How You Can Leverage the Power of a Franchise Network This piece explores why entrepreneurs have several reasons to consider the opportunities of franchise ownership and how you can leverage the power of a franchise network.
By Ben Richmond Edited by Joseph Shults
Opinions expressed by Entrepreneur contributors are their own.
Combine the effects of a global pandemic with the uncertainties of a disintegrating supply chain and would-be entrepreneurs have a couple of solid reasons to consider the opportunities of franchise ownership.
And while the risks and issues of small business ownership have never been more acute, the decision about whether to go at it alone, or invest in an existing brand remains both reasonably complex and intensely personal. Complex, because strong arguments exist for either choice. Personal, because the real secret sauce in franchise ownership just might be the willingness to subjugate some of that inner Lone Ranger in all of us in order to fully exploit the power of the franchise network.
It's also a question at least as old as colonial America.
The genesis of franchising in America dates to 1731, according to the International Franchise Association, when a Philadelphia publisher named Benjamin Franklin dispatched Thomas Whitmarsh to set up a satellite printing shop in South Carolina. They didn't call the Charleston location a franchise, but the terms and conditions were not unlike today's franchise agreements. Nearly 300 years later, in what might be one of the rare positive consequences of Covid-19, the case for franchise ownership has become more compelling.
Related: 6 Low-Cost Franchise Areas to Explore If You're New to Franchising
The inherent resiliency of the franchise model has been largely validated, and can provide some buffer against the disruptions in global systems of supply and distribution.
Which is not to say the franchise option was immunized against the personal or economic implications of the virus. Some 20,000 franchise locations closed in 2020, and food and leisure alone lost about 940,000 jobs, according to market research firm FRANdata. Still, overall franchise employment through 2021 is expected to increase by 10 percent, and the IFA and FRANdata project that franchising will be back to most pre-2019 levels by year end.
For the right kind of person, the prospect of participating in an existing and resilient business model -- and extracting every shred of potential value from that network – taking that leap of faith into the small business economy becomes a tad less intimidating.
From the time of Mr. Whitmarsh to today, high-performing franchise owners know that exploiting the advantages of the network is both an art and a science.
Trusted relationships always work both ways.
Think of a brand with a specific management philosophy and culture -- the operating system of the organization – as more like open-source software than a rigid set of coded rules.
These systems balance the brand's experience, recipes, and playbook – the immutable truths -- with an understanding that headquarters can't do all the thinking.
Related: 3 Tips to Build Trust and Drive Business Transformation
Instead, the operating system incorporates mechanisms to ensure that valid ideas and efficiencies at the store level are identified, rewarded, elevated quickly and distributed widely to the benefit of all in the network.
The network is its own source of power.
Beyond the marketing investment, brand recognition, purchasing power, training, centralized recruiting services or even access to more attractive leasing terms, franchise ownership offers the power of community and real-time business insights.
As the pandemic raged through the summer of 2020, many brands reeled as they scrambled to access real-time financial insights. Several large brands were forced to wait for monthly royalty cycles before they had a true sense of the state of their franchisees.
On the other hand, several franchise brands held daily calls with franchisees to share support, resources and best practices in real time. The best franchises measure and rank everything from labor costs to order fill times and overall satisfaction. They do it as a method of identifying and sharing best practices, lifting performance across the network, and, along the way, improving owner profit margins.
Mandates work, especially in trusted relationships.
And the best ones are delivered with a deft touch, and based on an established pattern of balance and mutual interests.
Standardizing something like accounting software can address a problem like revenue leakage at the store level. Alternatively, it can be presented as a life-altering gift to the local owner, delivering an intuitive performance dashboard and massive time savings on repetitive, low-value data entry. When a franchise determines that standardized accounting is a core competency of the brand, offering a new measure of value to the owner, the conversation about new software becomes a far more appealing proposition.
The magic is always in how the mandate is delivered – again balancing the imperative need for quality and consistency, with the belief that innovation also happens at the point of customer contact, and that every node in the network is a trusted partner.
