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Franchising your brand

Without franchising, renowned brands like KFC (from the United States) or Nando’s (from South Africa) were unlikely to have established a presence outside their country of origin. Thanks to the franchising model that a business from one country could think of exploring potential markets in other countries. Franchising also takes place among domestic businesses. Pick n Pay, one of the largest supermarket chain store brands in South Africa, also operates via the franchise route in the country.

In essence, franchising is two or more businesses working together for mutual benefits. While bigger brands gain in terms of localization, risk optimization, market expansion and penetration, reduced operational costs, core competencies, and integration, smaller players get the brand tag of reputed domestic and foreign companies, access to modern technologies, and the exposure of working with advanced business management systems.

Done right, franchising is a win-win game. However, things may not always go right. Even the franchise consulting services out there know this. There are certain standards and processes to be followed. There are challenges to be acknowledged and addressed.

Challenges in the franchise route

There are so many reasons why franchising could be such a brilliant strategy for starting a business right away at a high note or achieve rapid business expansion and market penetration in a quicker time. But if you do not acknowledge the turning points, you might end up risking your brand name and once the ball starts rolling down the hill even the top franchise consultants may not be able to prevent the damage.

Why to franchise your business?

The first question you must ask yourself as a franchisor is ‘why franchise’. There could be a matrix of reasons including business expansion, launching a new product/service, market entry, localization, and supply chain integration. But the reasons must validate your decision to go franchise. Franchising is not a copy-paste strategy that will work under all circumstances. The strategy needs a careful and comprehensive assessment. A professional franchise consultant might be able to provide meaningful insights in taking an unbiased and informed decision.

If you want to Franchise your business, it is advisable to take assistance from the franchise consulting services to avoid the initial and business mistakes. Even franchising your brand could take efforts in terms of market research, development of strategy, product development etc.

Blunders in business plan

At the end of the day, the profit and loss statements will speak the truth. A franchise arrangement is simply not worthy of being implemented if it does not carry the financial viability and profitability for both the franchisor and franchisee. If the financial assessments are faulty or erroneous, more dangerous when optimistically exaggerated, it could turn out to be a financial burden in the middle of the business journey.

Lack of defined roles and responsibilities

Defining the roles and responsibilities is a must in a franchise working arrangement. This also includes defining how the processes and operations are required to be carried out and the expected standards of performance and output to be achieved. Often franchise partners get into contentions when their expectations from one another begin to go off the rail. This could be avoided to a great extent when there are SOPs, robust legal agreements, arrangements for settling differences without disrupting operations, timely reporting, periodical audits, etc.

Lacklustre monitoring and reporting system

A robust monitoring and reporting system is an essential requirement in any franchise model. This is not about doubting but ensuring that business operations are going as intended. It is good for both the franchisor and its franchisees and their business. And without the aid of requisite technology, a monitoring and reporting system is ineffective in today’s business world that thrives on real-time. Technology also reduces the chances of miscommunication and misunderstandings.

Choosing the right franchisee partner(s)

Choosing a franchisee partner is much more than choosing a supplier or a vendor. In a franchise, you have your brand name at stake. You will be able to change your suppliers at shorter notice but withdrawing from a franchisee arrangement will cost you time and money. Therefore, who becomes your franchisee partner is an important decision that needs a careful approach. It is a decision that should be determined by merit first. Other considerations can factor in later.

Drafting the legal framework

Another crucial aspect of the franchise model is legal contracts or agreements. These legal and official papers outline many important features of a franchise working arrangement like the division of management and operational control, business operations, duration of the franchise, profit and revenue sharing, reporting and monitoring, audits, training support, trade privacies, etc. For businessmen and entrepreneurs without any prior experience in these matters, it can be difficult for them to address the paperwork involved. Taking help from professional franchise advisors could save a lot of time and hassle here.

How YRC can help? A glimpse

From strategy to operational planning, YRC will help you develop the foundation of your franchise business and in this entire process, our franchise consultants will guide and assist you at every critical juncture. Whether it is email, phone, or video conferencing, we remain open to one-on-one communication with our clients 24/7. And our delivery commitments are always time-bound. We aim at providing the best franchise consulting services. Here’s a glimpse of what we do.

Our franchise consulting service experts will work closely with your team to better understand the requirements and assess which expansion mode(s) will best suit your business and franchising objectives. You will ensure that you have an effective and sustainable expansion strategy to start with.

Is the franchising route going to be profitable? That is what we seek to answer when we prepare the franchise business plan for our clients. We make detailed and comprehensive financial projections on areas like capital and working expenditure requirements, pricing and costing, sales turnover and revenue, profit and revenue sharing ratios, profit and loss statements, ROI and break-even analysis, etc.

SOP design and development is one of our core competencies. We realize how important it is for any business including franchise business to have a planned and defined operational system which in turn helps to establish the operational routines, maintain consistency of standards, eliminate loss of productivity, fix accountability and responsibility, ensure smooth flow of operations, etc.  We strive to achieve these objectives with our expert SOP writing services. We take all the responsibilities of franchising your brand.

Whether you are an international fashion apparel brand or a local fast-food joint, if you are not keeping a check on the ground realities of how your franchisees are carrying out the business operations, you could be putting your brand name at the risk of tarnishing. That is where our robust audit processes will help you. Our focus in audit processes is not only to bring to the limelight the deviations made and loopholes in the system but also to achieve process improvement.

We keep stressing on this point all the time that franchisee partner selection should be done on a merit first basis. Now whether a potential franchisee applicant has merit or not could be determined only if you know first what merits and qualifications you want in your franchisee partner. Our team of franchise consultants will map this franchisee search and selection process for you.

If you are wondering how to franchise your business in South Africa, We at YRC help you draft the franchise agreements following a standard legal process and vetted by legal experts. It will not only cover the working relationship but also the exit strategy and action plan in the event of possible cases of conflict of interests.

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We are a boutique retail consulting firm. To know more about our franchise consulting services or if you have any query, drop us a message and we will get back to you.

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