Time for a new recipe?

Posted 02/01/2019 : By: Debbie Dennis

At this time of the year, Christmas, every publication you pick up goes into overdrive with recipes – and the theme this year seems to be creating a variation on the tried and trusted favourites and regulars that we have all grown up with.

Now I don’t know about you but how many different ways are there to fry an egg, for example? Or bake a potato? Or cook runner beans?

What does this have to do with franchising I hear you ask? Well, food and cooking – dear to many people’s hearts – are things that I play around a bit with at the weekend and my wife has enjoyed some culinary masterpieces as a result! She has also suffered some disasters AND inevitably chef’s tantrums, mountains of washing up and late deadlines for the meal.

The reason for some of these tantrums is that I think I know better than her – not a good idea! She has spent many years learning to be a great cook, and on a Saturday I roll up with a new recipe downloaded from somewhere or another and announce that I am going to cook something that will knock the socks off her old favourites. Usually, when I’ve started, she comes along and points out the recipe is quite incorrect in the amount of time that it will take, or that the quantities of the ingredients are incorrect, or even there is something fundamental that is missing. When I have my wise head on I listen to her and it all turns out well. When I’m feeling self-righteous I press on down my own road and that is when the problems come.

So, let’s turn to franchising and how there may be a parallel…

Recently we have seen a number of businesses coming along very keen to embark on a franchising programme, which is good, but from almost a concept or a very recently formed business background. It is our role and responsibility as Franchise Consultants to point out to these would be franchisors the risks they are running on behalf of their businesses and equally importantly on the behalf of the potential franchisee investor by trying to run before they can walk. In other words, these early stage businesses are trying to circumvent the tried and tested formula of franchising a business by first having solid proof of concept.

Now, I am not so set in my ways as to think that one cannot create variations on the theme. For example, in the way that collaboration takes place, or the initial or ongoing fee structure. – In fact, we do now witness some franchisors who are quite prepared to take a very minimal fee upfront, even though it will result in them subsidising their new franchisees, because they want to build a network and they see more value in the ongoing revenue from that network, particularly if they are supplying products, or have some vested interest in the overall supply chain. It is logical really; these franchisors are receiving the potential ability to scale up using their franchisees money, skills and talent – and they want to make it as simple as possible for those people to join their network and invest.

However, on the other hand, this is not the way that most franchisors operate. These franchisors, quite rightly, are of the opinion that their intellectual property is valuable, that they have invested in preparing a solid and viable franchise system, that they intend to provide strong ongoing support to the franchisee with a good training programme, and an operations manual. In addition, they are fully prepared to support franchisees, especially during the launch and early trading period and intend to be there during those challenging teething stages that every new franchise business goes through. In essence, they want to be paid an amount of money that properly reflects the value they are providing to franchisees.

Now, you tell me – which is right, and which is wrong? The tested or the new franchise formula? Actually, both can work in practice.

To be clear, what I do not think can work is the idea that a fledgling business with very little trading or a robust track record, or a business that has no experience through the 12-month cycle of a business can successfully franchise on any scale or indeed on any level. Other factors such as having only a limited understanding of their marketplace or a weak marketing strategy, and with ill-defined systems and processes insufficient to support a franchise network will also have a detrimental effect on business success. Without ensuring that all business-critical factors have been developed, implemented, operated and proven to deliver a healthy business really would be breaking a tried and trusted recipe – indeed a recipe for failure.

An increasing number of younger entrepreneurs, often with strong technical backgrounds, and who may have read widely around franchising are coming into the marketplace with aspirations to do things differently. As established, experienced industry professionals, we should recognise the value of developing and embracing change while staying true to the fundamental components of successful franchising.

That way new dishes can be created, new tastes catered for – and new recipe books written!

So, in summary, I think that cooking up a storm with different ingredients has potential merit in franchising as long as we keep some of the fundamental ingredients at the forefront of our thinking. We look forward to helping many new franchisors into the industry in 2019 and to supporting these new franchises achieve a recipe for sustainable success.

In the meantime, bon appetit!

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