Thursday 21 September 2017

Problem solver: Why buy into a franchise business if you can go it alone?

Feargal Quinn
Feargal Quinn

Feargal Quinn

Q: I am considering setting up a water sports business (kayaking, etc). I have been approached by a company which already runs a successful business and they want to create a franchise for me to operate under their name - although they don't seem overly willing to share their commercial model with me. What do I need to consider?

A: The main reason for any individual to sign up for a franchise business is that they don't have the skillset or expertise themselves, and therefore they "buy into" a turnkey solution from someone else who is already well-established in the sector.

The first question is do you have any expertise in this area and would it be possible for you to successfully upskill and start your own business without the necessity to pay someone else? I can absolutely understand if you are looking at some really complex operation which you would have no way of accumulating the expertise on your own. That would make a perfect scenario for a franchise. With this type of business you are suggesting, I honestly don't see it as overly complex. I would recommend you conduct your own research first and then decide if you feel you would be capable of running it.

I also think the fact that the existing franchisor won't share too much information with you is not a good sign. Normally the franchisor provides the franchisee with very detailed information on how the model might work and, in particular, a commercial model on what to expect financially.

Their reluctance to share information could signal inexperience in the area of franchising and they may not have worked out the model properly. My advice is to tread carefully and give active consideration to going this journey on your own.

Q: Is it true that the managers in your Superquinn shops had no offices so as to encourage them to spend all of their time on the shop floor?

A: It is not entirely true, but certainly the manager's office in the majority of branches was little bigger than a cloakroom. The customer was always centre stage, and there was an expectation from our customers that there would be a manager's presence on the floor at all times.

I certainly didn't want to see managers spending hours upstairs having to work on reports and administration, so therefore the company was structured in such a way that this "back of house" work was kept to a minimum which meant the manager didn't need a large office. I am not sure about you, but I am always impressed in a hotel or a restaurant where there is a strong presence of management on the floor. Those places seemed to offer a much higher level of service and one always feels everything is under control.

A business person told me a story recently that they were checking out of a hotel in Killarney and the manager, who was passing through the lobby, asked "are you leaving already?" Whether he had known they were ever there in the first instance, certainly the words he chose suggested he did, or he cared enough to ask.

When they explained they would be catching a train two hours' later, his reply was: "So you will have time for a coffee. Take a seat and I will have someone bring out two coffees to you." That is the type of tone a manager on the floor can set. The people who told me the story have probably told 20 others the same story.

A manager leading by example will enthuse and motivate staff from his or her lead, so the more time they spend at front of house the better.

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