rules and regulations as well as the ins and outs of your brand. Enthusiasm up front is not uncommon, but it’s unlikely to last the distance. You want to find and employ the people who will still be excited about the brand after they’ve been in it for the long haul.
So, instead of rushing into things, take a calm and measured approach. Check out your contenders and make sure you feel comfortable entrusting them with representation of your brand. At the end of the day, this is what will ensure a successful and prosperous relationship for you both.
5. Do you have what it takes?
Finally, you need to look at your own skills when thinking about franchising. Naturally you need to be good at operating your present business, but it’s important to note that running a franchise system takes a different set of skills and resources, which includes more than just a bigger team.
As well as being organised, focused, disciplined, diplomatic and patient, you need to be committed to self-development and growth. You must look at the bigger picture and have goals and aims of where you want to be in the long run, before you start the journey getting there.
You can’t sit back and expect your franchisees to run themselves while you count the profits. You must lead from the front, work hard and smart. Every ship that has a crew on board still needs a captain to steer the vessel in the right direction. The same goes for franchising. Having an active presence and constant communication with your franchisees enables you to keep your business’ competitive edge, with constant refinements of your products and services.
Commit to keeping an eye on competitors (both locally and internationally) and the market place and be on top of what is happening. Be dedicated, and have the desire to learn from what is going on in front of you; whether that encompasses visiting your stores, taking feedback and suggestions from your franchisees and customers or doing market research. It’s all valuable learning that can be put back in to continue developing your business.
And whilst expansion is a great thing, and something many businesses aim for, there really is nothing worse than doing it too quickly. So, be realistic with your expectations and ensure your giving the opportunity to those you believe have the right abilities to flourish your brand even further.
Stan Gordon is the CEO of Franchised Food Company, the umbrella company encompassing the brands Cold Rock Ice Creamery, Mr Whippy, Pretzel World and Nutshack.