Like a ship at sea, a business needs to change in a long, sweeping manner. Short, harsh changes in direction will create havoc. And, like a ship at sea, there needs to be a definite destination, a well thought out plan to get there in a certain time frame and with specific resources.
But, what happens when seas are rough, or when a storm is approaching, or when an engine shuts down? It’s then the captain’s responsibility to crew and passengers, to make necessary changes to ensure objectives are met. Then, when the ship is safely docked, management reviews the events that took place, and takes necessary action to make sure the same problems don’t reoccur. Last, management explores ways to improve performance for long-term benefit, and then develops and executes the strategic and tactical strategy to accomplish objectives at all required intervals, short, mid and long-term.
Change requires a great deal of thought and planning. As does operating a successful business. Right now, several of my franchise clients are being exposed to a lot of different proven methods and processes, that on the surface, appears to be “too much change.” However, system-wide there are multiple areas of weakness. Some are common denominators. Some are different from one store to another. Some have caused drastic reductions in sales. Most are the definitive reason for poor profit margins. So, where do we start to address things that need to be changed? Where should we start? And, at what pace or frequency?
Unfortunately, the economic woes of the past years have compounded the situation. It has caused the deficiencies, usually hidden by acceptable sales levels, to stand out like splitting seams on one’s pants… obvious to the people observing, but not so obvious to the person wearing the pants. Until, that person is instructed to look in the mirror! Using this same analogy, in many instances it’s necessary, and vital for survival, that we look at our entire wardrobe…
The ultimate key is honesty in one’s self. I believe we all know our own limitations and shortcomings. It’s what we do to improve, to change, that makes us better. It’s no different in business. Change what you know needs to be changed. Prioritize changes that make the most immediate impact. Grow into the changes that aren’t urgent. But, do it in the time frame where challenges present themselves, as survival may be dependent upon the same.
In the end, change must be practical, and implemented with common sense. I know I need to lose weight, which is an understatement. So, I need to change my diet, change my activity level, etc. That’s practical common sense, right? But, should I just stop eating!
* This post was originally published on this site October 2010. I believe it is very much appropriate today.
Many, including myself, refer to franchising as an industry… even though we know it’s really not an industry. A business model is probably one of the better definitions, but what does that really mean?
When referring to a franchise, even many within franchising choose from a variety of terms as a point of reference – franchise organization, franchise system, franchise company.
Of course, there’s also the varying terms relating to the franchise relationship – franchisee, franchise partner and not to mention the slang, zee. And to the other side of the relationship – franchisor, head office, corporate office, parent company… and yes, zor.
And what’s the difference between franchisor and franchiser?
And, franchise locations are independently owned and operated. Yet, the franchise relationship is interdependent… or at least it should be interdependent and not dependent or independent upon… Well, you get it, right?
Now let’s look at the people serving the franchise community. Yep, franchise community is another reference for the franchise list above but let’s move on. Franchise consultants, do they sell or consult? How about franchise brokers, sales agents, sales representatives, and again, franchise consultants. Whew!
Moving down the chain there are franchise suppliers, service providers and vendors… What’s the difference? Preferred or approved? Is there really a difference?
Of course, there are references to segments within franchising such as master franchising and sub-franchising… Which one is correct? And, isn’t the sub-franchisor actually the master franchisee? I guess it all depends on which end of the relationship one is on.
How about now – confused yet?
Franchise services means what, and providing services to who? Franchisee to end-user? Franchisor to franchisee? Franchise service provider to franchisor and/or franchisee?
Same can be said of franchise marketing, right? Does marketing in a B2B or B2C scenario but within a franchise environment mean that it’s franchise marketing? Or, is franchise marketing actually marketing to franchise candidates?
Speaking about franchise candidates, when is a candidate actually a candidate and not a lead or just an interested party? Does this fall under franchise sales or franchise development? And who’s in charge – the VP of Franchise Sales, VP of Franchise Development, or VP of Franchising?
And then there’s reference to franchise professionals. Is a franchisee a franchise professional? How about if the franchisee is a multi-unit franchisee with 25 locations? How about a franchise attorney? Franchise service provider?
If a franchise executive is a franchise professional, at what level of management does one begin to be considered a franchise professional? How about within the franchise organization itself? Secretary, if their support is purely administrative as opposed to an admin that actually communicates with franchisees?
Oh, and should the CEO of a franchise company be considered a franchisor as we often refer to them as such at franchise events?
Ironic how franchising is the replicating of a system with focus on consistency in image, appearance, product and service from one location to another. Yet, there’s little consistency in the terminology used to define many aspects of franchising.
Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…
Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.
The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.
They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.
Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.
However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.
As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.
Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.
While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.
It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.
So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.