As a franchise consultant, I am constantly asked why someone would buy a franchise when they could just as easily start the business on their own. Time and again, business owners who are considering franchising will pull in the reins because they feel they do not have something that is truly proprietary to offer to the franchise market. They lack that “secret sauce” that will make their franchise sellable.
The problem with this thinking is that the people asking these questions are thinking like the entrepreneurs they are, instead of like the franchisees they wish to attract. Unlike prospective franchisees, entrepreneurs would rather figure out how to run a business than invest in a franchise where they would have to follow the systems created by others. Franchisees think differently. They do not like trial and error. They are looking for someone to show them the ropes and are willing to pay the price for that learning.
Consider for a moment some of the hugely successful franchise brands that have relatively little in the way of secret sauce:
• Carpet cleaning franchises: While some of these franchisers will boast proprietary equipment, chemicals, or processes, to the average consumer there is little difference between them. Yet the largest companies in this industry are all franchised, some of which boast thousands of units. Chem-Dry, for example, a former client, has over 3,500 franchises worldwide, with companies like Rainbow International, Stanley Steemer, COIT, Servpro, ServiceMaster Clean and others bringing many hundreds more to the table.
• Maid service franchises: This is another example of a business with little in the way of secret sauce, as they typically offer very similar residential cleaning services with mobile crews. The biggest companies in this industry (The Maids, Molly Maid, Merry Maids) all have hundreds or even over 1,000 franchises sold.
• Lawn care franchises: Companies like TruGreen, U. S. Lawns, Lawn Doctor and others have all sold hundreds of franchises, even though their core services are often very much alike.
• Janitorial services franchises: While franchisers may provide a role in client acquisition, the franchisees themselves are in largely undifferentiated businesses. And companies like Jan-Pro, Stratus, Jani-King, Anago, CleanNet, Vanguard, Coverall and others have sold thousands.
Frankly, the list could go on and on. Junk hauling franchises. Hair care franchises. Fitness franchises. Even some food concepts (think about frozen yogurt, for example). There are dozens of categories where the business is, quite frankly, not highly differentiated at the consumer level.
So how is a new franchiser supposed to stand out if they are offering the same basic services as their more established competition?
It is a common misconception in franchising that what is right for the consumer market is also right for the investor market. With franchising, it is the investors, the future business owners, who are your key target market, and it is what you offer them that matters.
By some estimates, there are over 4,000 franchisers operating in the U.S. in about 100 different industry categories. What sets them apart when it comes to attracting franchisees is their systems and processes.
Prospective franchisees want to know what it will take to operate the business under the franchiser’s brand. What systems are in place to help them throughout their business journey? Here lies the opportunity for franchisers to differentiate themselves: by having stellar systems in place.
What does this mean?
Quite simply, the quality of the overall system in place allows both up-and-coming franchisers and established ones to compete with other franchises in the same market sector.
When a prospective franchisee begins the discovery process, they are introduced to all aspects of the franchised business, from the training manuals and classes to the expertise of the support personnel. As part of this research, they want to know how the business is run.
Is the software user-friendly? How are leads generated in the local market? Have you refined your marketing and pricing approaches at the consumer level? Have you established supply chain relationships and negotiated favorable pricing on products? While the role of franchisers in any given industry will be different, the answers to questions like these should all be found within the franchiser’s system. And it’s the proper communication and perceived quality of the system’s features and benefits that will ultimately turn a lead into a franchisee.
Setting up systems that are easily duplicated with ultimate benefits for franchisees is paramount in franchise development, and completely separate from the consumer experience. Think about the many details that went into starting your business at the onset that were the most challenging. How long did it take you to overcome the learning curve? How many mistakes were made before you figured it out? The key to attracting franchisees is to minimize the guesswork by giving franchisees an established system to follow. A highly efficient, well-developed system takes the guesswork out of the business and encourages potential franchisees to join.
Franchising continues to be the most effective method of business expansion. You’ve established a business model that works for you, so the next step is to evaluate it for “franchisability” and develop a business plan designed to grow it. Once you have systems in place, complete with operations manuals, local marketing plans, and other key support functions, you’ll be able to build your brand and cultivate fruitful franchiser-franchisee relationships.
These relationships are where the real secret sauce is created, built on a thoroughly established system, and providing the opportunity for fulfilling futures for all involved.