Helping Franchisees Through Hard Times
Helping franchisees through hard times There’s no point pretending this isn’t going to happen. Franchisees of some networks will be in for a difficult time over the next few months as the effects of the so-called credit crunch begin to take effect. Some of their customers will have trouble paying them and that means the franchisees will have trouble paying their franchisor. Add that to the fact that franchisee recruitment targets will not met, so income from upfront fees will not meet expectations, and several franchisors may end up in trouble too. Someone once reminded me, when we were discussing helping franchisees through bad times, that franchisors are not charities and, even they were, “in order to be charitable you first have to be profitable”. He also said, “Don’t let their misfortune become your misfortune” otherwise you’ll go out of business too. So, if franchisors want to stay in business they need to keep their franchisees in business and one of the ways to help them do this is to make sure they have their credit control procedures in place. If ever there was a time to remember that “Turnover is vanity, profit is sanity, but cash is reality”, then this is it and the people who shout loudest for their money, or who are most persistent in collecting it, are those who will survive. That applies to franchisors’ own credit control too – make sure the franchisees are paying you on time and don’t let them start getting into the habit of paying late or you’ll never get them back on course. If you need help with doing this, ask us. Franchisors should also think about reviewing the business management training they give their franchisees – not “how you run the store” but “how you run the business”. Fortunately The Franchise Training Centre runs workshops for franchisor’s support staff on “How To Understand Franchisees’ Financial Performance”. Once the support staff understand the principles they can pass them onto the franchisees to help them understand why discounting won’t get them out of trouble, why someone buying a lot but not paying in time is not “a good customer”, and why you have keep marketing your services and products even harder during a downturn.

For further information on this subject, you can contact Brian Duckett - Howarth Franchising using the contact form below.

UK - Brian Duckett - Howarth Franchising Franchise Resources