What is a franchise?

I was speaking to a couple of friends over the weekend and one of them said to me - "so, okay you've franchised your business. But, what does that mean exactly? How does a franchise work?" She actually had a very good point and I thought it might be a good idea to summarise the main facts.

The most well-known franchise are probably one of the fast food chains i.e. McDonalds or Burger King, but there are well over 800 franchises all around the world. A franchisee (the person who takes on the franchise) runs their own business and they can operate it generally how they want to. BUT, they will also be given a tried and tested system (processes, procedures, training, support, etc) from the franchisor (the person who has franchised the business) to help them to get set up quickly and easily. Because of the system, the franchisee is also less likely to fail in their new business.

As the franchisor has put this model in place, the franchisee will pay a fee to acquire it. For this, they will get access to the system and also the right to operate under the business name in an area (which could be across the country, within a county or simply within a few postcodes, depending on the franchise). In addition, the franchisee will also pay a smaller ongoing fee for additional training and support, usually on a monthly basis.

Franchising is an excellent business model on the whole and can give someone who is thinking about starting their own business a relatively risk free way to do this, without having to go through the hard work of setting up a company from scratch.

Us versus them

Over the last couple of weeks, I've been speaking a lot to both franchisors and franchisees and have come to a conclusion that there's a bit of a 'them versus us' relationship going on. Franchisees are moaning about their franchisors and vice versa. This struck me as strange, because surely both parties are supposed to working toward the same goal - success of their business - and if they're not happy, why are they not having a frank and open discussion about their issues and concerns to try and sort them out?

I guess the problem with keeping things secretive and moaning about things behind people's backs is that resentment builds up, not to mention a negative message getting out to new potential franchisees (which may not necessarily be true).

I hope any Exceptional Thinking franchisees will always come to me with any issues rather than keeping it all to themselves and I want to do the same with them. I've seen communication issues create problems many times in organisations and my policy will definitely be the more open the better.

It does work!

Hey...have decided that setting some time aside each week to work on the franchise really does work. I've now printed off my complete Operational Manual; put together a start-up pack and a meeting pack and am well on the way to completing my recruitment pack. Even though I've slowly been creating these docs over the past year, it's only now that I've printed them off and got them ready to go.

And now I feel more confident to promote it too. I sent out an email to my contacts last week and I've had a couple of replies from people who are interested. So, just need to keep promoting now...