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by Simon Lord,
last updated 30/07/2009

February 2009 - Reality television gives a false impression of franchising to intending franchisees and franchisors

A recent series on TVOne called The Family Firm featured families trying to win a franchise for half price by working in an existing outlet for two weeks. Watching the series was sometimes like watching a slow-motion car crash as people struggled to come to grips with the demands of running a business. Their goals depended purely on how much they could turn over and the critical issue of cost management was barely touched on. The result gave an unfortunately flawed impression as to what franchising is about.

People selected for the series appeared not to know what business they would be offered the chance to run and buy until training commenced. The worst example of this was the episode where three women scared of dogs were presented with a Bark Busters franchise to run for a fortnight. In reality - as opposed to reality TV - I suspect few of the contestants would ever have considered the businesses they encountered and, if they had, they probably wouldn't have made it past the first interview.

Any ethical franchisor knows that the process of appointing a new franchisee is a long and careful process that involves a great deal of questioning on both sides. A few years ago, an Australian study suggested that the cost of appointing the wrong franchisee is typically above $200,000. Experienced franchisors would be unlikely to waste considerable time and resources on applicants who showed little enthusiasm for the franchise and the type of work required.

Another flaw was the minimal amount of training that the contestants were given. In most cases, this appeared to be only one day and concentrated on the more visible aspects of the role. But new franchisees need much more than operational training. They need sales training, goal setting sessions and computer training. In many cases, they need training in equipment maintenance, purchasing, cost control, staff recruitment and management. They need to understand the basics of financial management, how to calculate break-even, work out GST and handle EFTPOS, tills and banking. This is why most franchise training programmes take several weeks and involve a mixture of classroom, pre-opening practical training and post-opening support.

There's also the little matter of having a manual set that documents every aspect of the business. Good manuals represent the accumulated wisdom of the franchisor and previous franchisees, and are a constantly available (and constantly updated) resource for franchisees. The programme didn't even mention their existence. To ignore the existence of thorough training and manuals - even in an entertainment show - does a disservice to both intending franchisees and franchisors.

Instead of presenting a franchise as a properly-developed business system for which people are carefully selected and trained, The Family Firm preferred to give the impression that anyone could succeed in business if they worked hard and pulled together as a team. Teamwork certainly is a factor, but it's far from the only one - and even here, the requirements of good television overtook reality.

In one episode, three girls and their mother were set the challenge of running a Sierra Coffee franchise for two weeks. They demonstrated real spirit by marketing heavily to all their friends and contacts to encourage them to come into the café, spend money and help them reach their sales target. They were told off for cheating. ‘But in real life, if we bought our own business, this is exactly what we'd be doing,' they argued - and they were right. As reality TV it might have been wrong, but as an exercise in running a small business they were spot-on. It is that flair, that determination to exploit every possible advantage for the benefit of the business, that marks out the successful franchisee from the also-ran. Not surprisingly, the family were offered the chance to buy their own franchise at the end of the programme. They did so, and several years later they are successfully running a Sierra Coffee franchise in Taupo.

However, there was one area in which the series did do a very good job, and that was in demonstrating the pressures placed on people working together in their own business for the first time. It's a topic that Greg Nathan has written about in some detail. This was perhaps at its strongest in the first programme, where a mother and son team were given a Jim's Mowing franchise to operate. There were all sorts of tensions within the family - two young children and another on the way, a father who had run an independent lawnmowing business and wasn't committed to the idea of the franchise, a son who was trying to prove something to his mother and a mother who was physically stretched trying to do the job. The pressure was enormous and regularly boiled over into shouting matches. It made for good TV - but bad business.

What the programme did successfully demonstrate is that running a successful business - even a franchise - is hard work. The franchisor can't do it all for you and success is down to your own efforts. What was even clearer was that, unless you have the wholehearted support of your family, it's going to be a whole lot harder. That is something which those contemplating buying a franchise need to remember - and those selling franchises are duty-bound to investigate.



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