Is franchising the right fit for you?
This article appears in the November/December 2013 issue of Business Franchise Australia & New Zealand
There have been a number of articles written on franchising over the years, some positive and others negative.
With the challenges in retail over the last few years, mainly in the fashion sector, once again people are questioning the merits of being a part of a franchise network.
It is undeniable and research has proven that being part of a franchise gives you a greater chance of success than starting your own business, but it does not give you a guaranteed ticket to success, which is where I think some people make the mistake when getting into a franchise business. They look at franchised business and some think, “it will run itself, that is why I am paying a royalty, I will have it as an investment like a property”. This attitude is a fast track to losing the money you have put into the business. Franchising like any other business needs your total focus and commitment to make it work. So why does a franchise give you a better chance of success? There are a number of reasons and these reasons only work for the good, solid franchises.
Below are some positives and negatives of a franchise business and what you should be looking for if you are looking at getting into a franchise business or you have a franchise and want to know how to improve this business:
1. They (the franchisor) should have a proven business model that has proven to be profitable over a long period of time: You need to do an enormous amount of research on the business you are considering and just because it is associated with some sort of business group or council does not mean it is a good business. Many of these groups can be joined by simply paying a fee.
2 Group buying power: Being a part of a franchise means you get buying power that an individual business could not get. This includes everything from raw ingredients as well as media buying power.
3 Branding and marketing: If you are an individual business, the chances are you would not be able to hire a marketing department and if you can, it is highly likely you would not have too much money left over to do any marketing. Again, the dollars that you put into marketing can go significantly further if you are pooling your money.
4. Network strength: Sometimes running your own business can seem quite lonely. Being a part of a network enables you to network with people who are in the exact same business. With that network you will find people who have various strengths that can be of assistance.
5. Support from the franchisor: The best franchise businesses will have business consultants who assist you with your business. Their role is twofold – the first is to help you generally in business and keep you up to date with the latest marketing and business initiatives from the franchisor. The second part of their job is to protect the brand for the rest of the network, and this does include ensuring that the business owners are following the systems and marketing initiatives that have been put in place. As a franchisee, you want to make sure that the brand that you have invested in is always represented as you would expect it to. The greatest risk you face is if there are rogue franchisees that do not follow the systems and put the whole network at risk.
Joining a franchise is not for everyone, and there are risks in any business that you may need to consider. If you really want to run your own show and not follow a system then it is probably better to follow your own path.
The advantages are that you are not paying a royalty and will have more flexibility in how you run a business.
But whatever path you take, make sure you always are accountable for your own business. Paying royalties does not mean that it gives you an excuse to blame someone else for your business not going well. The power of success is accountability; success or failure always depends on you, the business person, taking accountability for your business.
When choosing a business for you, make sure it is something you love, because you will spend most of your waking day either in it or thinking about it.
Listen to your customers, you may actually learn something
We get asked all the time, why is Boost Juice booming and why did the other 36 plus juice bars that started 10 years ago disappear?
There is not one answer. However, there is an overall philosophy that we believe gives you a better chance to thrive.
It is really simple; find out what your customer wants and give it to them! How hard is that? You know what? It’s a great statement but very few businesses truly subscribe to the theory.
We never saw Boost as a money making machine. I didn’t even take a wage for the first few years, I was just so petrified of failing and losing everything. You know the saying, “four out of five businesses fail in the first five years”, and I did not want to be one of them. So, we listened to our customers, we asked them every chance we could. Sure our product was different; but what else did they want that we could give them? These questions, along with a hundred others, we asked ourselves and our customers. It ended up being pretty simple; just a little love and making our customers feel just that little bit better.
I wanted our service to be ten times better than any other retailer. Today, with 300 stores around the world and three other brands that we are growing, we do not always get it right. In fact, we have made dozens (if not hundreds) of mistakes, but we continue to attack ourselves and be passionate about achieving the ‘Holy retail grail’ of consistently achieving amazing customer service. So, we asked our customers. We put a sign up in every store asking our customers to email me personally if we did not deliver the product and service that we said we would. We called the customers by their names not a number, we thanked them for continuing to come back with the 11th one free. We are genuine; we listen to what our customers have to say, we reply within 24 hours of every bit of feedback, we continue to attack ourselves everyday… that’s why we are still here.
So in a practical sense for your business, set your standard at a high (achievable) level that you think is right for your business then get angry and fix it when it’s not met. You could be a gun sales rep but if the gateway to your sales is through a receptionist that had a bad weekend and is just grumpy, you are behind the 8-ball before you even start.
There are two key points I believe you could take out of this article and put to use today. Firstly, you must have a curious mind and find out what your customers really want. If you don’t really care to find out, then join the majority of people in management positions in companies in Australia today! Fair chance though, since you are still reading this you do care. There will be a number of key reasons in your business why your customers are getting either a great or poor customer experience. Find out quickly what they are and fix them.
If your staff are happy and you have the right attitude towards your staff then they can make your customers happy. Make sure there is an avenue (or many) for the customer to tell you that they are not happy or what you are doing right and when they do, get back to them fast and fix it. Do all the people in your business (whether staff or franchisees) understand your philosophy on customers? If not – fix it.
Ask yourself “Is our receptionist outstanding?” “How do we measure the store experience for the customer?” “What are the penalties for not achieving our benchmark?” “What is the single catch phrase that can best encompass your business?” For Boost Juice it is “Love Life” and “having everyone that comes to a Boost store, to leave feeling just a little bit better”. The truth is no matter how good that smoothie is, if the team member on the register is in a narky mood and gives poor service, then that smoothie just won’t taste quite as good as it should.
The second critical take out is that you must be a vigorous leader to make sure it’s not just another ‘company value’ that gets stuck in the top draw and forgotten about; the vigour to care, the vigour to put measures in place, the vigour to have the courage to confront and expel poor experiences and banish them from your business.
It can’t be that hard right? Well, that great saying comes back again ‘If it was easy, everyone could do it’. You just need to care enough to get it right!
The Boost Juice business began with one store in Adelaide and after 13 years of growth has more than 270 stores in Australia, Chile, India, Indonesia, Malaysia, Russia, Singapore, South Africa and the UK. Retail Zoo is the holding company for Boost Juice, Boost International, Salsa’s Fresh Mex, CIBO Espresso and Hatch.
Janine Allis is founder of Boost Juice and Executive Director of Retail Zoo. Janine is among Australia’s most respected business women, winning Telstra Business Woman of the Year Award in 2004. Janine is actively involved in the continued growth of Boost and other special projects such as writing a book, The Secrets of My Success and the story of Boost Juice – Juicy Bits and All.
For more information contact Retail Zoo franchising sales:
Phone: 03 9508 4400
Web: www.boostjuice.com.au and www.salsas.com.au