Get the base model right
Almost any business can in theory be franchised successfully, and there are many textbooks and magazines available which cover the diverse range of businesses involved in franchising. In the UK and Ireland, there are nearly six hundred different franchise systems of various sizes – which have achieved varying degrees of success. However, not all businesses can be franchised, and there are usually some simple reasons for this:

-The cake has to be big enough to be sliced up profitably between the franchisor and the franchisee. In some business models, the margin is not big enough to divide (for example, selling cigarettes – in which the retailer gets a tiny margin – would not lend itself to a franchising model).

 

-The business model has to work, irrespective of whether it’s a franchise or not. In other words, the business has to be viable as a business first. Many people have tried franchising to rescue a business format that didn’t really work; the unfortunate franchisees who got involved with these companies usually lost everything.

 

Choose the best franchise partners
It’s an old cliché to say that people are the business, but in my experience this is true. One of the bedrocks of the expansion of O’Briens as a franchise business was that, from the beginning, we tried to take into the system only people we thought would make good long-term business partners.

It is a truism to say that, in our business, the franchisees that are the most successful and make the most money are inherently successful business people in their own right. Their success is not due to O’Briens but is rather based on the fact that they use the O’Briens franchise system as a tool to create a successful business for themselves.

The opposite is also true: most of the small number of our franchisees who are not successful are inherently not good business people in their own right. (And don’t believe any company involved in franchising that says it is 100 per cent successful.) They might be ideally suited to some other profession – but maybe not running their own business.

At O’Briens, we liken the franchise relationship to a good marriage. Successful marriages are built on a foundation in which, after a wooing process on both sides, each partner gets an opportunity to see the relative strengths and weaknesses of each other, in a truthful and honest way. Both partners can then go into the relationship with their eyes open, understanding the reality of what they are contemplating – there are few fairy tales in franchising, no more than in marriages – and prepared to act in a mature way to overcome the disputes that will inevitably arise, as they do in any good working relationship.

It was very hard in the early years to reject prospective partners, but I firmly believed that long-term business success could only be built on the back of successful long-term relationships with our customers – our franchisees.

We took our time before entering into any contractual relationship, getting to know our new bride or groom. Our first requirement was that, as we were in the hospitality business, we needed ‘people persons’ to be our partners: the success of our retail stores was based on managing successful relationships with staff and customers. We developed a process of trying out prospective new partners in a real O’Briens store before we would commit to them – or ask them to commit to us. This was a great way of weeding out people who were clearly wrong for our business. These people included the man who refused to work behind the counter in a store because he felt that it was beneath him as a business owner to do so. Then there was the guy who clearly didn’t like women; and the woman who turned up late every day and clearly didn’t like people of any description, whether they were staff or customers. We had another man who almost got into a fistfight with a customer on the second day of his trial with us. Our attitude was that it was better to find these things out before we got married to them!

McDonalds, which is without doubt the most successful franchisor in the world, despite not getting it right all the time, makes it very difficult for prospective franchisees to get into the business. You have to really – and I mean really – want to get into McDonalds before they’ll take you. Like us, McDonalds won’t take investor-type franchisees: you have to be prepared to work in the store yourself. Like us, McDonalds also realises that the quality of franchisees has a material impact on franchise sales.

Prospective franchisees are attracted to a chain where successful franchisees are already in place. Success breeds success, and like-minded people are attracted to each other. This factor will ultimately determine the success or failure of any franchise system in the long term.

Next week: Franchising your business for long-term success continued

Taken from Making Bread – The Real Way To Start Up and Stay Up in Business by Brody Sweeney, published by Liberties Press – buy at www.libertiespress.com and get a 10 per cent discount