Services vs. Costs: The Need for the Franchisee to Tow the Company Line

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One of the fundamental aspects that can often be overlooked by a potential franchisee is the necessary requirement of being completely in tune with the franchise.  It is human nature to want to add in one’s own individualistic touch, but more often than not, such action won’t be tolerated by head office.  In franchising, all franchisees must follow the corporate business model of standardization.

From the company’s perspective, it must secure protection for the trademark brand and control the implementation and continuance of specified business practices.  Conversely, the franchisee has an obligation to execute the predetermined services that made the brand famous. 

There are often a number of inaccurate assumptions by segments of the general population when it comes to the franchising model.  Probably the most common misconception is that a franchisee buys a franchise.  In fact you are investing your time and money into a regulated, standardized system to have the privilege of using a known brand name, with its own distinct operating system and support. You and everyone within the corporate system are licensed to use the brand name and operating system.  By extension, other franchisees within the company are not your competition.  Head office wants the brand name developed and matured by fostering a team environment so word gets out about the company success over a much wider area.  It’s about positive brand recognition whether you are operating from St. John’s, Newfoundland or Victoria, B.C – or anywhere in between.

Peter Druxerman is vice president of marketing at DRUXY’S Famous Deli Sandwiches who offers up some great advice on people thinking about getting into franchising.  Each franchise will vary in its format requirements and philosophies, so understanding the idiosyncrasies of each is integral.

As example, there are times when franchisees will be instructed to purchase certain products approved by the franchise that may cost more than products the individual could find on their own.  But it’s all about branding and quality control and ensuring everyone is on the same page.

On speaking about his own franchise, Druxerman addresses that very matter.

“If you are cost oriented, you are going to be very upset at the price you’re paying, because you may see the same thing cheaper at Costco,” he says.  “If that’s going to affect you, then you cannot become a DRUXY’S franchisee.  You’ll constantly be upset because your philosophy and our philosophy isn’t the same.

Such philosophies are often different based on the franchise and the industry.  It’s vital to be part of something that you believe in.  A bigger company may be very heavily cost-oriented as opposed to services oriented.  As example, if labour costs are coming in 2.3 per cent higher per hour than expected, then that’s a problem.  than Different strategies work best for different companies. 

“Don’t say you’re service oriented when you come to me and you’re really cost oriented,” Druxerman says.  “You’re hurting yourself – not me.”

If an individual determines that a specific franchise in a certain industry is the best fit, that’s only the first step.  The next decision is to factor in longer-term goals such as whether you want to run a single location, or if the plan is to eventually branch out to multiple locales.  Is that even an option?  That’s an answer you want to get from the franchisor up front as there may be set limits on expansion potential.  There’s a need to examine your own potential growth and what the company’s growth will allow.

Personality is another key ingredient that can often be overlooked.  Do you like interacting with customers?  Do you want to be out there in front, or would you rather be in a back room doing administrative work?

“Some companies look for the franchisee to be more administrative, others look for them to be right in front of the customer working the counter,” Druxerman notes.  “You likely won’t see a franchisee running the counter at McDonald’s but at DRUXY’S you will.  It’s a difference of opinion. The administration and tightening of the costs is important to McDonald’s – it made them successful. Our success is based upon the quality of service and relationships.”

It cannot be overstated how crucial it is to be properly educated on your strengths and the synergistic qualities of a franchise you are thinking about becoming involved with.  It’s necessary to meet with any potential franchisors to find out more about you and the business, not which one you think will bring tremendous wealth.

“One of the things I say to our franchisees is that if you love your customer more than you love their money, you will succeed,” Druxerman says.  “Listen to your franchisor and share with your franchisor.  Do not live on an island unto yourself, because your island will sink.  You’ve got to participate and have passion for your customers.  Service is about having a passion.”

An integral part of success is to carry out ongoing communication between the company and the franchisee.  It’s a partnership.

“One of the things we do is we have regular meetings or phone calls with franchisees,” Druxerman continues.  “I’ll do this all the time phoning people every week who are thinking more than others and I’ll be asking them what they think of certain ideas because I’m not in the stores as much as I used to be, so I don’t know what customers are saying today.”

“The franchisees quite often aren’t prepared to share because they’re afraid to look like an idiot; they’re afraid they’re saying the wrong things; they’re afraid to share their income statements – but that doesn’t help me any.  If the food costs are too high, I don’t know that if I’m not running things myself.  You have to share every idea you’ve got and then put these together and the company evolves.”  

Other factors that a potential franchisee will need to consider are the negotiation of the license and the applicable fees for becoming a team member.  More often than not franchise agreements carry no guarantees for protecting the franchisee, so if a dispute should arise, the playing field is often weighted heavily towards the franchisor – who otherwise wouldn’t agree to hand over the corporate keys.

Franchising can be an extremely rewarding career path.  Just ensure your chosen path is the best one for you.  Think with your mind, not your heart.

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