The franchisor’s new professions
Determination of the franchisor’s future organization and definition of its relations with franchisees
In fact, franchising is a profession that is distinct from your basic profession, whether you are a baker, retailer, service providers, a franchisor first will develop the network.
The Franchisor has four professions:
- The first job of a franchisor is development. He must develop his network by finding new franchisees; it consists of identifying candidates for the franchise, convincing them to join the network and signing contracts.
- His second job is to run the network: he must ensure the consistency and performance of his network by running it. It obviously consists of transmitting know-how, managing its operation, exchanging with the members of the network, checking good practices… For this, there are animators, animation techniques.
- The third business line is the supply in most networks, even in services, we generally need and well, which software, which products to resell… so for that, it will organize the supplies by constituting either purchasing centers, or referencing centers.
- And lastly: this is the communication and marketing business of the brand; the franchisor will communicate, manage the marketing related to the brand and this, based both on national actions but also on local actions, that is to say using the franchisees as communication and marketing relays.
The organization selected determines the costs relating to each of the functions. These costs must be covered by the franchisor’s future income.
Adapt the franchisor's "business" tools
As a first step, a project manager must be appointed to coordinate the work of the various service providers requested to assist the brand in the creation of the network (organisational advice, lawyer, accountant, etc.).
Then, it will be necessary to formalise your know-how, by asking the people who hold it in the company to describe it, so that you can duplicate it in the other points of sale.
If own software or IT tools have been developed, it will be necessary to study the modalities of making them available within the future network.
Marketing will include all forgetting-promotional visuals for external use as well as graphics, merchandising, semantics, etc.
Purchasing and logistics will ensure the ability of suppliers and carriers to deliver throughout France.
The work will ensure the quality and usefulness of the architectural charter.
Finally, the managers of pilot branches will be trained in the reception and training of partners.
We are therefore in a stage of franchise construction that should allow the brand to start off on the right foot and in the right direction. We call this phase the franchisability strategy.
Organize the development and animation of the franchise network
It is necessary to define an animation and development function; we start with development, then animation. We only animate once we have the first franchisees. Development can be internalized or outsourced; therefore, it will be necessary to acquire means of communication that will make it possible to collect leads from candidates and human resources that will make it possible to process them.
This processing will be done on a defined methodology. So here, we can outsource the function initially but the objective is of course to acquire this skill and eventually internalize it.
As soon as a sufficient number of franchisees exist, we set up an animation function with network facilitators who will benefit from reporting tools that will allow them to communicate efficiently with franchisees.
The development of the franchise brand
A new skill will be integrated, that of “brand developer”. This is the employee in charge of sourcing and qualification until the contractualization of relations with partners. Often, he also takes care of real estate research on behalf of candidates.
Eventually, another person, often from within, will take responsibility for the training, support and facilitation of the first partners.
The project manager will often become the franchise manager and liaise with internal departments. The latter will probably have an increase in their activity, dedicated to the installation of partners and the proper operation of their business.
We are moving from a project phase to a network launch phase. The success of this strategic period (approximately 3 to 5 years for 5 to 10 franchisees) will depend on the quality of the project phase, the recruitment of the first partners and the processes implemented for them.
Recruit Franchisees
Among the functions specific to the franchise, those responsible for recruiting candidates, finding premises, trainers, monitors, network facilitators, etc., will see their workforce grow according to the number of partners. We have about 20 franchisees for an animator, knowing that it depends on the proximity (20 all of France or 20 in a region) and the role (launch, support, animation, etc.).
At the same time, certain support functions will also be strengthened to cope with this new network that has become mature. Firstly, purchasing and logistics in franchising, IT, and then, to a lesser extent, accounting and legal. Finally, marketing will be much more important, especially if we are on a retail brand for individual customers, and will involve, for example, hiring a community manager.
Organize the supply of franchisees
We have two options: either we operate as a purchasing center, that is to say that the franchisor will buy from third-party suppliers, according to the terms and conditions of its suppliers, and then resell to franchisees according to its own terms and conditions. This means that there will be two tariffs and that it will achieve a margin that will pay for its central purchasing function.
Obviously, it will carry the stock, it will carry the commercial risk of the default of the franchisees.
Alternatively, to avoid carrying the stock and the commercial risk, we may prefer to organize a referral center, that is to say that we will negotiate the conditions with suppliers, that these suppliers undertake to apply to the franchisees who will benefit from it, but the sales will be made directly by the franchisees who will order from these suppliers; these suppliers will assume the risk of unpaid and will deliver directly or via a logistics provider to the franchisee.
In this context, the franchisor will be remunerated by other types of remuneration, such as commissions, brokerage, referencing for example.
Organize the communication of the franchise network
Brand communication is sometimes traditionally organized as part of a communication fund. In this case, the promise that is made by the franchisor is that ultimately, the communication fee that it will collect from the franchisees will be recorded to the credit of a dedicated bank account and will be allocated to communication expenses, as defined in the franchise agreement. So it’s an assigned expense.
The risk is that if we do not spend all the money, or in accordance with the clause, there is a breach of contract but also a criminal risk of breach of trust. So we may prefer to avoid this risk a technique that is a service delivery technique.
In this case, the franchisor is compensated for providing communication services and can therefore maintain a margin that may be normal and reasonable depending on the services that are provided.