It’s been said that when it comes to expansion, you can either get a consultant “or make a mess of it”. Brian Duckett looks at the the consultant’s role
When I speak at franchising events around the world I am often asked “Why should my company use a franchise consultant?” There isn’t a standard answer but there’s always an answer once I know what stage of franchise development their company has reached.
Let’s start with a business that is considering franchising. The pre-requisite is that they have developed a successful business system and that others would benefit from operating that system.
1. However successful their business is, a new franchisor is getting into a new business. Whilst remaining in their current business sector they are also moving into the franchising business. That’s a whole world away from what they are currently doing. They need to learn the science, art and skills of franchising and a good consulting firm will transfer those skills.
2. A business may currently be profitable but will it be profitable when it converts to operating through franchisees? Franchise consultants will do the financial modelling that establishes the answer, using their experience of the costs and returns of creating franchising structures then marketing the franchise and recruiting franchisees.
3. If the future looks bright and the client decides to proceed, the consultant will manage the processes of franchisee marketing and recruitment. A bespoke recruitment website will be created and a media plan developed to make optimum use of portals, magazines and exhibitions.
4. An automated recruitment process will be installed to enable the consultant to track visits to the website and to manage subsequent enquiries, including telephone interviews, so that the franchisor only has to meet fully qualified prospects.
5. While all that is going on there will be parallel development of the necessary documentation, specifically the operations manual and the franchise agreement. The consultant will either guide the franchisor through the process of producing the manual or they will do it for them. They will also liaise with the chosen franchise lawyer to draft the agreement, speeding up the process and reducing the cost through previous experience.
6. The franchisor business will also need several other services which are available within the franchising community, not least funding from the various banks and introductions for membership of the national franchise association. The consultant’s long experience and close relationships will ensure that the client ends up in good hands.
7. Should there be insufficient numbers of people in the franchisor’s management team to provide the necessary training and support services to its franchisees, or those that are there are insufficiently skilled, the consultant will recruit, train or outsource as required.
All of the above will get the show on the road much more efficiently and effectively than a new franchisor could achieve on their own. Indeed, as Brian Smart, former director-general of the British Franchise Association used to say “You have to acquire franchising skills for your business and you have but four choices. You can buy it in from qualified franchise consultants; you can employ someone who has been through the process before; you can have someone from your business trained in franchising; or you can make a mess of it”.
However it’s not just new franchisors which can benefit from using an established and experienced consultancy firm. Franchisors cannot allow their business to coast; like cars, businesses can only coast downhill. If a network is nearing capacity or complacency in its domestic market it needs to consider its options. The right consultant can often provide a sounding board to an emerging franchisor when considering new strategic developments or to a mature franchisor which may be planning an eventual exit. Once a decision has been taken, a good consultancy firm can help in the following ways.
8. The franchisor may be considering building a stable of franchised networks, i.e. becoming a multi-brand franchisor. To do this they need to start another network from scratch, acquire an existing network within their market or combine the two by acquiring the master franchise from an overseas franchisor. Consultants with their own international networks will have access to proven and ambitious systems. They can make the appropriate introductions and assist with negotiations.
9. An alternative to growing in their home market is for a franchisor themselves to go international by exporting their successful systems. Once again, an established consulting firm can both structure the international package then deal with their associates in foreign markets to refine the legal and operational aspects then find local master or unit franchisees.
10. If an exit is the chosen strategy the consultant can advise on the various options, help to prepare the business for sale and make introductions to potential buyers, like those mentioned above, or corporate finance experts.
To summarise, an experienced and well-connected franchise consulting firm, with its own team of experts and a wider group of associates around the world will save franchisors money rather than cost them money. Every step of the franchising journey and every hurdle that might be presented along the way will have been experienced by someone somewhere before. All that experience and knowledge will be available from day one, provided the right consulting firm is chosen in the first place.
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