Franchising has helped make the business dreams of more than 70,000 Australians come true since the first ‘golden arches’ of the McDonald’s burger empire crossed the Pacific and began to appear on our suburban landscape in the early 1970s.

Australia now has around 1200 franchise systems, and with more franchising outlets per capita than the USA, the original home of franchising, Australia is now known as the ‘Franchising Capital of the World’.

Originally all about food – in particular U.S styled burgers and fried chicken – franchising has grown to include practically every type of product and service imaginable and our home-grown concepts account for around 90 per cent of the franchise market.

Franchising has many advantages over independent business ownership because it allows franchisees to own their own business without being totally ‘alone’. A good franchisor will form a partnership with the franchisee and provide them with all the systems, support and training required to ensure both their businesses flourish.

Research shows that franchises are more likely to succeed than independent small business. The Griffith University Franchising in Australia report (2012) showed that, post GFC, the franchising sector shifted into economic recovery sooner than the general small business sector, with sales turnover for the entire franchising sector estimated at $131 billion.

The sector has certainly grown over the past two decades and now almost 400,000 Australians are employed directly in franchising. I’m proud to say that I have been able to contribute to this figure through my own business FC Business Solutions that originated in Melbourne in the late 1990s as ‘Franchise Careers’, an employment agency dedicated to the franchising sector. The business saw the need for further services in this rapidly growing industry and we have since branched out to provide franchisee training, franchise system development, PR & Marketing, and a range of services that are designed to ‘help franchises grow’.

The 2nd great Australian Dream

For many Australians, owning and operating their own business, is the fulfilment of a lifelong dream.

Franchising, with its proven low-risk/high chance of success formula, offers ‘anybody’ the opportunity to ‘be your own boss’. No matter what your work background is, or qualifications are, there is a franchise system to suit your finances, family, skills and lifestyle.

Buying a franchise is one of the most important personal and financial decisions you are likely to make in your lifetime.

If you have the desire, commitment, passion, resources and support required, you must take the time required to find the best franchise system for you.

When you are ‘shopping’ for a franchise system the most important question to ask yourself is: “Is it a proven system?”.

A proven system is one that achieves franchising’s ‘holy grail’: brand awareness. Once a system becomes a ‘household name’ you know that it is proven and in Australia we are fortunate to have many home-grown examples. Think: La Porchetta, Brazilian Butterfly, Boost Juice, Quest Serviced Apartments, Hairhouse Warehouse, Forty Winks, the list goes on and on.

The franchisor of a proven system runs a successful business model, provides all the training and support that the franchisee requires, assists with financial and business management, provides marketing and public relations to support the franchisee and provides the leadership and mentoring to ensure he or she is equipped with all the tools to succeed.

Even a ‘new’ franchise system can be ‘proven’. It is one where the franchisor has already established its own successful core business, then branched out with a couple of ‘company owned’ test franchises to ensure all they systems and support are in place and the financial data adds up before offering them for sale. The Griffith University Study found that most successful systems were ‘piloted’ for four years before they began franchising.

But what makes a franchise system different from an independent business? Some things are the same e.g. in retail, the location is vital. Across all businesses, customer service is always paramount, and the business owner must have the drive and motivation to want to make sure his or her business is a success. There are however some areas, provided by a good franchisor, that separate independent business from franchises:

• Training programs

• Marketing & public relations support

• Manuals and procedures

Training programs

It makes sense for franchisors to invest heavily in their training programs for franchisees. Motivating individuals helps achieve business success. People Development, in the areas of OHS and risk management, recruitment, performance and management skills, is vital for the successful growth of a business.

The Franchisee Induction Program (FIP) is key to franchise success because it ‘inducts’ franchisees into the system and helps them to run their business consistently and continuously. As far as induction training goes, there is a need to balance theory and practice in a meaningful timeframe. Many of the systems we work with incorporate additional qualifications such as Certificate IV in Business or Retail into their induction training programs.

Does the franchise system you are interested in employ field service personnel such as franchise support managers (FSMs) to ensure franchisees are staying on track with their business plan and receiving all the training and support they need?

A quality franchise system should be continually looking at different ways for franchisees and staff to increase their performance in a measurable way.

Excessive staff turnover can cost companies dearly. But by focussing on staff engagement and providing staff with the training and tools to engage and empower them, retention rates are able to be increased.

All highly successful franchisors are leaders who promote respect and integrity within their teams and throughout the brand. They set the path; share the end destination and make the best decision at the right time with the best information. This is leadership. They have taken on the responsibility to grow a business, to expand the product or service offering, to increase market share and to increase brand awareness.

Successful franchisors are not shy in sharing their plans with the team members who choose to live and breathe their vision. The level of leadership differs amongst the franchise network; some require the detail, the how, when and where; others require just the overall perspective and are committed to the cause. The franchisor’s responsibility is to deliver all these needs and continue to share the message in all available learning and development forums on a regular basis throughout the network.

Marketing and public relations support

Building and maintaining brand awareness is vital to a franchise system’s growth and positioning in the marketplace and for it to be considered a ‘proven system’.

A sustained PR, Marketing and Communications program will assist businesses’ growth and success through targeted and tailored brand building solutions including advertising, media relations, local area marketing, internal and external communications strategies.

Potential franchisees should be looking at what the system they are interested in does relation to targeted PR & Marketing solutions and if their internal and external communication strategies, local area marketing and advertising campaigns, have been proven to demonstrate measurable results from increased sales figures, and media coverage.

Manuals and procedures

What does a franchisor actually own if there are no documented standards and procedures?

Compliance with operational standards and procedures usually forms a key part of the franchise agreement.

It would be very difficult for a new franchisee to succeed in their business without proven standards and procedures.

A quality system will have a comprehensive, well written set of operations manuals for its franchise network. Operations manuals contain the details of the proper procedures and provide an invaluable support mechanism for franchisee education at all levels.

As training tools, effective operations manuals promote consistency and quality throughout the franchise network. They help franchisees run their businesses more successfully.

When properly drafted, operations manuals can serve as one of the strongest selling tools for the franchise program as they demonstrate best practice in franchising to current and potential franchisees.

Potential franchisees should be confident that the system’s operations manuals are up to date, reflecting new products, services, changes in market trends, technologies and competitive forces.

The next step?

Having conducted your due diligence, selected your franchise and started on your new pathway, the satisfaction of being a franchisee can be exhilarating.

If you are prepared to work hard, committed to following the system that you have invested in, embrace the training, support and mentoring available, and if you manage your back office (financials) in a professional manner, then you will give yourself every opportunity to succeed and grow.

Like any business, it will be demanding, however, knowing you have the ongoing support of the franchisor, together with their internal knowledge and experience, as well as many supportive franchisees that are on the same life journey, franchising can be extremely satisfying.

You might hit some obstacles along the way and disputes between franchisees and franchisors keeps a whole sector of the legal profession employed. According to the Griffith University study around 19 per cent of franchisors have had a dispute with at least one of their franchisees and the main cause of disputes, comes down to franchisee compliance, franchise fees, territorial issues and profitability. The best way to avoid this happening all comes back to your research and due diligence in the first place. Do you know exactly what you are getting yourself into? Have you carefully read, and had a legal representative read the franchise agreement?

You may also discover a whole new world of business opportunities which may see you expand to become a multi-unit franchisee, a regional franchisor or master franchisor. Multi-unit franchising, particularly in retail, was identified as an emerging trend in the industry, with two thirds of the 1180 franchisees in Australia in 2012 having multi-unit franchisees in their systems.

There’s no doubt that once you embark on your journey into franchising you will become part of a wider community, the Australian franchise community. You will meet some amazing people along the way and discover a whole world that you previously may not have known existed. Your vocabulary will expand significantly with a whole range of new terms and acronyms will roll off your tongue with surprising ease! So if you have done your due diligence, signed the FA (Franchise Agreement) with your franchisor who is a member of the FCA (Franchise Council of Australia) completed your FIP (Franchisee Induction Program) and have met your FSM (Franchise Support Manager) – good luck with your new business and I hope to meet you somewhere down the track!