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Followers are Winners

At the heart of every successful franchise system is consistency.

Controls in franchising sounds like a dirty word, but without controls a franchise system can not exist.  Consistent standards in performance of all franchisees is vital to the success of all parties; one underperforming franchisee lowers the value of the entire franchise and the value of the brand. Controls have been carefully designed by the franchisor and their consultants and advisers and are a result of experience. Controls are solely for the purpose of growth of a valued asset for each franchisee and ultimately the growth of a valued asset for the franchisor; a WIN WIN situation. 

Controls are a result of:

  • trialing and sometimes failure of products and systems,
  • previous mistakes, mistakes that the franchisee does not need to make again
  • knowledge of the marketplace for the product or service, facilitating quick ramp up of turnover
  • customer feedback and complaints
  • monitoring of successful marketing and advertising, franchisee will not waste time and energy in the wrong avenues
  • common goal to protect the brand, a brand can take tens of thousands of dollars to build and years to build

Controls are the key to:

  • uniformity and conformity
  • monitoring profitability, growth and controlling expenses
  • ensuring customer satisfaction and expectation, a BigMac is the same where ever you go

Main mechanisms for control are:

1. Franchise Agreement: The Franchise Agreement is the legal business agreement between the franchisor and the franchisee.  It grants the rights to the use of the brand, the intellectual property and the business systems in exchange for a franchise fee. Both parties must fully understand and be familiar with the Agreement.  The Franchise Agreement does not change during the term although at renewal the franchisee may be required to enter into the then current agreement which may have some changes. The Franchise Agreement will stipulate the key obligations of the franchisor and the franchisee e.g. “The franchisee must operate a vehicle for the business as per the manuals.”

2. Franchise Manuals: The manuals are an extension of the Franchise Agreement and spell out the day to day operations of the business. They define the controls in more detail e.g. “the franchisee vehicle must be purple with yellow spots” “the minimum opening hours will be...”  The manuals can and will be changed from time to time by the franchisor.  The quality and detail of the manual content is important and any prospective franchisee should request to view and read the manuals prior to signing the Franchise Agreement.  This will give them an insight into the professionalism of the system and the actual controls imposed, remembering controls are essential and require full cooperation.

3. Franchise Reporting: The manuals will detail the reporting regime which range from daily to annual.  Reporting will not just be for financial data but will include the likes of Key Performance Indicators (KPIs), customer data, prospecting and advertising activity, ongoing business planning and customer complaints/feedback. Data may be used to provide benchmarking reports so that franchisees can monitor their own performances in relation to others within the franchise or others within the industry.

4. Field Visits: Visits to the franchisee’s territory and premises by a franchisor representative allows the franchisor to check for compliance and confirm that the controls are manageable and achievable.  They are also a business evaluating and building exercise, where the franchisor can determine the need for any further assistance or training to ensure the health of the business.

Policing Controls
 
It is the franchisor’s responsibility to enforce controls and franchisees are generally pleased and grateful when the franchisor takes action against persistent or serious breaches.  Franchisees should be aware that there success depends on and will be rewarded with compliance and consistent high standards across the entire franchise network. They are encouraged to tell the franchisor when they see others threatening it. 

Franchisees as well as the Franchisor should protect the brand with their life as it is the brand that provides value to their business and the stronger the brand the more their business is worth.  Having a great brand can make the difference between a mediocre business and a thriving one.

The Sum of the Whole is Greater than the Individua

Past E-News
The Seven Secrets of a Great Franchisee

Fiona Macky, Senior Consultant
“The Franchise Coach” The Complete Franchise Resource
fionam@franchisecoach.co.nz

The Franchise Coach is the New Zealand distributor for the franchisee recruitment tool “The Franchize Profile” that can be viewed at www.DynamicPerformanceSystems.com

"The Franchise Coach" is a member of the Franchise Association of New Zealand. Association of New Zealand Franchise Member
"The Franchise Coach"
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PO Box 25020, St Heliers, Auckland, 1740, New Zealand

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