Your Franchise Development Strategy

Developing your Franchise Strategy

Every business is unique and develops its own business plan. Similarly in Franchise development, Each business needs to develop its own unique franchise strategy. Whilst many businesses have grown to become international giants through franchising, the road to successful franchising can be complex.

Franchising is about more than just the legal agreement that binds the franchisee and franchisor. There is a whole host of business management areas that a franchisor needs to invest time and resources in to build a franchise development strategy to ensure successful replication and local adaptation of the brand over time.

I am often asked about how much a business should charge for a franchise fee and royalties. This is a question that cannot immediately garner a responsible answer. If one chooses to look at the closest market competition and decide on pricing, the answer is already out there. However, I believe that the success of a franchise is more than just the economics of the franchise. Those who already franchise will testify that franchising is certainly more than these magic numbers. Ultimately, it is the quality of the franchise management, the relationship between Franchisor and franchisee and the strength of the brand that influences the franchise success most.

While there are usually legal documents that frame the agreement between the franchisor and franchisee, it is really the business decisions that make up the agreement that ultimately determine how the franchisor and franchisee work together.

So what does it take to develop a strong Franchise Strategy?

The franchise strategy used in structuring the franchise offering is the foundation for every successful franchise system, and proper strategy development can ensure that your goals are attainable. This means we need to consider if the franchise strategy is to be developed as single units in home territory, in different territories in the same country or is it to handle international growth. The challenge is knowing what is right for your organisation, so that you can create a franchise offering that is easily replicated and marketable to the franchisees you want to target.

Underlying any successful franchise system is the determination of the economics of the franchise and the franchisor franchisee relationship, with a focus on creating a business model that is both marketable and sustainable.

We focus on understanding the key drivers that make your business successful, identify performance targets, systems to monitor progress. Other important areas to understand are the elements of support provided by you, the franchisor to help strengthen the performance of your franchisees, like set up support, training support, supply chain management, audit implementation, marketing support and many other aspects. Looking at your business from a holistic view, we build credible financial simulations and then make our financial recommendations regarding initial and continual fees based on extensive economic modelling.

Once the financial models are developed, we then go about pulling all the features that make your franchise different and more attractive than other similar franchises that are out there. Offering a franchise program to potential franchisees is no different from selling your products to end consumers. It is important to have a quality franchise offering that is well positioned and clearly differentiated from the other franchises out there.

Alongside a strong franchise development strategy is the need for strong Standard Operations Protocols to ensure increased replicability. Our award winning clients like The Manhattan Fish Market stated that it was their Standard Operating Protocols (SOP’s) that have helped them to accelerate and grow their business. Today, these SOPs have become integrated into a business operating system that leverages cloud technology to offer easily accessible, updatable processes and provide reports and business intelligence for the franchisor to take action.

Your Franchise Partner

Astreem’s success as a franchise development advisor is that we focus on the business’s state of franchise readiness, identify the key success drivers, strengthen the fundamentals, build sound Franchise growth strategies that are scalable. We focus on designing our clients’ franchise systems for long term success. We balance the economics of the business and the ongoing franchise relationship with the goal of ensuring sustainable growthfor the franchise system. Technology today makes it much easier for franchisors to manage their franchisees. Franchise management technology helps franchisors to monitoring performance, communicate to franchisees, streamline business processes, provide information to take pre-emptive actions when necessary as well as to ensure compliance within the franchise system.

7 Steps To Developing Better Audits

Audits are key to improving the operational performance in any multi store operation. Both Internal and external Audits help to ensure compliance and consistency in successful business management. However, audits are only useful when designed correctly, easily implemented and provide insights to help managers make decisions. Audit programs are designed to improve operational standards, improve customer service and audit compliance. Ensuring consistent quality and service delivery is critical to businesses on the brink of expansion and international growth. Being able to ensure consistency and quality is the key to sustainable growth. This article aims to provide you with an easy 7 step guide to developing better audit plans that are easy to manage and implement.

Step 1: Start with the Why

As with any goal, starting with the Why is the necessary first step. Defining the objectives of the audit and the Key Performing Indicator (KPI) criteria will help operations managers design a better audit plan.

For example:

  • Do you want to track compliance to the brand?
  • Do you want to track the customer service over different stores ?
  • How often do you track the hygiene standards of your outlets?
  • Do you want to check the completion of operational processes?
  • Are your outlets following merchandising guidelines?

Whatever your audit needs may be, the objectives of the audit need to be clearly defined so as to reap the benefits of an operations audit.

Step 2: Identify the Areas of Audit

Once the goals are set you need to identify all the Key Performance Indicator (KPI) areas that need to be audited.  If you want to audit brand compliance across all stores, you need to identify all areas that may affect how the brand is perceived. For example:

  • In-Store Corporate Identity
  • Staff Appearance
  • Customer Experience
  • Handling Customer Complaints

Step 3: Identify who conducts the audit

Generally, we have people in 3 roles that involved in conducting audits

  • Field Team: Either the Store Manager or Area Manager
  • Internal Dedicated Quality Assurance: Person whose only job is to conduct audits
  • 3rd Party External Auditor

Using an internal Field Team is cost most effective way to conduct audits. The disadvantage of using an internal field team is that there are certain conflicts of interest in the scoring of the audits. Having a dedicated quality assurance team to conduct audits may be provide for more unbiased scoring of the audits, however as this option menas a whole team dedicated to implementing and maintaining audits, this is a solution that works better for very large companies.

Using a 3rd Party Auditor may be good solution to help reduce both conflicts of interests that may arise by using internal field teams and avoid the high costs incurred in maintaining a dedicated quality assurance team. Since they are not tied to the operating metrics of the stores being audited, the audit scores are likely to be more unbiased. These 3rd Part Auditors are paid by the audits they conduct.  Astreem Consulting is a 3rd Party Auditor to help you conduct audits. The experienced team at Astreem designs practical audit programs that are targeted at key performance areas and conducts operational & brand audits for F&B, Education & Retail businesses.

Step 4: Designing the Audit Questions

The designing of audit questions depend on several factors:

  • Who is conducting the audit: If the field team member is conducting the audit, you want to keep the audit simple and short.
  • Type of Questions asked – The audit questions should also be from the view of  recording a fact (objective) rather than asking for opinion (subjective). Statements with a Yes/no answer or those with a graded range are the most commonly used audit question formats.
  • Frequency of the audit – Designing the audit is closely related to the frequency of the audit. If you are going to visit the store every day, then the audit can be short and you can vary the sections covered. But if the frequency is once a quarter, you would rather design a more comprehensive audit to cover the various aspects of an operational audit.

Step 5: Conducting the Audit

Before conducting the audit, you need to decide which tools will be used to conduct the audit. It is totally fine to use excel sheets or physical hard copies for Audits. The problem occurs while collating the data from hardcopies and making sense of the data. Copious amounts of Man hours are often invested to harvest the data.   Another issue happens when you need to look back at records from last quarter or the year before to make performance comparisons between periods. This can be resolved by using smart online audit tools like Tree AMS (Automated Management System). This system helps you to seamlessly collate data, run different reports between time periods and key performance areas. You reduce a lot of time in data collation and data storage.

Step 6: Analyzing the Results

The whole point of the audit system is to give you insights about the performance of various key performance areas of your business. Analyzing the results and taking decisions is key to performance improvement of your brand. For example, if the Customer Service Audit is consistently showing poor audit scores in specific outlets, then specific action at the store level to address the way the staff is trained to handle customers. A re-training may be scheduled for the staff. A post training audit will show better results and also improve your customer service.

Step 7: Improving the Audit Program

The last and important step is to make sure that the audit program stays relevant with the management goals. A regular relook is essential to improve the quality of the audit program.

To conclude, a well-designed audit program is about providing insights, feedback and enforcing accountabilty through out the organisation. It is one of the best ways of improving and sustaining performance of your brand.

Develop Your Own Audit Programs to Increase Your Brand Performance

Increase your Brand Profitability through increased Productivity.

Are you a Singapore business owner or operations manager who is wondering why all the profit you used to make has reduced over the years.

Are you in search of fresh business ideas that improve profitability ratios? Given that High Rentals and Human Resource restrictions are external forces that we, as small business owners and operation Managers cannot control, we can only look toward building business ideas to improve the way we manage our business. The usual way to increase profitability is to increase revenue and reduce costs. However, given the levels of competition and pressure placed on increasing expense, one major way to increase profitability ratios is to increase productivity.

Business Productivity is more than a buzzword. In a march 2018 report in Straits Times, it was reported that the SME 1000 ranking saw turnover and profits for smaller companies fell 11.8 per cent while profits declined 17.1 per cent. This means the real decrease in profitability ratio was almost double. Whilst many SME owners try to engage technology to improve the way they manage their businesses, very few have approached it from a holistic viewpoint. Leveraging technology needs to be part of the overall business plan. When executed well, leveraging technology into business development plans can improve the entire business management process can help to increase productivity, reduce human errors, decrease repetitive non value-add work and ultimately, increase profitability ratios.

Productivity can be increased through redesigning your current business processes

What does Business Model Transformation really mean to business owners and operations managers? Business Transformation is the process of fundamentally changing the systems, processes, people and technology across a whole business or business unit, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction. Business Transformation is a change management strategy that aligns People, Process and Technology initiatives of a company with its business strategy and vision. In turn this helps to support and innovate new business strategies that lead to the improvement of the business competitiveness as a whole.

Business Model Transformation entails more than just the blind automation of workflows that is currently being used. It is about strategic thinking to identify overall business objectives, identifying key business drivers and its associated key performance indicators (KPIs). Once the workflow processes are mapped out, it is streamlined to achieve specific performance metrics (Specific KPIs) and outcomes. Besides measuring KPI’s, another important area of Business Model Transformation is the ability for Business owners and operation managers to take appropriate and timely action through automated triggers and alerts. Using a Management dashboard as a control centre to monitor key performance criteria (KPI) and analysis of Business Intelligence (BI) gleaned from the business workflow management tool can allow the business owner to take the appropriate actions and decisions quickly. Business model transformation can be implemented in specific workflow like retail operations, customer service, restaurant operations, logistics, production, and any other business workflow area that requires the collaboration of more than one department.

How do you know if you need to Redesign and Automate your business process and workflow?

Ask yourself: 

  • Are you finding it more and more competitive?
  • Is your profit margin decreasing?
  • Are you having constant challenges meeting customer expectations?

To find out how you score take this questionnaire.

If your answers indicate you may be losing competitiveness, your business will benefit from a business strategy re-calibration and , a change in approach brought about by business model transformation.

Contact our Business process redesign experts at [email protected]  if you have a question on how Business Model Redesign or Business process automation can increase your business productivity and eventually your bottom lines.

Redesign and Automate Your Business Process to Increase your Business’ Profitability

Are you a Singapore business owner or operations manager who is wondering why all the profit you used to make has reduced over the years. Are you in search of fresh business ideas that improve profitability ratios? Given that High Rentals and Human Resource restrictions are external forces that we, as small business owners and operation Managers cannot control, we can only look toward building business ideas to improve the way we manage our business. The usual way to increase profitability is to increase revenue and reduce costs. However, given the levels of competition and pressure placed on increasing expense, one major way to increase profitability ratios is to increase productivity.

Business Productivity is more than a buzzword. In a march 2018 report in Straits Times, it was reported that the SME 1000 ranking saw turnover and profits for smaller companies fell 11.8 per cent while profits declined 17.1 per cent. This means the real decrease in profitability ratio was almost double. Whilst many SME owners try to engage technology to improve the way they manage their businesses, very few have approached it from a holistic viewpoint. Leveraging technology needs to be part of the overall business plan. When executed well, leveraging technology into business development plans can improve the entire business management process can help to increase productivity, reduce human errors, decrease repetitive non value-add work and ultimately, increase profitability ratios.

What does Business Model Transformation really mean to business owners and operations managers? Business Transformation is the process of fundamentally changing the systems, processes, people and technology across a whole business or business unit, to achieve measurable improvements in efficiency, effectiveness and stakeholder satisfaction. Business Transformation is a change management strategy that aligns People, Process and Technology initiatives of a company with its business strategy and vision. In turn this helps to support and innovate new business strategies that lead to the improvement of the business competitiveness as a whole.

Business Model Transformation entails more than just the blind automation of workflows that is currently being used. It is about strategic thinking to identify overall business objectives, identifying key business drivers and its associated key performance indicators (KPIs). Once the workflow processes are mapped out, it is streamlined to achieve specific performance metrics (Specific KPIs) and outcomes. Besides measuring key performance indicators(KPI’s), another important area of Business Model Transformation is the ability for Business owners and operation managers to take appropriate and timely action through automated triggers and alerts. Using a Management dashboard as a control centre to monitor key performance criteria (KPI) and analysis of Business Intelligence (BI) gleaned from the business workflow management tool can allow the business owner to take appropriate actions and decisions quickly. Business model transformation can be implemented in specific workflow areas like retail operations, customer service, restaurant operations, logistics, production, and any other business workflow area that requires the collaboration of more than one department.

How do you know if you need to Redesign and Automate your business process and workflow? Ask yourself:

Are you finding it more and more competitive?
Is your profit margin decreasing?
Are you having constant challenges meeting customer expectations?

To find out how you score take this questionnaire.

If your answers indicate you may be losing competitiveness, your business will benefit from a business strategy re-calibration and , a change in approach brought about by business model transformation.

To encourage Singapore Business owners to ready themselves for today’s more complex business environment, Enterprise Singapore (ESG) has crafted some Government Grants to help reduce the financial burden Business owners face when they engage in the adoption of Business Process workflow improvement, Business Transformation and Business Process Automation.

Business Owners can apply for Enterprise Singapore for financial support for the projects that improve core capabilities and productivity. Approved projects are granted up to 70% of the Project costs. Enterprise Singapore(ESG) support projects that involve Business Model Transformation.This enterprise Singapore grant can be found Enterprise Development Grant (EDG) under the scope of Business Process Redesign and Business Process Automation.

The Business Process Redesign grant is designed to help companies review existing business processes and identify areas to improve business efficiency. This is the first step business owners must take in redesigning their workflow before introducing automation into their businesses. The scope of this specific Singapore Government grant covered includes:

  1. The review and streamline of workflow and processes to reduce or remove redundant workflow processes
  2. Explore how technology can be used to automate processes and reduce manpower on repetitive actions
  3. Develop key performance metrics to track and measure the effectiveness of workflows

The Business Process Automation grant is designed to cover:

  1. The adoption and development of hardware and software solutions,
  2. The development of solutions that involve the purchase of machinery and integration of systems.
  3. The training of staff to deploy these solutions.

If you are a Singapore Owned business and want to find out more about these government grants, please go to the following link:
https://www.enterprisesg.gov.sg/financial-assistance/grants/for-local-companies/enterprise-development-grant/innovation-and-productivity/innovation-and-productivity

Want to find out if your business can benefit from this grant? Speak to our experienced consultants today.

Enterprise Development Grant (EDG): Frequently Asked Questions

Since the merger of IE Singapore and Spring Singapore to become Enterprise Singapore (ESG), there have been some changes in the way the Government supports the grants that are available to help in the growth of SMEs in Singapore. Many SMEs have been asking us what areas of support they may be able to expect from ESG and so, we have shortlisted a few questions we think can help business owners navigate this important area of government support. Astreem works with business owners who seek to improve and grow their businesses in most of the areas supported. We welcome questions about how your business may be able to grow through the specially curated areas of government support that has been crafted by ESG.

What exactly is the Enterprise Singapore EDG grant?

The acronym EDG actually refers to ‘Enterprise Development Grant‘. This is a financial assistance programme, initiative of Singapore government agency – Enterprise Singapore (ESG). It is a program to assist with SME growth and is designed to offer  more flexibility and extend more coverage to support our local SMEs.

This grant assistance programme is aimed at helping local SMEs develop and upgrade their organization’s business capabilities under three pillars:

Development of Core Capabilities

The Grants are designed to assist SMEs to develop their Core Capabilities to help prepare for growth and Business transformation by strengthening their business foundations. This can include formulation of growth strategies including corporate driven expansion, Franchise development and Joint venture partnerships. Companies can also look towards development of Business strategies and processes to protect and monetise intellectual property assets as well as optimise their operations.

Another area that is important in the quest to grow your business is to look at better capturing your business’ target audiences and markets by differentiating your brand proposition, and your products and services. In some cases, brand localisation in the targeted market can also be a critical success factor when entering new markets.

Other areas that fall under the Core capabilities development include Financial Management, Human Capital Development and Service Excellence.

Innovation and Productivity

The Innovation and Productivity projects support companies to explore new areas of growth, or look for ways to enhance efficiency. These could include reviewing and redesigning  workflows and processes. Companies could also tap into Business automation and technologies to make routine tasks more efficient. The successful Implementation of Business Automation can greatly increase productivity and reduce human errors, thereby increasing profitability.

Market Access

Projects under Market Access support Singapore companies that are willing and ready to venture overseas. Companies can tap into the EDG to help defray some of the costs of expanding into overseas markets especially where Mergers and acquisitions is the growth strategy, developing overseas presence.and developing international standards.

Who Qualifies for the Enterprise Singapore (ESG) EDG government grant?

EDG is only applicable to Small Medium Enterprises (SMEs). Typically, a SME would be eligible as long as they meet the following criteria:

  • The company must be registered and operating in Singapore
  • Has a minimum of 30% local shareholding
  • Is in a financially viable position to start and complete the project

Enterprise Singapore assesses your company’s overall financial performance to ensure that your business can comfortably see the project through and benefit from it as well as the overall productivity of your company. The competency of the selected consultant or service provider is also a key consideration. Ultimately, ESG seeks to support Business owners who clearly understand the scope of the project, why they wish to embark in that area of specific capability improvement or business strategy development projects and how your business will benefit from the projects supported by the government grant.

What  does Enterprise Singapore Enterprise Development Grant (EDG) support?

The EDG grant supports up to 70% of qualifying project costs namely third party consultancy fees, software and equipment, and incremental internal manpower cost.

How long is the duration of an Enterprise Development grant (EDG) project?

As EDG project may take between 4 to 12 months to complete. However, it is really subjected to the scale of each project that is undertaken.  A typical Franchise Development project by Astreem can take between 4 to 6 months and an International Business expansion project into a specific country may take 3 to 4 Months to complete.

Internationalizing Your Brand through Franchising – Are you Ready?

You started your own business and it was an exciting affair, especially since, nothing could beat the thrill of being your own boss. Over time you have then set the systems in place, figured out what works and what doesn’t and you have grown your business locally. Now you think this is the right time to take your business to the international shores. Franchising your brand can help you achieve a larger brand footprint.

Some Benefits of Franchising Internationally:
– Builds market share.
– Increases revenue channels.
– Grows brand equity, Brand reputation and recognition.
– Lowers risk through diversification in new countries.
– Balances out temporary losses locally with international earnings.
– Decreases production costs by moving certain operations to countries where labour and materials are cheaper.

Getting started:
Before you franchise internationally, do ensure you are prepared with the following:

1. Strong Brand Identity: At the centre of any good franchise operation is the brand’s identity. Franchisors must develop the brand well enough to gain international market recognition because people buy a product or a service depending on how much they can relate to it. There must also be a proven track record of the brand’s success in the local market.

2. Clear Franchise Strategy: You must ensure that your business has a clear and easily communicated sales proposition before you start to look for franchisees. Price, quality, service, logistics, operations and anything else that you want to include in the Franchise offering needs to be clear in your franchise marketing collateral.

3. Well Documented Operations: You know that you are ready when you have clear, reliable and documented operations processes for creating or delivering your service of product.

4. Replicable Business Model: Your company must already be making decisions and be implementing activities consistently based on agreed methods of business process management. This is important because in the end franchisees are not buying your product or service but they are buying a process by which your brand can be run.

5. Adaptability: International markets often put the franchisor out of his or her comfort zone. The franchisor must be flexible enough to adapt to the nuances of the new markets. Not everything that worked in your local marked can be applied to international markets.

6. Strong Franchise Management System: Finding a franchisee, whilst is important, is less vital to the success of a franchise’s success than their ability to manage their franchisees. Using a Franchise management platform can simplify many repetitive tasks and ensuring processes are automated also allows for smart contract agreements to be enforced.

Few Words of Caution:
1. Avoid the lure of short term profit: Take your time and plan on long term investment in the new international markets that you want to be in. Rome wasn’t built in a day and neither was a successful international brand expansion. Lasting business relationships and credibility in international markets are built over time.

2. Misjudging new markets: Even if your brand is doing exceptionally well locally, you need to see whether the products or services that you are giving through your business will fill a demand in international markets.

For franchisors who want to grow internationally, it is recommended that you take the support and services of franchise experts to help you exploit the intellectual property that resides in your business. Develop customized growth strategies for your business to help you successfully franchise and sustain your international brand growth.

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About the Author:
Hsien Naidu has over 25 years of experience in Franchising, Marketing, Branding and Intellectual Property Management across various industries including Food & Beverage, Education, Retail and Lifestyle as well as services. She is a Senior Practicing Management Consultant, a certified Intellectual Property Management Consultant, a Certified Franchise Executive and is presently the Director of Astreem Consulting Pte Ltd.

The “Golden Age” of the Chinese Education Market

The “Golden Age” of the Chinese education market is fast approaching. The huge gap between spending power and the quality of education urge foreign companies to seize a share of this market.

Opportunities:

  1. Chinese government policies reveal its determination to fully support industrialization of the education market. One of the development goals in the 13th Five-Year Plan proposes to provide pre-school education in every community in the country by 2020 while encourage private capital to invest in the education industry.
  2. Private capital has been flowing into the education industry. In 2015, total investment into the industry more than doubled from the previous year.
  3. China’s education market is estimated to reach up to RMB3 trillion by 2020, up from RMB 1.6 trillion in 2015, with a compounded annual growth rate of 12.7%. In particular, the training education segment, which includes early childhood education, K12 tutoring and vocational training (both corporate and personal), will be the main driver of growth in the future.
  4. For early childhood education, thanks to the implementation of the new “Two-Child Policy” by the Chinese government, the market is set to take off with instant new demand. Similarly, the growing number of school-aged children will boost demand for K12 tutoring.

Restrictions and roadblocks

  1. Education in China as a whole is a highly sensitive sector closely correlated to ideology, the government has put some quite stringent regulations in place limiting foreign investment, particularly in the compulsory education segment.
  2. The National Development and Reform Commission (NDRC) under the State Council has prescribed several restrictions on China’s education industry. Its Catalogue of Industries for Guiding Foreign Investment (2015 Revised Edition) restricts foreign entities to investment in the non-compulsory education segment including pre-school, high school and tertiary education by way of JVs with Chinese counterparties. While foreign entities are permitted to hold majority ownership, the board of directors and key management positions must be held in majority by Chinese counterparties.
  3. For non-compulsory education segments, regulations are less restrictive. Foreign capital to investment in vocational education is encourged, including in English language, information technology (IT), sports and accounting. Foreign interests are prohibited from investment in ventures relating to military, police and political education.

Possible foreign entry models

How International Education Brands and investors choose to enter the Chinese education market invariably depends on the level of capital outlay and engagement at their disposal. Typically, there are six potential entry models: self-owned schools, China-foreign cooperative education, franchise, institutional investment and M&A, online education, and education resources input.

Entering the Chinese education market via the franchise model

 The Educational Franchise models in China (Both Local and International) mainly focus on early childhood education and English language training. This is often the preferred model of entry as upfront capital outlay as well as ongoing investments are greatly reduced.

Foreign brands entering China must be sensitive to the need to localize their curriculum and offerings in order to increase their adaptability and accelerate expansion.

The problem remains that International Education Franchises may not be able to maintain consistent standards across all franchises and branches, which may lead to deteriorating reputation. In a highly competitive and price sensitive environment like China, Brand Equity and Reputation is the key factor that allows for differentiation.

Stringent and effective operational control on service and quality delivery is the biggest challenge for most foreign brands entering the China market.

A good balance of International best practices brought about through foreign brands must be combined with excellent localized operational development for foreign franchises to succeed in China. As globalization accelerates, more and more Chinese parents hope to nurture Global citizens, infusing their children with a sense of internationalized thinking and awareness. Compared to local educational brands, International Education brands are very appealing. Education brand with strong offerings, clear differentiators and offering future generation teaching concepts and pedagogy should consider a strategy for entering China whilst the door of opportunity to this Golden land is wide open.

Astreem has been working to effectively forge collaborations between Singapore education franchises with Chinese Investors, schools and franchisees to bring the education in Chinese to the next level, whilst accelerating the growth of the Singapore brands.

For more information, please contact [email protected] or call +65 6742 0803.