What makes a 'good' franchise system? - Part 1

First of all: Franchise systems can only be assessed in comparison. Only through comparison does it become clear whether the services offered by the systems and the obligations one undertakes as a franchisee are in a good balance for oneself.

Franchising is characterized by the division of labor within the network. Many administrative tasks are usually handled by the franchise headquarters. This relieves the franchise partners and allows them to focus more on the core business. Nevertheless, these services vary greatly and are system-dependent.

You need to assess yourself where your strengths and weaknesses, as well as your interests, lie and which specific offer is the most attractive for you based on that.

The service package of a franchise system can basically be divided into two categories.

1. Services in the organization and
2. support in the implementation.
   
   In this article, we focus on the services in the organization.
   

Products or services

This is the most obvious point you will consider right from the start. Can you even identify with the products or services offered? Do you see the need, the market niche?

But important questions also concern the future vision of the brand offering.  

How are the core services being further developed so that the system can evolve with the market and new customer needs?

Finance: economic planning, controlling, benchmarking

Franchise systems provide new founders with tools and experiences to create a business plan at the beginning of the partnership; this is the norm.

But don't hesitate to delve deeper into the financial organization. What methods are there for ongoing success control by the franchisor? Are controlling and benchmarking lived in the system processes, and how do the partners benefit from them?

Effective controlling provides a clear picture of the economic reality. It shows where the individual partners and the system as a whole stand and where they are heading.

Business premises

Not every franchise concept has a public location or business premises. For the systems where this point is relevant, we recommend exploring the following questions during your assessment:

Does the system's headquarters have the means and methods to conduct a detailed location analysis? What is the density of the target group at this location, and how much competition already exists?

Does the headquarters support or even take over the site negotiations?

What are the concepts and plans for the setup and interior design?

What about the schedules and costs?

Marketing

Since you are relying on an already established brand in franchising, you can naturally assume that you will be provided with the necessary marketing assets from headquarters. Beyond that, there are also significant differences between systems in this area.

In many concepts, marketing is centrally controlled for each location. This means you don't have to worry about setting up or maintaining the website, customer relationship management system (CRM), or handling social media channels.

However, it is advisable to clarify in advance how much is actually taken over by the franchise headquarters. You might have extensive experience in this area yourself. In that case, you should determine how much freedom you have to launch your own campaigns.

Sales

As with marketing, there are also various organizational models in franchising when it comes to sales. The range extends from systems where acquisition is carried out centrally to business models where sales are the main task of the franchise partners.

Here, it is recommended to rely heavily on your own experience and preferences. How comfortable do you feel with the idea of cold-calling for your product or service? How familiar are you with sales processes? How much could you thrive in the challenge of building a customer base from scratch?

Employee Management

Successful franchise systems rely not 'only' on well-tested products in the market but also on well-thought-out internal management processes. If you already have experience in this area, you can compare your own best practices with those of a system and determine if you are on the same wavelength with the organization's values.

If you still have less experience in this area, it is even more important that the system of your choice actively supports you here.

Internal Communication

Finally, we would like to explicitly emphasize the examination of internal communication. The franchise system thrives on the partnership of independent entrepreneurs and thus wants to know how best to utilize this. What information flows exist from the partners to headquarters and back? The better the system is set up here, the faster partners can learn from each other's mistakes, discover new opportunities, and drive the growth of all parties.

Each system has individual onboarding processes in which many of your questions will be answered at different stages.

We hope we were able to broaden your perspective and thus clarify your own process in system comparison.