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“Franchising a business is easy, isn’t it?”

SmartCompany /

Too many budding entrepreneurs imagine they can sit back and let the magic of franchising make them rich. It just doesn’t work that way…

“Franchising a business is easy, isn’t it?”

Jason Gehrke: Photo by Studio 60

Many aspiring franchisors have attended our public information seminars and workshops over the years in the vain hope of learning the inside secrets to quickly franchising their businesses so they can retire shortly thereafter.

Unfortunately, these potential franchisors are surprisingly disappointed when we point out that franchising is not a path to overnight, obligation-free wealth. Nor are they particularly thrilled to learn about the hard work involved in preparing a business for franchising.

Many would prefer to just throw some money at us or other consultants in the hope that all the work will be done for them, and they can just sit back while the magic of franchising happens around them.

Sadly, it doesn’t work that way. Preparing a business for franchising is a bit like learning to fly. You can pay the experts to do it all for you, but at some point you have to take the controls and fly the plane yourself. And as any pilot will confirm, barely 30 seconds separates you from flying smoothly one moment, and crashing to earth in a deadly fireball the next.

So getting other people to franchise your business is largely useless if you are not actively involved and engaged in the process, and take ownership of your pathway into franchising from the very outset. This is especially true where businesses pay considerable sums for franchise “advice” to consultants with little or no qualifications.

Worse still is where these same consultants double-dip by also selling the franchises at commissions of up to 20%. Many new franchisors have realised to their cost that there is often a conflict of interest between franchise consulting and selling franchises, and the two combined can easily lead to inadequately structured, unsustainable and unhappy systems.

If the growth in the number of franchisors from 850 in 2004 to 960 in 2006 is any indication, franchising is attracting many new businesses keen to grow this way. However, the increase of 110 franchisors during that two-year period is net growth, when really there were about 200 new franchisors, but at the same time about 100 others fell off the radar (according to the Franchising Australia Survey, 2004 & 2006, Griffith University).

Those franchisors that disappeared during the same period either ceased franchising, or went out of business altogether – a clear indication that franchising is not a guarantee of success for those businesses using it for growth.

So if you’re thinking of franchising your business, be prepared for the long haul and make sure you engage someone who will coach you through the process while you remain in the pilot’s seat.

 

Jason Gehrke has a passion for franchising. He has been involved in the sector for 17 years as a franchisee, a franchisor, provided PR and marketing services to more than 30 leading Australian franchise systems, and presented to literally thousands of potential franchisees and franchisors over the years. He is a director of the consultancy Franchise Advisory Centre and is the immediate past CEO of automotive paint and plastic repair franchise, Kwik Fix International, a 2004 Australian Franchise System of the Year winner.

 For more Franchise Tips & Trends blogs, click here.

 

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