The Necessity to Revamp Franchise Operations and Systems
When you grant a franchise, one of the most important takeways for the new franchisee is an operating system for the franchise. Every successful corporate franchise has a well defined operating system. In order for a company to grow and continue that success, the operating system must be followed.
But, once the original operating system is established, it must be refined and tweaked as changes take place in its industry and within the company. An ongoing challenge for every business, not only franchise companies, is how to improve their operating systems in order to better manage results.
To do this, a company must take a serious look at the current systems, analyze them and then proceed with determining the next steps towards improvement. All companies should have this as part of their ongoing plan, although many do not take the time for this important part of their operation.
A recommended process is as follows:
- Analyze and identify the gaps in the current operating systems
- Prioritize which gaps need immediate attention
- Identify strategies and tactics to close the gaps
- Establish follow-up processes to ensure progress is being made on closing the gaps
- Train and develop your people with the necessary skills, knowledge & abilities to make their behaviors more effective & sustain performance over time.
Areas in the company that need to be analyzed in order to begin the process are:
- How customer-centric is your business?
- How effective are your leaders?
- How effective is your strategic, operations & financial planning at the corporate, corporate-franchisee and the franchisee level?
- How does your process of “selling” and “granting” franchisees stand-up to “best practices” developed by other successful franchise companies?
- What is the current state of your franchisor/franchisee relationships?
- What is the role, function & purpose of your field consultants? What processes do they use with the franchisees?
- How effective are your pre-opening and operations manuals?
- How effective are your new franchisee training programs and your on-going training programs?
Once the company has identified the above areas, the real work begins. It is possible to tackle some of these areas and issues with internal staff. However, the more difficult issues and areas where improvement is needed may well require outside consulting, guidance and assistance. One of the most challenging parts of this process is to be honest as you analyze and identify the gaps. It should not be perceived as a negative that there are gaps, but should be looked upon as opportunities to improve your operating systems in order to best manage the results in your franchise system.
To learn more about this topic and others, go to Management 2000’s website at www.mgmt2000.com to see a complete list of franchise management services and seminars offered on many franchise related topics.
Breaking Down Royalty Fees
When people think of the costs of opening a franchise they typically just think about the franchise fee. That makes sense, seeing as the franchise fee is typically a substantial cost, ranging from a few thousand to a few hundred thousand dollars. But, this isn't the only payment a franchisee needs to make to the franchisor. Once operations start a franchisee typically needs to pay some form of ongoing royalties to the franchisor.
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Franchise Disclosure Document for Dummies – Part 4
One key aspect of Item 12 is establishing how franchisees’ territories will be defined. This may be by zip code, population, population with certain demographics, or geographic or political markers (i.e. streets or county lines). For franchises with population-based territories, a franchisee in a busy downtown urban area may have a territory of only a few blocks, while a rural franchisee’s territory could reach for miles.