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Wednesday, September 30, 2020
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How franchisors earn their keep, and their franchisee’s respect

There are a number of traditional reasons why the pundits such as myself spruik the virtues of franchising versus a stand-alone or independent business model. Top of the list has to be the fact that franchised businesses have a higher success rate versus the independent business.

For many, that fact would simply be enough in itself. In my view the three core drivers of this statistic stem from brand, purchasing power and the superior systems often associated with a well-developed franchise system.

Factors such as the brand, market position and marketing allow a single franchise business unit to project itself as larger than it actually is, capturing market share, sales and profitability accordingly.

Group purchasing power harnesses the power of many, delivering to the individual business savings that ultimately translate to margin and increased profitability. And or the ability to be more price competitive and in turn capture market share.

“There are some roles that franchisors never anticipated that they would need to be undertaking, as the cheerleader, the resilience coach and the lifestyle coach.”

Franchising is based on a model of doing or performing a business function, so it’s no surprise that often a franchised business has operational and business systems and processes far superior to a similar independent business unit.

New approaches in Covid-19

In 2020, all of these elements are as relevant as ever and well-developed, well-supported franchise systems will almost certainly exhibit all three.

However, the pandemic and the ensuing market and economic disruption has created a need and opportunity for good franchisors to work with and for their franchisees and systems in some entirely new ways.

There are numerous stories and examples of franchise systems being able to innovate and implement change in a very short and challenging period.

Innovations have ranged from developing and introducing complete online shopping platforms, to virtual store and business meetings with franchisees, through to product and delivery “pivots” to either fill a revenue hole or capitalise from new market opportunities.

For bricks and mortar-based businesses the April-May (and now August-September in Auckland) lockdown, created literally an untenable situation for many including franchisees where they had rental obligations with no income.

The Government’s complete inaction and flip-flopping has meant that franchisors have had to perform the role of tenancy advocate and negotiate with landlords, whether the franchisor held the head lease or not.

In many cases this has literally saved franchisees from going broke. I know many franchisors that have spent 100’s of hours both publicly and privately advocating for their franchisees.

And finally, there are some roles that franchisors never anticipated that they would need to be undertaking, as the cheerleader, the resilience coach and the lifestyle coach.

Many franchisors during lockdown were quick to perform business-focused check-ins with franchisees, but as the lockdown dragged on, with no business, this check-in role developed into one of resilience coach, keeping in contact with the franchisees and their families to ensure they did not feel isolated and alone.

I have heard of group Zoom chats, after hours virtual drinks and even a franchisor that sent care packs to franchisees with young children, realising that between home schooling and limited purchasing opportunities, something new was going to quieten the masses.

The well-worn franchising cliché, “be in business for yourself, not by yourself” has never rung more true.

Good franchisors have and are standing by with their franchisees in challenging times, often undertaking and performing functions well outside their contractual and traditional scope of works.

Nathan Bonney
Nathan Bonney
Director of Iridium Partners. He can be reached at nathan@iridium.net.nz or 0275-393-022

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