This book came about for a number of reasons, but mostly because various people asked us for it! Those people fell into various categories, and each had a valid reason for their request. As a reader of this book you will likely fall into one of those categories, listed below, yourself.

Our potential readers were all looking for practical franchising advice from those with years of experience of how franchising works in practice, rather than a book containing only the theory and the dry legal stuff. Franchising is a people business, not a legal business, and understanding how the people work is what makes it a success.

WHO IS THIS BOOK FOR?

Potential franchisors

These are owners of businesses who want to expand their business by opening more branches, and for whom franchising is one of the options. They could of course just grow organically by opening more outlets and employing more managers themselves, but franchising may offer the opportunity to do so more quickly by using other people’s money and enthusiasm to open individual offices, shops, restaurants, salons, surgeries, units, van rounds, service centres, or whatever they call their outlets. Those who have no experience of franchising should start with Section 1 of this book, the Basics, in order to get an overview of what’s involved. They can move on to Section 2, the detail of Practical Franchise Management, later.

Existing branch network operators

Owners of existing branch networks may also be looking to add more branches by franchising, to run alongside their existing company-owned outlets, so they could fall into the classification above. They could also be looking to convert all or some of their existing outlets to franchised outlets, possibly even by converting existing managers to franchisees, in order to harness the power of franchising to transform their performance. They too should start with the Basics chapters and move on to Practical Franchise Management later.

Practising franchisors and their management and support teams

Many people working in franchised organisations have evolved into their current positions, as indeed have their companies, without necessarily understanding how things happened as they did, or why they happen as they do. Other than out of interest, it’s probably too late for them to read the Basics chapters, but in Practical Franchise Management they will find plenty of advice to help them in their current roles – and they may be particularly interested in finding out what their franchisees are thinking via a franchisee satisfaction survey. (See Chapter 20, page 193.) They should simply dip into the book and pick the chapters most relevant at the time.

Diploma in Franchise Management candidates

Most of these will be franchisors in the early stages of development, or their managers in established networks, but they are going through a programme at the Franchise Training Centre (see Appendices E and F) which exposes them to all aspects of franchise management including those disciplines with which they are not (yet) involved. Franchise sales managers need to learn about monitoring franchisee performance; franchisee administration support personnel need to learn about motivating franchisees; field support staff need to know how to assess a franchisee’s financial performance, and so on. Everyone needs to understand the franchisor–franchisee relationship. These candidates can also dip in as and where they feel the need.

Mature franchisors

As a franchised network approaches maturity or capacity in its domestic market it needs to consider whether to grow the business or to get out. It can only be one or the other because simply doing nothing will be the start of a downward spiral. Readers in this category can go straight to Section 3, Advanced Franchising, where they can consider the options of taking their business overseas, starting a new network by importing a system from overseas, buying an existing franchised network or simply selling up.

Potential international franchisors

Some businesses just know they want to go international, whether or not they franchise at home. International development using the right franchising model may be the way to do it. If they have no previous experience of franchising, the Basics chapters will be useful first, then cut to the chase and go to Advanced Franchising.

Franchisees and potential franchisees

OK, we’re fibbing. No franchisees or potential franchisees have ever asked us for a book, but they would all benefit from reading this one to find out how good franchisors do things properly. They can then compare these methods with those of the franchise they are thinking of joining, or the one with which they may already be involved. If we can stop one potential franchisee from joining an ill-prepared system; or help one franchisee to get his franchisor to improve what he does, then all the effort that has gone into this project will have been worth it.

WHAT IS FRANCHISING?

Before going any further, and to make sure we’re all on the same page (which we must be if you’re reading this) let’s define what we mean by franchising in the context of this book.

Business format franchising

We are talking about ‘business format franchising’ which, put simply, is ‘a business relationship where one party allows another to operate clones of a proven business system in return for initial and ongoing fees’. We are not talking about rail franchises or film franchises, or any other variations on the theme.

Why have two words been highlighted in that definition? Because they underpin the whole franchisor–franchisee relationship, of which you will read much more later.

The franchisee is allowed by the franchisor to operate a branch of the franchisor’s business, using the latter’s name and business systems. If the franchisee stops using the name and system properly they will no longer be allowed to use it and they will lose their business and whatever they have invested in it.

The franchisor should only be offering a system, and any addition to the system, which has been tested, and proven to be capable of duplication, over a period of time, at a number of outlets, with a number of people having been trained how to do it. They should not be offering to franchise something they think is just a good idea.

Get everyone understanding those simple points and you have the basis for a long and happy career in franchising.

Growth franchising

The majority of businesses considering franchising do so because they want to grow, so these can be called growth franchises. Franchisees provide the financial and human resources to open new branches so the total network ought to grow more quickly than it could organically. Within this category there are two types of business:

• established businesses which have been going for at least a couple of years, sometimes decades, which are looking to add new branches, either domestically or internationally;
• brand new businesses, sometimes little more than a good idea, which want eventually to grow by franchising once they are established. As will become apparent from later chapters, these businesses need to go through a slightly longer development process to become franchisors.

Conversion franchising

There are also two types of conversion franchises:

• a business which already has a number of outlets (it could be ten, it could be a thousand or more) may see advantages in converting some or all of them to franchised, rather than company-managed, units. The costs and hassle of day-to-day operation are transferred to the franchisee, who may or may not be the previous manager. The latter is more motivated to operate profitably because it is their own business;
• a business adds further outlets to its network by converting existing, competing, businesses to operate under its brand. Many small business owners are good unit operators, but they lack the skills to develop their marketing, research and development, and so on. For them, joining a franchise brings those added benefits. For the franchisor, it means acquiring a franchisee and a site, and taking out a competitor in that local market, all in one go.

Neither type of conversion is as easy to achieve as it may sound and it is essential to get experienced advice from those who have been involved in such projects before.

WHAT CAN BE FRANCHISED?

Just about any business which can operate as a branch network and which meets the criteria outlined in the next chapter can be franchised, and both franchisors and franchisees come in all shapes and sizes.

Job franchises

These are sometimes known as man-and-a-van franchises because they often involve someone going round providing a service or products to either businesses or consumers, but they also include white-collar franchises where an individual provides some sort of professional service, often working from their own home, particularly if customers do not need to visit them. The franchisee may be the only person involved in his business, many of the customers may be provided by the franchisor, and sometimes the franchisor will handle most of the invoicing and other administration.

Management franchises

The end product or service could be the same as that provided under job franchises, or it could involve the need to operate from specific retail or other business premises, but here the franchisee is managing a team of people rather than doing everything themselves. Many job franchises evolve into management franchises as they become established and early franchisees take on multiple territories, or simply grow their businesses so that they need to employ others. Different skills are required of the franchisee and it is important that franchisors realise what these are when recruiting their franchisees.

Investment franchises

Some projects which require large capital investment, such as hotels or larger restaurants, may attract franchisees who simply put up the money and engage either a manager, or indeed the franchisor, to operate the business and produce a return on their investment and capital gain on resale.

Whichever category you fit into, we hope you will find the book useful. If you have any comments, or would like to know more about something specific, please send an e-mail to info@howarthfranchising.com