Franchisor support and infrastructure form the backbone of franchising and provide an ideal mechanism to reduce the risk of business failure.
The latest Franchise Association of South Africa (Fasa) survey results show that 72% of franchisees rated their relationship with the franchisor as good.
While much of this is attributed to marketing and training, support entails a great deal more than that. It generally also includes initial start-up assistance, ongoing mentoring, and suppliers’ relationships. Many successful franchisors provide further support by opting to expand through vertical integration, which provides franchisees with logistics, supply chain security and product consistency.
Several franchisors advocate maintaining a structure with both franchisee and corporate-owned stores. This way a franchisor can keep in touch with the daily challenges franchisees experience and can easily test new products and solutions at a corporate store before rolling them out to their franchise network.
However, given the uniqueness of the South African environment, there is not a one-size-fits-all support model. Many franchisors have created custom approaches to accommodate and adjust to the need of a specific property or consumer market. A great example of this would be the food industry where many franchisors offer shopping centre concepts, drive-throughs and kiosk or express concepts.
The franchisor is responsible for the facilitation of initial training and ongoing upskilling of franchisees. This generally incorporates theoretical classroom training as well as on-the-job practical training to ensure the effective implementation of learnings in the daily operations of the business.
Training should also cover compliance matters such as occupational health and safety. It is important that the franchise ensures that all staff are trained at the prescribed intervals and at standards reflective of the franchise brand.
A Johannesburg-based Spur franchisee says, given how vital customer service is in the food industry, stores cannot afford to make any mistakes. Training is instrumental in keeping the standards high and empower staff to effectively deal with customer issues.
He says his employees must complete daily tests on tablets at the franchise and go on weekly and monthly courses at the head office. Having these systems in place from the franchisor contributes to the overall success of the store or stores.
Training, while important, is only one piece of the puzzle. If brand awareness is not high, then the most well-trained staff in the world will not make a difference in getting people through the door. As such, franchisees make monthly contributions towards a national marketing fund, managed by the franchisor. This makes provision for overall ongoing brand development and awareness. According to Fasa statistics, the average percentage marketing fee being contributed is 2.3% of the franchisee’s monthly turnover.
In addition to the national marketing fund, franchise owners are obligated to participate in and assist with local area marketing for their stores. This may entail getting involved with local community programmes, schools, and sporting events. It is important for franchisees to understand their responsibility outside the franchisor support structure, to increase public awareness of their stores and ultimately grow the performance of their store
For example, the Spur franchisee says branding is vital in making a store work. And being part of one of the largest franchise annual marketing budgets in the country is not something which an individual store could compete with on its own. It really helps to entrench a brand in the hearts and minds of customers.
Granted, it is not always smooth sailing with some support challenges still to overcome.
According to the Fasa survey results, some franchisees pointed out that communication between the franchisee and franchisor can improve. Additionally, more finance-specific training is required, and, in some instances, better advertising across multiple channels can also be considered.
Franchising is often used as a cost-effective growth strategy for businesses. There are many benefits to this strategy, with the most evident being that no capital layout would be required from the franchisor for a new franchised store as opposed to corporate-owned stores.
Franchised stores are also proven to be more successful than these corporate-owned stores. This can mainly be attributed to how the franchise owners have a vested interest in the store, whereas corporate stores get supervised by a manager.
Franchising is therefore a great way the keep a brand in high regard in the market. But if a franchise is to be successful, it needs to have the relevant support services in place by the franchisor. It is a partnership approach that will contribute greatly to the success of the business in a competitive local market.
Brought to you by Nedbank Franchising.