Franchising and how to succeed as a franchisee in 10 easy steps is an important topic. Generally speaking, not all franchisees succeed. Hence this topic becomes vital for the people who want to become a franchisee and also for those who already are a franchisee. It is a fact that most of the franchise opportunities in India are FOFO (Franchisee Owned Franchisee Operated). As the name suggests entire responsibility to manage and operate the franchise business is on the franchisee. Therefore a franchisee should be aware of the steps required to become successful when taking a franchise in India.
In franchising, becoming a successful franchisee is a three-stage process. The first stage is to select the right franchise, which we have already discussed in a blog. You can read it here. Hence, it is the remaining two franchising stages, which we are going to understand In this blog. These two stages are
- The pre-opening phase of franchising.
- Post opening phase of franchising.
In franchising, there are many activities and initiatives that a franchisee needs to take to become successful. It should be noted that the list of activities (for a franchisee) shared in this blog is not comprehensive. But bare minimum essential points which a franchisee should execute.
Let us begin with the first stage in this blog.
Pre-Opening Phase of Franchising
The pre-opening phase of franchising is a critical phase for a franchisee because it is during this phase that a franchisee does all its capital expenditure and lays the foundation of the franchise business.
This phase of franchising is critical for a franchisee because of the following three reasons.
- If a franchisee does well within this phase of franchising, it can save money, and we know that every penny saved is the penny earned.
- If a franchisee can get its act together within this period, it can shorten this franchising phase and start earning early.
- Without a doubt, an impactful inauguration of franchise business creates positive buzz around it.
In this franchising phase, all franchisees’ activities and initiatives should strive to achieve the above mentioned three points.
By taking the following steps, a franchisee can attain the desired goals.
Preparing a Pre-Opening Checklist Before Franchising Starts
The first thing done while planning pre-opening activities is to make a checklist. The checklist is about, who will do what and by when, which includes both franchisee and franchisor. This list should be prepared jointly by both franchisees and franchisors. Depending upon the systems and processes of the franchisor, there will be some work that needs to be done by a franchisee. In addition to it, there will be some work which needs to be done by the franchisor too.
Every franchisor would have a different approach towards the pre-opening phase of franchising. In one case, a franchisor would be doing all the activities by themselves. The franchisee’s role would be limited to paying the amount. While in another case, some franchisors would provide the design and other information to the franchisee. And franchisee takes care of the entire execution of the pre-opening phase of franchising. Keeping in mind the existence of a vast difference in approach, a franchisee should have complete clarity on the actions that it needs to take and what it should expect from the franchisor.
First, the franchisor and the franchisee decide on ‘who does what.’ Then the date by which each task will get complete needs to be frozen. The obvious thing which requires attention is that no time for task completion could exceed the inauguration day. The only exception is when a soft opening gets planned before the scheduled grand opening.
The franchise should also start the process of getting the various approvals and licenses at earliest. As any delay in obtaining any required government approval or consent could delay the inauguration of the franchising business.
Close Follow-Up On The Execution
The franchisee needs to seek clarity from the franchisor on who does what work. If the interior work needs to be done by the franchisee, in that case a suitable contractor has to be identified. Then get the expected date of work completion from the contractor and landmarks like what work would be accomplished within a week or fortnight or in a month and then track the progress.
If the work progresses as per the schedule, then there is nothing to worry about it. But if work progress is behind schedule, then further micromanagement is required so that the delays get controlled in the initial stage itself. The undesired consequence of a delay in completion is that it could push the budget further up. Whatever may be the case, a franchisee should keep the franchisor into the loop so that there is no confusion about the status of work. If due to delay, the launch needs a postponement by a few days, then that too needs to be conveyed.
If the franchisor has to do the interior work, the franchisee should keep itself posted with regular updates. A franchisee should visit the site regularly to verify information shared by the franchisor. In case of discrepancy between the status shared by the franchisor and what franchisee finds at the worksite, then that difference should immediately be brought to the notice of the franchisor. This discrepancy between the status shared, and reality could be because of two reasons. The first reason, the contractor hired by the franchisor may have provided the wrong information and franchisor might not have verified it before sharing with the franchisee. The second reason could be that franchisor itself provided incorrect information.
Build Online Presence Before Franchising Starts
Building the online presence of the franchise business is significant in today’s time. Social media is the fastest and cost-effective way to reach out to customers. An online presence not only helps during the inauguration period but also helps immensely at a later stage. For example, online presence comes very handy when a franchisee has to inform its customers about the upcoming sale or new product launch or exciting offers on avail. Whatever the situation, an active online presence helps in reaching out to customers immediately in a cost-effective manner.
Pre-launch Marketing Activities For Impactful Opening When Franchising Starts
Pre-launch marketing and publicity in a very critical cog in the wheel of pre-launch preparations. Marketing activities create buzz and awareness before the inauguration of the franchise business.
In today’s time, marketing activities have become much focused and thus give better results. Due to social media, it is easy to target the customer base as there are means and ways to do it. If, the franchisor manages ‘before launch’, marketing activities, then they will either have a team or an agency with them. But what if, a franchisee needs to execute the marketing activities? In that scenario, a franchisee can manage itself if it has the capability or hires a marketing agency depending on its budget.
If a franchisee and franchisor can create a good buzz around the franchise business, and product matches the expectation of the people. Then the positive word of mouth could take franchise sales to great heights in the initial months itself.
A successful inauguration matters a lot for the auspicious beginning, as it creates a positive impact around that particular franchise business. A successful opening ensures more footfalls in the initial days and months itself. Higher footfalls mean better cash flow, which results in a shortening of the break-even period and reduces the period for generating profit.
Post Opening Phase Of Franchising
As the name suggests, this is the phase of franchising, after a franchise business has started the operations
Follow The Process After Franchising Starts
Every franchisor has specific sets of laid down system and procedures which a franchisee needs to follow. There are good reasons for laying them down. To begin with, the franchisor, from its own experience, has developed the most effective way to do things. Hence there is no need for a franchisee to experiment. From the franchisor perspective, this helps in the standardization of systems and processes across the franchise business.
There is a possibility that while running a franchise business, a franchisee may feel very strongly about a specific issue. And it may feel the need to move away from that particular part of the laid down process. In such a scenario, it is better to first take the franchisor into the confidence by directly speaking with them over the concerned issue. If the franchisor gives the consent, then only a franchisee should go beyond the laid-down process. Where as, if a franchisor remains unconvinced then the franchisee should drop the matter. Under no circumstance a franchisee should go behind the back of the franchisor. Also, it should not do the things which have not been approved by the franchisor.
If a franchisee decides to act beyond the laid-down system and processes without the franchisor’s approval, such an act could result in loss of trust. And also could create bad blood between franchisee and franchisor. In case a franchisor feels that franchisee has breached the agreement by going against the laid down system and processes, it can even terminate the contract. Termination of the agreement is dire retribution; thus, why take such a chance.
Act As The Leader Of Establishment After Franchising Starts
A franchisee is the leader of its business. As a result a franchisee is expected to lead from the front especially if the franchise model is FOFO (franchisee-owned franchisee operated) and COFO (Company Owned Franchisee Operated). Unlike in FOCO (Franchise Owned Company Owned) model, where the franchisor manages the operations and a franchisee’s involvement in the day to day operations is not required. In COFO and FOFO models, it is for the franchisee to keep the team motivated and ensure the desired result. Also, a franchisee has to ensure that the franchise business runs as per the franchisor’s guidelines. Simultaneously a franchisee needs to ensure that customers enjoy the best possible service.
If a franchisee is not leading the show, things will start going haywire not just concerning the performance but also on the customer experience front. Such a scenario does not have a favorable outcome in the franchising business.
Many times, due to the indifferent attitude of a franchisee, the franchise business’s performance suffers so much that there is no other option but to close it down. People with this apathetic attitude are those who think that their job is over once they have invested the money. Now business should happen automatically without putting any effort.
Sufficient Funds To Manage Business After Franchising Starts
Sometimes a situation may arise where there could be a requirement of additional funds in the franchising business. The requirement of additional funds may come in instalments or suddenly in one go. Some of the situations that could result in additional fund requirement be like
- Extension of the Break-even period by a few more months than the budgeted period.
- Franchisor has launched a new product range, so its training, stock, launch & other expenses require additional funds.
- If the property is on rent and the landlord asks for the additional deposit to renew the lease term.
Apart from the reasons mentioned above, there could be more reasons for a franchisee to arrange the additional fund. Hence unexpected expenses should not surprise a franchisee.
Give Sufficient Time After Franchising Starts
Franchisees need to give the franchise business adequate time so that they have better control over the company’s operations and activities. A franchisee giving sufficient time to the franchise business becomes essential, especially at the beginning of the franchise term. But as franchising business settles down, it resembles like a flight in autopilot mode. Then maybe a franchisee can take some time off from there to focus on other activities.
Keep Communication Channel Active With Franchisor
There would be many times when the franchisee may disagree with the franchisor. The disagreement could be on a single issue or multiple issues. Like the franchisor’s view or strategy or pricing or pace of growth or on the way forward or execution part. Whatever the disagreement that a franchisee may have with a franchisor, it is essential to discuss the same and clear the doubts. There is no point in keeping things to oneself or remain upset or become incommunicado. The best strategy is to speak, clear the air, and move on.
Engage And Build A Relationship With Customers After Franchising Starts
A franchisee needs to engage and develop a personal relationship with the customers after the franchising starts. Building relationships with the customers helps in getting feedback from the customers on the first-hand basis about the product and services and helps a lot in creating a positive word of mouth about the franchise business. A good relationship with customers becomes essential, especially in the era of social media. A social media post could go viral if a sufficient number of people share it. Now, these people will share such a post only if a franchisee is regularly engaging with them on a one-on-one basis. A viral post on social media is a great way to create positive word of mouth without spending any money.
Many people take the franchising business because it is safe. But being safe does not mean that a franchisee does not have any role to play, and everything will happen automatically. The bottom line of the franchising business is that in this business franchisee’s money is at stake. Hence a franchisee has to be proactive in running the show. A franchisee’s active involvement can happen only when it has an intent and secondly knows what it has to do.
In the blog, we tried to understand the steps that a franchisee must take to succeed. We know that most of the franchise opportunities exists in FOFO (franchisee owned and franchisee operated) segment. Hence the success of the franchise business largely depends on the franchisee. If a franchisee knows the steps involved in each stage only then, can it succeed? In a scenario where a franchisee is not aware of the discussed stages and levels in it, the franchisee may find it difficult to survive in the franchise business.
The two stages and the steps in it are
The pre-Opening phase
- Preparing a Pre-Opening checklist before franchising starts
- Tight Follow-Up On Execution before franchising starts
- Build Online Presence before franchising starts
- Pre-launch marketing activities For Impactful opening when franchising starts
Post Opening Phase
- Follow the process After franchising starts
- Act as the leader of Establishment After franchising starts
- Sufficient funds to run franchise After franchising starts
- Give adequate time After franchising starts
- Keep the communication channel active with franchisor After franchising starts
- Engage and Build a relationship with customers After franchising starts
Disclaimer: Reading this blog does not create an advisor-client relationship between us. This blog should not be used as a substitute for the advice of a competent franchise professional on the topic of how to succeed as a franchisee in 10 easy steps in franchising.