Warning
to Franchise Owners
Business owners
considering launching a franchise should be draconian in the way
they manage franchisees or they risk weakening the brand and possible
business failure.
The warning
comes from Phil Oliver, a partner at national accountancy group
UHY Hacker Young, which specialises in advising franchises.
Oliver
explains:
"In their
haste to attract franchisees, many business owners go soft in
the head and let their brand values become diluted. This is short-sighted
because a strong brand can make or break a franchise business.
And a strong brand will only be created if franchisors insist
that corporate rules are followed.
Oliver
has three key pieces of advice for franchisors:
1) Make sure
you are in regular contact with your franchisees - both remotely
and by visiting them
2) Make sure
you incorporate a corporate guidelines section on the contract
to ensure franchisees don't weaken the strength of your brand
- logos and corporate colours, for instance, change beyond recognition
3) Make sure
you agree financial and accounting requirements from the very
start. Make it clear that you expect to receive weekly or monthly
management accounts
"Before
launching a franchise, the owner will have created a successful
business. They need to be proud of this and remember that the
values they have instilled into the business are what will take
it forward to even greater success. They must be proud and insist
that franchisees follow certain criteria."
Oliver says
the most successful franchises have effective systems of control
in place.
"In a
nutshell, they are micro-managed. Weekly reports are filed and
any discrepancies or signs for concern are followed up with the
franchisor immediately. It may sound harsh but it is the only
way to really keep tabs on the business. This approach also means
that potential problems can be spotted and sorted before they
escalate out of control."
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