Support Services a Franchisee is Entitled To

Extensive franchisee support is a cornerstone of franchising; without it, there would be little point in investing in a franchise.

Support Services a Franchisee is Entitled To

Unfortunately the term ‘franchisee support’ is open to interpretation. It is unavoidable that the nature and extent of support a franchisor provides varies depending on the industry sector. However, agreement exists that certain basic services are non-negotiable; this article lists the most important of them.

Launching the franchisee’s business

In a properly managed franchise organisation franchisee support will kick in long before the franchisee starts trading. One could even argue that franchisee selection is a form of franchisee support. Accepting an individual into the network who is patently unsuited for the role would be detrimental to everyone involved, not least the unfortunate franchisee.

Once the franchise agreement has been signed and the cooling-off period has lapsed, franchisee support commences in earnest. Depending on the needs of the industry sector, some or all of the following applies:

  • Site selection

In business sectors where the right location is important, for example in retail and fast food, the franchisor’s experience in site selection is invaluable. Should the network’s brand be well known and draw people to the location, it may even make it easier for the franchisee to secure an attractive site and negotiate a more equitable lease.

  • Raising finance

The franchisor’s involvement in helping the franchisee raise finance is invaluable. The brand’s standing and the franchisor’s input lend credibility to the assumptions on which the financial projections are based.

  • Initial training

Because many new franchisees lack business experience, formal initial training is essential. It consists of a reasonable mix of classroom training and working in a franchisor-owned outlet. Many franchisors use the network’s operations manual to guide the franchisee through the entire training process.

  • Getting the new business up and running

Dealing with shopfitters, decorators and equipment installers is not for the fainthearted. The franchisor’s new store setup team have done it all before. Drawing on their experience and armed with architectural drawings, specifications and checklists, they ensure that everything pans out as it should while keeping costs in check.

  • Recruitment and training of staff

The franchisor provides a list of key staff. Depending on circumstances, staff training will either be conducted at a company-owned outlet or the franchisor’s trainer works alongside the franchisee’s staff until the network’s operating standards become second nature to them.

  • Access to existing customers

Most franchisors offer territorial protection. This often means that a new franchisee ‘inherits’ existing customers or gains access to servicing branches of the network’s national accounts within the territory. Moreover, the brand and its existing infrastructure lend credibility to tenders submitted by franchisees.

  • Grand opening

This is the final step in the startup phase. The franchisor arranges a ‘Grand opening’ that puts the new business on the map.

Ongoing support

The grand opening does not signal the end of franchisee support. It is the beginning of a new phase that lasts for the duration of the franchise agreement.

  • Joint marketing

Franchisees benefit from an ongoing national promotional programme the franchisor operates. Franchisees’ local marketing initiatives can be slotted in.

  • Joint purchasing

In suitable circumstances the franchisor will negotiate bulk deals with suppliers on behalf of the network. In some sectors the resulting savings exceed the rand amount of franchise fees payable.

  • Ongoing concept development and training

The franchisor monitors developments in the market and creates products and services that keep the brand at least one step ahead of its competitors. This keeps franchisees’ offering fresh and allows them to focus on customer service. Ongoing training keeps the franchisee and his/her staff acquainted with the latest products, systems and procedures.

  • Assistance with setting prices

From the franchisee’s viewpoint the franchisor’s experience in setting correct prices is invaluable. Competition legislation prohibits the setting of prices but most franchisors publish recommended retail prices that serve as a guide.

  • Mentoring service

Field service consultants serve as a conduit between headoffice and franchisees. They also offer troubleshooting advice, act as mentors and provide motivation and encouragement. Lastly, they review business performance and help franchisees benchmark their operations against similar units in the network.

  • Regional and national conferences

Franchisors arrange periodic regional and an annual or biannual national conference during which franchisees exchange ideas, learn about the latest developments within the network and the sector as a whole and build useful personal relationships.

To sum up, there can be little doubt that a prospective franchisee who selects the correct franchise opportunity and then utilises the services the franchisor offers receives excellent value in exchange for payment of the initial and ongoing franchise fees.

Written by Mark Rose of Nedbank and Eric Parker of Franchising Plus.
Copyright of this article rests with the authors.
Mark Rose
About the Author
Mark Rose is the Head of New Business Development at Nedbank Business Banking. He holds a Masters in Business Administration (MBA) from the Oxford Brooks University, as well as various business qualifications from the Gordon Institute of Business Science (GIBS), the University of Stellenbosch Graduate School of Business, and the University of South Africa Graduate School of Business. Nedbank’s New Business Development unit develops customised industry specialised offerings to the medium sized business market, including Franchising, Agriculture, Professional – including Financial and Legal Practices, and the Medical Fraternity. This unit has also developed a unique Enterprise Development proposition. For specialist advice and more information on the Nedbank Franchising proposition visit the website or send an email to [email protected]

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