Advisor Profiles

by Franchize Consultants

last updated 08/12/2019

Which Comes First?

by Franchize Consultants

last updated 08/12/2019

Callum Floyd of Franchize Consultants cautions new franchisors not to put the cart before the horse

There’s not just one form of franchising – there are countless variations. Every franchise structure is unique in some way. Furthermore, franchising is not suited to all businesses, or all business owners; projected costs and revenues may not be sufficient for all parties to earn a reasonable return. 

It’s no surprise, therefore, that there are various stages anyone considering franchising their business needs to go through to achieve the right result, and these need to be tackled in the right order. Dedicated planning, assessment and preparation are needed to help structure the franchise system properly; assess likely returns to the franchisor and franchisees; establish a proper franchising infrastructure; and train the franchisor in how to be a franchisor.

Sadly, some would-be franchisors or licensors skip these steps and think that creating a Franchise Agreement is the starting point – and some advisors are happy to go along with that. This is putting the cart before the horse, and significantly increases the chances that the expectations of both the new franchisor and their associated franchisees will not be met. Given the potential cost of failure (in terms not just of money but of time, focus and potential litigation) it’s important that potential franchisors use experienced specialists to evaluate their business in a highly methodical manner.

More complex than you think

A structured franchising assessment is always considerably more involved than the business owners imagined. Numerous options need to be addressed, and small differences in key areas can make or break potential franchisee and franchisor returns, and therefore future business value. Here are three ways our own organisation, Franchize Consultants, can help:

1. Determine, assess and develop the optimal franchising or alternative multi-site strategy for your particular business.

2. Undertake detailed unit and network-level business and financial modelling.

3. Develop and formalise multi-site structure (eg. operating manuals, recruitment systems, field visit frameworks, etc) for new and existing businesses.

The ideal outcome of such a feasibility study, of course, is for franchising to look highly appropriate, and there to be the prospect of solid and sustainable returns for franchisees and franchisor alike. If the study does not support such a conclusion, we’ll tell the client upfront, so they can put their time and resources into other opportunities instead. But if it does, we’ll then work to put in place a properly considered structure, with workable territories and appropriate franchise fees, before briefing a lawyer to create a franchise agreement.

Franchize Consultants have worked with many companies large and small over the last 30 years, including some of New Zealand’s best-known franchise brands and have proven the value of using a specialist franchise consultant time and time again. Franchising is a complex process: that’s why we say ‘Do it once, do it right’ – and do it in the right order, too.   

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