Optimize Franchisee Talents for Growth with Multi-Brand Franchisors
By Michelle Parks, CFE
Franchisors operating multiple brands have unique opportunities and challenges. Companies become multi-branded through various means and for different reasons. Likely, these come in the form of the following:
• The ownership has an entrepreneurial streak and develops new concepts viable for growth through franchising;
• The company may acquire brands or concepts through opportunities that become available or because of a policy of diversified investment and allows franchisees to operate one or multiple brands; or
• A combination of these.
Companies that operate multiple brands and decide to expand through franchising should be prepared for the benefits and challenges each type can provide, and be able to motivate each franchisee according to the goals set for the brand and franchisor, and the culture and characteristics of the franchisee.
Entrepreneurial franchisors who create and expand their own brands have the opportunity to involve franchisees in the development of their concepts and ideas into the brands. The level of involvement depends on the culture and attitudes of the franchisor and its leadership. Franchisors operating brands that are earlier in their life cycle are more likely to attract franchisees who are more entrepreneurially minded—having a strong desire to create and have input than those who are more “frantrapreneurially” minded—possessing a strong desire to follow an established system—these franchisors will likely have more success involving their franchisees in the evolution of the brands to some level.
Entrepreneurial culture, active communication and involvement from the franchise community can create dynamic brands with versatility and energy that attract increasing numbers of the consumers. The challenge for the franchisor is to put into words the brand’s essence so its core brand remains consistent through the life cycle and early evolution of the subsequent brands. Entrepreneurial franchisors may also discover that as the brands mature, these early franchisees are not as prepared to cope with the brand becoming more consistent. The franchisor then must seek ways to retain these franchisees through other means, such as empowering them to become champions for what the brand becomes and mentor new, less entrepreneurial franchisees into their roles. Some franchisees may not desire to continue in this role.
Involving entrepreneurial franchisees allows an outlet for their entrepreneurial energy.
If the franchisor is continuing on the path of creating new brands and selling or otherwise disposing of concepts or brands that did not demonstrate the success the franchisor had hoped to, the company can transition these franchisees into the new brand and help them to identify more frantrapreneurial transferees. Think through an exit strategy for these early franchisees when considering development and franchise agreement terms; don’t assume these franchisees will remain when the waters of the new brand become calm.
Franchisors who acquire more established brands typically seek out more frantrapreneurial franchisees. These franchisees have a focus to grow the brands and follow an established system. Because the brand’s essence is clearly established, franchisors can focus more energy on solidifying these systems and finding ways different brands can work together more efficiently. Franchisors can also focus more on keeping the brand energy fresh as the brands mature. With multiple, well-established brands operating under the same franchise system, franchisees enjoy the benefits and security of similar training methods and pursuing avenues that allow cost-effective buying that can improve their bottom lines. Franchisors in this scenario have the opportunity to cross-train support staff so the franchisee can build a relationship with the operations, marketing and other team members. Franchisors should focus on how internal infrastructure can maximize cost effectiveness and create strong franchise relationships.
Harnessing Entrepreneurial Energy
Franchisees can also benefit by creating opportunities for their staffs to grow and advance, thereby increasing employee retention. Challenges occur when the franchisor identifies a franchisee who demonstrates more entrepreneurial traits, likely after they have signed the agreements. The franchisor then needs to get creative and find avenues whereby the franchisee can constructively utilize these traits, similar to how the more entrepreneurial franchisor needs to continue to motivate longer-standing franchisees through new avenues. One avenue might be to utilize these franchisees during research and development projects to assist in idea-creation sessions or in testing and providing feedback on new products. Or the franchisor might find these franchisees essential in training new franchisees in the system. They could test the new franchisee extranet before anyone else and provide insights on how to make it even better. Involving more entrepreneurial franchisees in creative projects allows them an outlet for their entrepreneurial energy, with the hope and intent that they become proponents of the franchisors’ activities to the other franchisees.
Identifying these individuals and involving them early, before they believe the franchisor is failing to meet their needs, is crucial. Sometimes, they just want to be heard and know the franchisor is interested in listening to them. Other times, the franchise organization may discover that no matter how involved it strives to make them, they are not well-suited to the company’s culture. The franchisor must then work with franchisees to enable them to understand that the company wants to help them reach a level of fulfillment, but it may require them to transfer the franchise. Again, taking these circumstances into account in the agreements is important, and having franchise support staff capable of open communication about the franchisees’ goals and needs molds these discoveries into opportunities, rather than issues and conflict.
Exiting does not mean quitting
Franchisors operating a mix of new and established brands can create opportunities for franchisees with both entrepreneurial and frantrapreneurial tendencies. Franchisees may seek out brands they know but discover, because of entrepreneurial tendencies, they are better suited to enlarging brands in development, either prior to entering into a franchise agreement for the known brand or even after they begin to develop the established brand. These franchisors can retain these franchisees within their ranks, test their abilities, and then encourage them to take on the brand and opportunities that best suits them, while also encouraging them to mentor other franchisees.
All multi-brand franchisors should consider how they can best use the resources of the brands to reduce internal costs while providing exemplary support to their franchisees, whether the franchisees are operating a single brand or several, without risking the integrity or proprietary information for each brand. Find the strengths of these franchisees and use them to the best advantage. If they are “go-getters,” challenge them to get more and be more. If they are happiest when they are following the system and not dealing with change, make sure pending changes are known well in advance of the change so they feel prepared. Multi-brand franchisors have the advantage of providing franchisees options for additional growth by presenting another path that might lead to a potentially more-rewarding direction, and efficiencies that single-brand franchisors do not have.
From a Franchisee Perspective
Franchisees, whether of single- or multi-branded franchisors, need to communicate their desires to the franchisor from the date of introduction. If a multi-brand franchisor ultimately desires a franchisee to operate multiple brands simultaneously, the franchisee should ask the franchisor about these intentions early in the process. If the franchisee knows the franchisor wants to provide insight and ideas to the venture, he may want to seek out franchisors with brands that are in the youngest stages of the life cycle, and then ask about the culture and acceptance of input from franchisees to the evolution of the brand. If the franchisor has existing franchisees, these are questions to ask ideally during interviews of franchisees currently acquainted with the leadership style of the franchisor. If a franchisee knows he would like to operate within a system, he might select franchisors operating brands that are more mature and established.
Some of these questions will be answered once an individual meeting with the franchisor representative is being conducted during a visit to the organization. This represents another critical step when seeking a franchise opportunity because one will see from the operators in the units how clearly they follow the system. We all make mistakes, misunderstand, or miss asking questions. One essential thought to consider as one enters into a franchise venture is “What is the exit strategy?” It’s also wise to realize that exiting does not mean quitting or failing. It more likely means a previous franchisee has paved a road for someone else who then purchases the business and opens a new road that may be better suited to his destination. n
Michelle Parks, CFE, is global development manager of Brinker International, Inc. She can be reached at 972-770-1257 or email@example.com.