In franchising, especially, even small decisions can have a dramatic long-term impact for franchisors and franchisees alike – therefore increasing the benefits of investing in specialist outside advice. And today, in an increasingly complex, dynamic and uncertain environment, fields of advice are becoming even more specialised.
It is our observation, based on 30 years of experience working with new and established franchising companies, that some companies strategically leverage a diverse range of outside advisors – adding considerable value and sustainability to their organisations. Meanwhile, at the other end of the spectrum, some companies almost make a point of never using outside advisors – apart from help with statutory accounts.
In franchising early decisions in even small areas can make a massive difference. Consider a franchisor with nationwide operations and $250,000 profit. In this case a marginally higher royalty would have delivered >$1m profit, with little impact on franchisee profit and returns. But the company never completed a proper franchising feasibility and economic assessment.
In another example a company dramatically underestimated demand, granting just 12 territories nationwide. Over many years they developed to more than 100 territories, necessitating difficult established franchisee territory split negotiations, on multiple occasions.
We see huge potential for franchisor companies to actively obtain outside advice, from appropriately capable specialists. There are a range of specialists relevant to franchisors, depending on their development stage and support office make-up.
Examples of specialist areas include franchise consulting, legal, intellectual property, sales, marketing, branding, human resources, accounting and finance, analytics, health & safety, technology, property, procurement, public relations, publishers and business brokers. In turn, many of these examples, like marketing, include increasingly specialist (and relevant) areas of focus, like social media and digital marketing.
Specialist advisors can add value because they have specialist knowledge, are independent, and more successfully allow the business to maintain focus on existing business operations.
Best practice franchisors, as part of their comprehensive franchisor planning, will research and identify areas of outside advice that can add value and sustainability to their total franchise system.
- What areas of outside advice do you currently leverage?
- What areas of outside advice are available that could help you establish a more profitable and sustainable future for your franchisor and franchisee businesses?
About the Franchising Best Practice 500 Series
This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.