Franchisor Training and Support
Virtually every franchise system offers a training program to new franchisees. This is vital because there’s a good chance that the franchisee will be new to the industry. Only about a quarter of the franchise systems require previous experience. These are predominantly in businesses that require a very specialized knowledge or skill, for example, optical products and services, accounting and tax services, real estate services and some restaurant systems. In any case, getting trained in the particulars of the franchisor’s system is essential.
The franchise agreement should spell out all initial and continuing training obligations of the franchisor in detail. You should also query the franchisor about the following:
- Is previous or related experience necessary to operate the franchise?
- Is training optional, recommended, or mandatory?
- What is the nature and extent of the training?
- What are the costs, and who is responsible for paying? Do these costs include classroom training, lodging, meals, and transportation?
- Where are the training facilities?
- Is the training of employees included in any training cost charge?
- Will there be a continuing training program
- Will there be additionally accessible training materials like videos or webinars?
- Is start-up assistance provided for pre-opening and for a time after opening?
In our survey of franchisees, all said they had attended a training program of one kind or another. Training ranges in time from two to three days all the way up to eight weeks or more. The longer stints are associated with those businesses that require a specialized skill or technical training or one of the very standardized fast-food operations. The average training time is one to two weeks. The trend is to extend the training period across the board. Apparently, franchisors have listened to their franchisees who complained of too short a training period.
For example, Larry Gambino, a Priority Management franchise (management skills program) was trained over eight years ago at company headquarters in Vancouver, BC. He recalls that it was adequate then, but says the training program is now much improved. He also benefits from the new on-going training, which is led by regional coaches. They meet with franchisees once a month to help keep them on track and maintain a focus on building the business.
FranchiseHelp analysts recently spoke to two franchisees, both in the auto aftermarket business. Their comments on the two respective training programs illustrate potential problem areas. One franchisee said, "I've been in the automotive business for thirty years, so I knew what I was getting into. But the training is pretty good; they've changed it to be more office-oriented than shop-oriented. An owner doesn't have to know how to change brake pads. If the owner can't do it, he will have to find someone who can."
The other franchisee had several complaints about his training program. He said, "The training is not as thorough as I would have liked it to be. They don't provide us with the details of the business, such as inventory. Their aim is to bring in business people, not transmission people, and then they want us to sell parts, but don't tell us how to organize that part of the business."
The majority of franchisors include the cost of training for the purchaser, and usually one or two employees in the initial fee. There's less consensus regarding room, board and transportation, but, in general, franchisees pay these expenses out of their own pockets.
The classroom training sessions are usually held at the corporate headquarters. In polling franchisees, most assert that they could have used more training in administration, especially in the computer systems. In addition to the classroom sessions, many franchisees also get on-the-job training held at company-owned units or other franchisee units. This experience may be followed by on-site training and support, with most systems sending one or two company representatives to help franchisees through the early stages of their openings.
Jeff Grayson, a Pizzeria Uno franchisee, had lots of prior experience in the restaurant business, but even so, Grayson says, "I trained up in Framingham, Massachusetts, for eight weeks, and it was well worth it. You're responsible for 50-100 employees. The first restaurant opening is very tough, but subsequent stores are easier because then you can mix in some experienced employees with the new ones."
Buying into a new franchise system is likely to be a totally different experence. Ken Wisotzky was the first My Favorite Muffin (retail muffins) franchisee, with only one company-owned store opened. There was no formal training program set up, so Ken got his training by working at the company store for a little over a week. The major problem, according to Wisotzky, was "that it seemed like a very easy operation," but he didn't realize then that the location had a relatively low-volume business. When he opened his own business, he found that he had more than double the number of customers. This meant he immediately needed additional employees and he also had to change some operational techniques to compensate for the greater volume of business.
On the positive end, the training program can pay some unexpected dividends. Take the experience of George Colgate, a VR Business Brokers (sales of small businesses) franchisee. Colgate trained for two weeks in the training center in Dallas. The first week he learned about business brokerage, and the second week concentrated on office management. As part of the training, new franchisees are put out on the street and have to make a cold call to see how it feels. This experience actually got George's business off to a great start. During training, he managed to list a business and to sell a business.
How to Read the Franchise Disclosure Document and Red Flags to Look For
This webinar is designed to help you learn how to choose a franchise wisely. Your selection process should consist of thorough research, analysis, and focused investigation. Understanding how to properly read and analyze the franchisor's required documentation, the Franchise Disclosure Document (FDD), is one of the most important activities you will perform in your franchise selection process.
Get Your Franchise Audits and FDDs Done Early for Renewal Season
Renewal season means different things for different people. Here are a few important tips to keep in mind:
Advanced Franchise Accounting Terminology
Fair warning: If learning about things like GAAP, revenue recognition policies, and the intricacies of cost vs. expenses makes your eyelids droop, feel free to skip over to the next article.