Clone The Profit
I want my business to become 10 times bigger but other people to develop it and I want them to pay me, instead me paying them! If those are your three wishes, the Goldfish of Franchising will fulfill them.
The market is really hungry! For all kinds of franchises. In less than two years one of the franchises for snacks has opened over 300 new sites, a franchiser for filling stations - 15. If you have a successful business, do not hesitate - the best idea ever appeared in the human head is to grow through franchising!
On your side you have the cases of numerous successful franchise systems that conquered the world - from media products to exotic restaurants and franchises for creative arrangement of Lego or Pest Control. Moreover, in Bulgaria there is great demand, but despite the steady growth of franchises, the offering is still insufficient. At the end of 2008, companies providing opportunities to start a franchise business, were 53, and at the end of 2009 the franchisers were 86.
By letting the franchise of your business to other entrepreneurs , you deal with the three largest deficits of the expansion - the lack of money, lack of time and lack of people: First – you won’t invest any of your money in new sites, which allows you to attract greater resources and minimize the risk. Second - through franchising you can open new sites, without waiting to regain the previous investments. And third, you will no longer need to control employees – franchisee will take care of that. And everyone knows that owners are better managers than mercenaries, because they invested their money and do not need extra motivation.
An interesting fact is that potential franchisees in Bulgaria start from the idea to start a business, and only then they choose which particular industry to focus on. They are attracted to the idea because they can immediately dispose with proven technology and marketing, which can save you years of “trial and error” with unknown end. This is an attractive opportunity for small and medium entrepreneurs who realize that the time of the Sole Proprietors permanently fades out and the big chains take control over the market.
So the market is waiting for you and now you are on the move! Is your business appropriate for franchising? Ask yourself the following 9 questions and see for yourself.
1. Do I have a viable business model?
2. Is it applicable to other cities and countries?
3. How big is the market and does it have long-term growth prospects?
4. Is there enough profit margin in this business?
5. Can the franchisee recover the initial investment for a relatively short period of time?
6. Do I have a pilot project to give the franchisees a working sample?
7. Do I have the potential to build a memorable brand?
8. Is my business model unique, what differs it from competitors and can it easily be copied by them?
9. Are the business operations are repeatable, and efficient and easy to master?
Almost every business can develop a franchise, but for various reasons franchises in food industry, retail sales and services are among the most successful. However, there is room for all – for instance, in England there is a franchise for a plumber! Banks, magazines, travel agencies, schools, etc. - they all develop successful franchises. Even starting a business as a franchise consultant can be sold as franchise. But it will be difficult or even impossible to sell a franchise for your own legal practice or skills as a cellist.
If you are in a position to offer a unique product, associated with your individual qualities, perhaps you should consider how to “McDonald’s-size” it - turn it into a technologically simple, cost effective and easily replicable product. For example, if you are the best dentist in Bulgaria, you can not clone, nor can you train others to be good as you. The options for your franchise could be the following two. The first is to find cheap nonstop aid clinics, in which even students could cope with the tasks. The second - to offer specialized services in which the result depends on the unique equipment, rather than capricious human factor. Fast, cheap and simple - offer franchises fries, not stuffed pheasants!
If you believe your business meets these conditions, you will have to deal with some things that are probably quite different from your previous occupations: You must prepare an operational manual which includes the entire methodology of the business. It is necessary to describe all everything to the smallest detail - from how to check if the new employees have learned the things you care about, to how many and what size should be the knives in the kitchen. This is the only way you can control the multiplication of your business.
You will need new people to lead trainings, to monitor franchisees and build your brand. Do you have adequate staff to manage the franchise system? Can assign assign new employees to those new positions, or will you choose to re-qualify some of your experienced people. Be careful because you can lose a good cook, to win a bad supervisor.
Naturally, you will need a serious franchise contract, which exhaustively describes all possible deviations from normal relationships with your franchisees. Good contract sets targets for the performance of the franchisee - with bonuses and penalties. For example, if the recipient of your franchise reaches a certain turnover, you can give them another franchise with a big discount. And if he fails, there is a possibility for another restaurant from your big chain to be opened next door.
Throughout this process it is possible to miss one of the most important things. Remember that people buy not only a business model but also a brand. Anyone can make sandwiches, but not everyone is McDonald's! Assume that you have a local business that you want to develop and become national, and why not international. This can happen only with a clear strategy for building and managing your brand. It is obligatory to refer to specialists. If you decide to handle alone, you will open a few books on the subject and you will find that among other things, your brand must have a marketing positioning and it’s messages must carry out the benefits and values of the brand, delivered with a certain tone of communication and it so that, they can build a comprehensive, long-lasting and attractive image of your product or service when sent to representatives through the channels of marketing communications. I told you - just call the consultant with appropriate experience or one of the best advertising agencies!
You will need to identify and profile of the potential franchisee. The most important thing is to decide whether he will develop a successful business or he will just be passive. Many of the largest franchisers require the franchisee to personally manage the business and to continuously monitor every detail and not be an investor who has appointed a manager in your subject. Set clear criteria for selecting franchisees and do not hesitate toreject the wrong. Why would you need rusty items in your chain?
And yet, the fact that a business can be franchised does not mean necessarily mean this needs to be done. If don’t have a clear model or you have structural problems in the system, you better wait. Ideally you should have a proven pilot project, three years of business experience and proven return of the investment. Franchising is multiplication, but multiply the successes, not your problems. If you act too hastily, there will be disappointed, or even bankrupt franchisees, unhappy customers and demotivated staff.
Finally, after you have done all this, after two years you will already have sold 20 franchises (although at the beginning 5-6 years franchises per year is the perfect tempo) and have built a national chain in your industry. You might be surprised, but your work just about to begin! Your franchisees should feel that you work for them. To you be devoted, they must regularly receive: the new products you develop; more options to the software that you provided; trainings to enhance their competence; they need ad support on national and regional level . In short - the feeling that you really strive to make them rich!
