DEVELOPING THE FRANCHISE STRATEGY
Each business needs its own unique franchise strategy. Development of the proper strategy for any company to become a successful franchisor can be complex. While the legal documents required to become a franchisor are fairly straightforward, it is the business decisions included in those documents that require considerable analysis and thought. The business strategy used in structuring the franchise offering is the foundation for every successful franchise system, and proper strategy development can ensure that your goals are attainable. The challenge is knowing what is right for your company, so that you can create a franchise offering that is marketable to the franchisees you want to target. Having a franchise system designed to be attractive to single-unit franchisees when your intended franchisee is a multi-unit developer or another class of potential franchisee can limit your growth and create problems in properly supporting your franchise network.
To accelerate the growth of our clients, we define who the potential franchisees are and the methods used by our clients to recruit the right classes of franchisees and rapidly close the sale. We also explore the obligations and responsibilities our clients will have once they become franchisors, and determine how they want their relationship to be structured with their future franchisees. In developing our approach to our client’s franchise system, MSA determines what rights are included in their license to franchisees, and also what rights will be reserved to them and not included in the franchise offering.
Underlying any successful franchise system is the determination of the economic relationship between the franchisor and its franchisees, with a focus on creating a business model that is both marketable and sustainable. MSA makes our financial recommendations regarding initial and continual fees based on extensive economic modeling supported by our analysis of the competition for potential franchisees, how we want to position the brand, and our extensive experience.
Comprehensive Client Engagement
When companies begin to contemplate the development of a franchised system, important questions will surface. We will take the time, even before the engagement begins, to discuss and explain franchising with our clients. Each client engagement begins with an overview class on franchising to ensure understanding of the development process and the dynamics of franchise system management. Our goal is to remove any of the myths that our clients may have learned about franchising, so that they can fully participate in the design of their franchise system.
MSA’s success as a franchise advisor is that we recognize from experience that fungible solutions rarely work, and that care needs to be taken in designing our clients' franchise systems for success. We balance the economics of the relationship with the goal of ensuring sustainable growth for the franchise system, because we understand that the value of any franchise system requires a consistent delivery of the franchisor’s brand experience at the consumer level.
Following are some of the broad areas we examine during the design of our client’s franchise system:
- The concept to be franchised
- Franchise structure issues and requirements
- Territorial grants, if any, to facilitate critical mass market coverage and to support the company’s requirements and capabilities
- Initial and continual headquarters and field training and support provided to franchisees
- Requirements to participation in system-wide programs
- Operating standards to be established and enforced
- Franchisee support that will be provided prior to opening, during the initial opening period, and ongoing
- Franchisee relations
- Franchise system expansion, determining the anticipated growth projections by class of franchisee
- Business structure and administrative processes
- Financial structure including initial and continuing fees, modeling the anticipated financial performance for the franchisor and each selected classes of franchisees