Go to the profile of ResultsThruStrategy
ResultsThruStrategy
A group of creative consultants who help restaurants unleash potential by growing their sales, profits, and people.

To Be or Not to Be a Franchisor

Today, franchise consultants Lynette McKee and Frank Steed shared tips on ways to prepare to franchise a foodservice operation. The presentation was part of Results Thru Strategy’s on-going webinar series.

Steed has overseen franchising at several chiefly franchised chain, including Bennigan’s, Ponderosa, Bonanza and Tony Roma’s. McKee’s has been a franchise executive at Bennigan’s, Burger King and Dunkin Donuts. A replay of the event will be posted to our website next week. Meanwhile, here are a few highlights:

Steed: “Franchising is nothing more than your company’s grwoth strategy. So you have to ask: ‘What should my company look like?’ Franchising to gain market share can be a great strategy, but it isn’t always the perfect answer for every brand.”

Is franchising a smart growth strategy for your company? Consider the bulleted items on this list before making a move.

McKee: “Be sure to review your competitors’ FDDs [Franchise Disclosure Document] so you don’t price yourself out of the competition for franchisees. You’ll want to look for things you will need to put for your protection. understand what your competitors FDDs look like.

Both experts strongly advised hiring a lawyer who specializes in franchise law to help you write that document and understand your obligations to franchisees — and so you don’t run afoul of Federal Trade Commission rules.

Steed: It’s really important when you are just starting to make that first agreement as good as it can be, because it lasts the life of the franchise agreement.”

McKee: “[In light of the National Labor Relations Board’s co-employer ruling], look at your operating structure in the field. Look at what might be the best practices moving forward.”

Where will franchisees open their restaurants? It’s absolutely crucial that franchisors have a solid grwoth plan.

Steed: “Build the recruitment strategy before you set out to franchise. I see new franchisors hiring brokers to sell franchises before there’s a franchisee profile. Is this a buy-a-job franchise that’s staffed with family members or one seeking multiunit franchisees? Ask: Who do who I want to grow my brand, and how do I reach them and get their attention?”

Best advice is to regularly communicate with franchisees. Advisory councils have been adopted by many franchisors, but they are not without their challenges.

McKee: “Many companies struggle with advisory councils. Regardless of how you do it, having a good communication channel with franchisees is crucial. if you don’t communicate with them, they will communicate among themselves.”

Steed: “Franchising is all about relationships, selling and working with franchisees. The word ‘control’ is not in my dictionary.”