Many franchisors believe that the franchise contract obliges franchisees to follow the franchisor’s instructions to the letter, come hell or high water. This is true, but only in theory. Practice tells us that if the franchise relationship is not very well designed, the franchisee will either sibyllinearly or openly breach our guidelines, try not to pay us, or even want to stop being our franchisee.
We cannot pretend to wield the contract as the only weapon to force franchisees to do everything we want, even against their own will. If we do so, in the medium or even short term the relationship will end up exploding, leading us to lose the franchisee or to have him or her dislike the chain with its consequent low performance.
Chain of errors. Another mistake is to believe that simply because we offer a business that brings a lot of benefits to the franchisee, he/she will profess ‘eternal love’ to us. Although it is an important requirement, it is not enough for the franchisee to make money for him to want to remain enrolled in the chain.
For the franchisee to be attached to the chain until the end of the contract and want to renew it, it is very important to define a correct franchise strategy. By franchise strategy we mean the relationship between the value it provides and what it will charge for it, how to franchise the business, how it wants to grow, the selection of the franchisee profile to be sought, the use of ‘tricks’ so that the franchisee prefers to remain in the network, and so on and so forth.
There is no single franchise strategy for each business, on the contrary, there are many ways to franchise, some good, some not so good and some disastrous.
Moreover, two companies in the same sector and apparently dedicated to the same thing do not have to follow the same strategy and both work well, it is even normal that the strategy of one does not have to be good for the other, as it will depend on the objectives of each one, its internal organizations, its resources, its location, its objectives, its know-how, … in short, its own and unique characteristics.
It is a matter of defining the optimal strategy for our business, which will depend on many factors that must be studied in depth before determining how to franchise it. Only in this way will we be able to achieve our objectives and ensure that our chain of franchisees will have as few dissatisfied members as possible and will bring us high profits.
We must define a strategy that allows us to ‘captivate’ the franchisees and have a profitable business for them and for us. The contract should only serve to defend us from ‘bad apples’, which always end up sneaking in, especially when we do not use a good franchisee selection system, but this is a topic for another article.
Investing time We should spare no effort in developing the strategy of our franchise, since the success we can achieve depends to a large extent on it. Spending time to correctly define the strategy before starting to franchise will save us much more time and money in the medium and long term, skimping at the beginning can be very expensive.
A typical mistake that many companies make is to start franchising on the basis of a standard contract or doing the same as everyone else.
Each franchise is a special case and as such must have its own strategy, tailored to its characteristics, and the franchise contract must reflect that strategy and not the other way around. The same happens with the operation manuals, many franchisors write their know-how without having thought about the strategy to follow, they simply write their knowledge without thinking about what the franchisee must know, what tasks he will perform, how he must explain himself,… The manual must depend on the strategy since it is one of the tools of the same.
Maximum effort The message is, then, that we must make an effort to develop a correct franchise strategy before starting the expansion, and if we have already started it without having done it, perhaps we should stop to reflect on it and decide if it is the correct one and if we can improve it.
By Miguel Soler. Partner-consultant of FDS
Businesses for franchisees to earn 6,000 euros per month
Franchising offers more and more business opportunities for professionals capable of obtaining and maintaining a portfolio of clients, skilled in the commercial sector. With a low investment and minimal infrastructure you can become your own franchisee.
The business world is full of professionals who work in attracting and maintaining customer portfolios for companies of all kinds. They are experts in their field, mostly salespeople, tired of always doing the same job for others. Now, these professionals with a strong commercial character, have before them the possibility of creating their own self-employment and put all their experience to their own benefit.
The field of franchising is increasingly oriented towards this type of business, which is beginning to proliferate in the most diverse sectors.
This is the first step to become an entrepreneur of a highly profitable business. So much, as it is to earn more than 6,000 euros per month with the ‘only’ effort to create and maintain a large customer base. Basically, they are companies that are nurtured by professionals already experienced in the world of sales, mostly active, able to run and manage their own business and to do so with a certain fluency.
Low investment “They are businesses focused exclusively for self-employment, for which a reduced investment is needed, few infrastructures at the time of starting the activity, if not none, and where the limit of the profits is on behalf of the franchisee himself, of his capacity of work and his effort”, affirms the person in charge of the ceiling cleaning company Net Horitzontal, Néstor Sordo.
Types of business But what is it about these businesses that makes them so attractive? Of course, the high profitability with which they work. They are options focused both structurally and logistically to this profile, to develop independently and put at the service of itself all its experience and knowledge about the world of sales. This means dedicating oneself completely to the chosen activity directly on the street, practically 80% of the time, in some sectors it will be even more.
With few operating costs No costs to face, more than the necessary ones, the investment / income binomial leans directly in favor of the franchisee, who sees how the capital to start operating is not a ‘handicap’, but rather a resource at his fingertips.
From that point on, everything starts to come together: he knows the job, he is an expert in contacting clients, he may even already have them and he chooses to offer them his new services. He is not afraid of the initial effort, he is already experienced in other similar battles and has the added value of the support of a franchise.
The prospects are not negligible, and according to the accounts of the head office you can begin to recover your investment from the eighth month on average. The income, from that date onwards, will be ‘increcendo’, in a progressive way. It happens in almost all these activities and advertising is no exception: “The low cost of the franchise and the freedom in the start-up time allows most franchisees to have a positive cash flow from day one,” they say from Coffee News.
How much you can earn From 6,000 euros, when the activity has stabilized and the number of customers is constant, and up to 12,000 euros we are talking about a salary considered ‘usual’ for franchisees at the head of an activity of this type.
Of course, the variants are innumerable and each type of business requires a dedication and a very different work methodology, which makes you get more income with less effort or vice versa.
All these salaries, however, have a common denominator: they are achievable. Without the need to make a general assessment, the only thing that can be reflected is that from 20,000 euros as an average investment, a good salesperson who knows his job can become his own boss, with hardly any expenses and with a monthly salary that in the worst case scenario will reach 6,000 euros per month.
With a clear commercial profile “I would define it broadly as a one-man business, where practically everything is profit, what else would you say about an activity for which the premises are dispensable and unnecessary and where costs are reduced to a minimum?”, asks one of the heads of the new technologies company Worldsites, Miguel Tunchs.
And this not only happens in this sector, where the franchisee’s activity can be summarized in a laptop through which to show the services of this brand, but also in many others, the activity can be carried out directly from the franchisee’s own home. To different degrees, of course, but with similar results, if not similar, at least very similar.
With such characteristics, it is not necessary to delve much deeper into the market to find out which profile is preferred: “We are looking for a good commercial manager”, emphasizes the manager of the transport agency specializing in international shipments, BCC Worldwide, Juan Sánchez Puxán, who continues: “capable not only of strengthening the clientele, but also of providing solutions to the growth that the activity is going to present”.
Premises at their minimum expression. Premises have taken a back seat. Of course, not in all areas, but in most. Some have taken them for granted and avoided counting them as part of the initial investment.
Cleaning services, new technology or business services top the list of businesses without premises as such. It is the ‘self-employment’ method that many businesses materialize through a mobile unit, if the activity requires displacement and the elaboration of an activity with or without operators. In this case, it is possible to advance in the business without the need of having an own establishment.
But this option is not the most common or, for many, the most comfortable. “In the long run, the business grows, so do the customers, and it is important to organize the work and control it so that everything works perfectly from a fixed location,” says Eduardo Vidal, director of ChipsAway in Spain.
What is the franchisee’s job Selling. Primarily and, in some cases, exclusively, to sell. This is what can be deduced from the characteristics of the businesses that have signed up to the self-employment train for salespeople. However, it is not a question of direct sales, but basically of providing services, especially to companies but also to individuals; this allows them to contact potential customers.
How does the head office help? Regardless of the fact that many franchisees already have an attractive portfolio of clients to start working with, or at least a good number of them to start making contacts, the head office provides them with the potential clients they will have to work with, distributed by areas or characteristics. This usually happens in those companies where there is a database to exploit. This is the case of LaNetro or DGE Bruxelles.