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.

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