The franchise is not just the preserve of the big national brands! SMEs seeking growth are increasingly choosing this approach. And with ten, twenty or fifty franchisees carrying their products and their brand, they can grow quickly.

You can gROW but you don’t necessarily need extra EMPLOYEES

Franchising enables rapid and relatively safe development for the franchisor, because the risk is shared with the franchisees. They pay royalties to the franchisor to use a recognised brand and service package, to develop the reputation of the brand in their territory. So, it’s mutually beneficial.

There’s no need to be a large national brand, well-known to the general public from the outset. There’s no need to have impact over a vast territory. There’s even no need to invest heavily, since each franchisee pays an entry fee that finances a large part of the initial costs.

The franchisor decides on the pace at which new franchises open. They are able to control and plan the growth of the franchise, which is in stark contrast to the roller-coaster ride of having to tackle markets head-on.

DO YOU HAVE A unique selling point?

The first step is the most important one: can your SME offer an easily-identifiable, differentiating concept, for which you can create a model, while maintaining real defensive barriers to competition? These are the questions all potential franchisees will want answered, before signing on the dotted line: after all they are entrepreneurs wanting to launch a profitable business. The very act of defining your concept, your USP, formalising what it offers, rendering it repeatable and communicable to others makes it real. It’s an excellent exercise for the Owner/Manager.

There’s no need to have a revolutionary offer either: a franchise often involves reinventing a trade, as the example of Costa Coffee shows. The UK is full of bars and other cafés, but Costa Coffee has been able to do something different: offer high quality at competitive prices … This much-talked-about franchise sells coffee and other hot drinks in railway stations and shopping centres. Extremely banal really, except that the coffee is exceptionally good, that the point of sale is easily and instantly recognisable and the ‘barista’ prepares it with a carefully choreographed turn of hand …

don’t make mistakes in your choice of franchisee…

The second step is to choose carefully! Any SME signing franchise contracts with the first-comer runs the risk of paying dearly for it. Avoid the candidate who comes to the franchise after failing everywhere else: they will never behave as a boss should.  These types will make you responsible for their failure and will damage your reputation.

On the other hand, the right candidate is one who could go it alone, but chooses your franchise for a better chance of success and of achieving it more quickly. They will demonstrate the profitability of the concept and may become a leading light of the network, or even an expert who may contribute to its further growth. The first franchisees, in particular, must be chosen with extreme care: this is the base on which you will build.

Finally, the Owner/Manager who becomes a franchisor experiences a change in role. They’re no longer a ‘boss’ applying their authority on employees, but a business expert and facilitator working with entrepreneurs: their legitimacy will come from their technical skills and the quality of the connections they make.

Becoming a franchisor is not an obvious move: it requires a unique set of skills. Someone can have succeeded in their original activity and yet not know how to enable others to duplicate that success. Like any profession, there is a learning curve which makes the challenge highly motivating. This aspect alone, could justify the franchise adventure.