A recent survey by time.effective.com asked business owners to assess their own management skills in five key areas – sales, marketing, financial management, strategy, and managing people. The survey found that company owners felt themselves to be weakest in financial management, with marketing a close second.
When bringing in a new franchisee, it is essential that franchisors be fully cognizant of the franchisee’s skills in a variety of areas, not least of which is management. When assessing a franchisee in the early months of their business, franchisors need to know when to step in and offer more training and direction.
Marketing and finance management are vital to the running of a business, and a franchisee’s ability in these areas can mean the difference between the franchise failing or succeeding. Most franchisors have set systems in place to help their franchisees handle their finances. It is also important that the franchisee be fully trained in everything they need to know about finances before they open their business.
It is common for franchisors to handle national marketing with funds taken from the ongoing fees paid by franchisees, and for the franchisees themselves to run the marketing locally. As a result, it’s crucial that franchisees receive training in this area too.
The majority of the 600 business owners surveyed identified people management and strategy as their strongest areas. This may be misleading however; people can have warped ideas of their own strengths. It may be necessary to talk to employees to understand the level of a business owner’s people management. With regard to strategy, it might be asked how you can have good strategic skills if you don’t have a good grip on the marketing and financial aspects of a business, which should be key stepping stones to a strong strategy.
As a franchisor, you can help your network to succeed by keeping an eye on all areas of your franchisees’ management skills, especially when they are in the first few months of owning their own business, or as that business expands.
Tags: business planning, franchise a business, franchise business, franchise development, Franchise Finance, franchise growth, franchise information, Franchise Marketing, franchise news, franchise research, franchise success, franchise tips, franchisees, franchising, franchising in the uk, franchisors, steve jones
Intellectual Property refers to an invention or piece of work that is the result of creativity, and which is owned by a specific person or company. There are four main types of intellectual property:
- Trade marks are symbols that can distinguish your goods and services from those of your competitors. You might also refer to your trade mark as your brand, although it can be argued that your brand constitutes more than just your trade marks. Trade marks can consist of words, logos, or a combination of the two.
- Patents protect new inventions, covering what they’re made of, how they work, what they do and how. Patents ensure that other companies cannot copy your work and sell, use or import it without your permission. Patents can sometimes cause confusion internationally, as with the recent Apple vs Samsung legal hoopla – in the UK it was ruled that Samsung’s Galaxy tablets are not too similar to an iPad because they’re not as ‘cool’, but in the US a ruling was made in Apple’s favour.
- Registered Designs protect the appearance of your product legally in whichever countries you register it. This covers the visual features such as shape, colours, lines, texture and materials used that make a product look unique.
- Copyright protects a variety of work, such as lyrics or music, pieces of writing, or works of art.
When you sell a franchise to a franchisee, a lot of what you are selling – brand usage, know how etc – is Intellectual Property. In order to protect yourself and offer good value to your franchisees, it is important to make sure you are aware of what you own and that all of your Intellectual Property is appropriately registered. Often, people only think of Intellectual Property in terms of patents and inventions – avoid this by speaking to an appropriate legal expert to establish what else you can register.
Tags: branding, business planning, franchise a business, franchise business, franchise development, franchise information, Franchise Legal, franchise research, franchises, franchising in the uk, intellectual property, joel caws, steve jones
The initial franchise fee you set when starting your franchise sends a very important message to potential franchisees. There are several things to consider when setting a fee that is both appealing and sustainable. Although you may think lower is always better and lower fees will get you more franchisees, there are much more important considerations. The three main points to think about are:
- Cost coverage
Sometimes franchisors can be tempted to look only at the marketability of a franchise when setting their franchise fee, figuring that new franchisees will be attracted to the lower price. Whilst this can be true, it’s important to look at the other two factors first.
The initial franchise fee is a buy-in payment, and should cover the costs of marketing, sales, and consultants you may have to pay, any rent needed and all materials. Although you definitely don’t need to make a profit from the franchise fee, you shouldn’t be making a loss either.
A large part of what a franchisee is purchasing when they buy into a franchise is use of the brand name. The value of this name depends on the size and reputation of the franchise network – if the network is well known and popular, this adds significant value to the brand and should be reflected to some degree in the franchise fee.
Negative consequences of low franchise fees
- If the franchise fee is too low, it might be perceived that the opportunity is worth less compared to other brands, so franchisees may be less likely to investigate further
- Having paid less to buy in to the franchise, franchisees may be less motivated to put in the necessary work and commitment – they are literally less invested in their franchise
- You’ll be starting every franchisee relationship at a loss. If you’re making a loss on the franchise fee and you have several franchisees signing up at once, it can be difficult for your network to weather the impact.
This isn’t to say that low-cost franchises are a bad idea – a lot really do offer great opportunities and are able to pass great value on to their franchisees. It is up to you as the franchisor to balance the three elements and come up with the right price to bring franchisees into your network.
Tags: franchise a business, franchise business, franchise development, franchise growth, franchise information, Franchise Marketing, franchise research, franchise success, franchise tips, franchisees, franchising in the uk, franchisors, steve jones