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Category Archives: Franchise Operations

Once your business is franchised, comes operations. Articles to help cope.

Types of Franchise

Despite the common stereotype of a franchise as a fast food outlet, Franchises come in a variety of shapes, sizes and sectors!

Many people belive that franchising is limited to fast food chains and is a really expensive way to start a business. This is not entirely true, there are a huge variety of franchises available from Couriers to Cafes and Cleaners to Chocolates!

Franchises don’t always have to cost hundreds of thousands either, some part time franchises have a starting up cost of under £1,000!

Some examples of the types of Franchise available are listed below:

1. Investment Franchise

  • Fast Food & restaurant chains, and some hotels
  • Franchisee has overall control
  • Franchisee employs own senior management and staff

2. Executive Franchise

  • Provision of Professional service
  • Financial advice, legal services, recruitment assistances

3. Retail Franchise

  • Sells and displays goods approved by the franchisor
  • Franchisee has overall control
  • Franchisee employs own senior management and staff

4. Distribution Franchise

  • Franchisee operates from a depot or central office owned by the Franchisor
  • Franchisee has overall control
  • Franchisee employs own senior management and staff

5. Depot Franchise

  • Generally courier companies & parts suppliers
  • Franchisee employs own staff

6. Job Franchise

  • Lawn care, car repairs or furniture refurbishing
  • Generally a one-person business
  • Operated from home

7. Management Franchise

  • Franchisee is responsible for both running the franchise and employing and managing a team of operatives

Source: http://www.franchisingni.com

4 Types of Franchisees and How to Motivate Them To Do Better

You can provide a better POS system, add a loyalty program, add a new coat of paint to the business; and yet, the business may still fail. The reason – the franchisee did not get the job done.

The corporation is responsible for providing the franchisee with all the tools and training necessary for the success of the business. This post will identify the 4 types of franchisees and how to motivate them to do better, work harder, and ultimately succeed as a franchise owner.

The 4 Types of Franchisees

1. The Driver
Drivers are born to lead – they’re a franchisee because they like taking risks and want to make the business decisions for themselves. Drivers are hard-headed, impulsive, and first-movers when it comes to new initiatives from corporate.

  • How they lose motivation: Drivers lose motivation when they feel they lose control and power. If you place too many guidelines, tell them how to run their business, and require them to do business your way, then you’ll lose them as a motivated franchisee.
  • How to motivate them to do better: Give Drivers the power to make their own decisions – but keep them within a framework. For example, your new initiative may be to get your franchisees to try a new loyalty program. Drivers will be the ones who’ll jump at the chance to try a new technology at their location. Because they’re Drivers, ask them what kind of rewards they’d like to provide to their customers and for their feedback on the points system. Drivers want to be heard and will provide you with key feedback to make your initiatives more successful.

2. The Analytical
Analyticals crunch numbers – they’re the doctor, accountant, and the guy in class who got all the A’s. Analyticals made the decision to become a franchisee because they analyzed the numbers, the location, the franchise, and determined it was a smart business investment. They will not be the first to try out a new initiative unless you have numbers to back up an increase in bottom-line profits.

  • How they lose motivation: Analyticals lose motivation when they don’t have the right data to perform their best. If they can’t effectively track inventory, customers, sales, and social media, then they’ll lose interest to do better at the company.
  • How to motivate them to do better: Quite simple actually – give them the data to perform better. They want the best technology to track inventory, sales, and customers so that they can optimize every process in their business. For example, a loyalty program will give them the ability to track their best customers, what they purchase, and how often they purchase. Understanding this information, Analyticals may create ways to up-sell at the POS to increase revenue or send text/email messages that drive people back to the business when they haven’t visited in 2 months. Give them the information and they’ll put it to use.

3. The Expressive
Expressives are fun loving people that love trying new things, taking risks, and experiencing life. Expressives became a franchisee because they thought it would be a fun, worthwhile experience. They’re one of the first to try new initiatives from corporate because they naturally love to try new things.

  • How they lose motivation: If you constrict them with too many rules and guidelines, then they’ll lose motivation and quickly find another business adventure to spend their time on. For example, if you require that they write an email newsletter every week and tell them that they can’t post on their own Twitter account without permission from corporate, then they’ll lose motivation to work for the company.
  • How to motivate them to do better: Give Expressives tools and outlets to express their creativity and build a better business. For example, teach them about social media, loyalty programs, and text/email marketing and give them the option to lead the one they like best. If they really like Facebook and Twitter, then provide them with the training and tools to build a great Fan Page and Twitter following. They have the drive and energy to work hard on a marketing campaign; you just need to provide them with the right tools and point them in the right direction.

4. The Amiable
Amiables like to please people. They became a franchisee because someone recommended that it was a good business idea. They want to be a part of something bigger, be told what to do, and want to please corporate and their customers. They won’t take the initiative to join a new campaign from corporate, but when specifically asked to do something, they’ll do it.

  • How they lose motivation: Amiables lose motivation when they’re left alone and feel like they’re no longer part of a bigger team. If you don’t connect with them on a monthly basis, don’t give them goals to accomplish, and don’t provide recognition for their accomplishments, then they’ll seek another venture that provides them with acceptance and comfort.
  • How to motivate them to do better: Amiables love to hear from corporate, receive training, and get recognized for their accomplishments; therefore, you’ll need to keep in constant contact with Amiables to make them feel special. If you want to launch a new loyalty program, tell Amiables that they have been hand-selected to try a new company initiative because of their hard work. If an Amiable is struggling, invite them for personalized training or send a professional to the location to hand-hold the Amiable and teach them how to do better.

Franchisees joined your business because they believed in your product – they believed they could be a successful business owner. Keep that dream and goal alive by tending to their needs and giving them the tools to succeed.

By:Jun Loayza http://blog.rewardme.com

Types of Franchise Arrangements

Franchisors use different ways of developing their franchise. The types of franchise arrangements include:

Single-unit franchising
With this arrangement the franchise buys the right to run just ONE franchise unit. They may at a later stage be offered to buy additional units from the franchisor, this is called multi-unit franchising.

Multi-unit franchising
This is when a franchisor owns more than one unit in the same franchise network. E.g. many food franchises only look for those with the money to buy more than one unit. They may initially only start with one but as time goes on they will be required to develop the business into a multi-unit operation.

Area developer
An area developer franchisee is granted the exclusive rights to develop the franchise system in a defined territory e.g. city, state, within a specific time frame. They do not sell franchises.

Master franchising
A master franchisee is given the rights to open and develop franchises in a defined territory, and is also allowed to sell franchises within that area. They sell them to sub-franchisees. Master franchisees may hold the rights for regions, states and the US as a whole if the franchise is from outside of the US. The master franchisee becomes technical the franchisor for their territory, i.e. they do the recruiting, training, marketing etc.

Source: http://franchiseopportunities4u.com

Types of Franchise Agreements

Before you consider what kind of franchise to investigate, it is extremely helpful to find the right entry level of franchising. Franchises are usually classified into four different categories or levels. Choosing the right level of franchising for personal and professional satisfaction is almost as important as choosing the right franchise.

Single-unit Franchises
A single-unit franchisee has the right to operate one franchise unit. Most franchisees enter the world of franchising by owning one unit. It is an excellent way to gain an understanding of the franchise system before considering additional units.

  • Territory: The single-unit franchisee may have a small radius of exclusive territory to operate within. If it is a retail store, it may be a two or three mile radius around the store. If it is a home-based business, it may be a few specific zip codes.
  • Level of participation: The single-unit franchisee is very involved with almost all operations. Because of this level of involvement, these franchisees are also known as owner-operators.

Multi-unit Franchises
The franchisee acquires more than one unit of the franchise usually at reduced initial franchise fees. A good sign of the health of a franchise organization is that many of the franchisees are multi-unit owners.

  • Territory: There is usually no exclusive territory where the franchises must be opened. The franchisee may have one unit in one part of town with a surrounding radius of exclusivity and another unit in another part of town 15 miles away or even in another county with its exclusive radius of operation.
  • Level of participation: The franchisee is less involved with each unit’s operations but is managing multiple operations and will need to have some level of supervision in each unit. The franchisee acts as a general manager. If many units are opened, a general manager and additional administrative and training staff may be needed.

Area Development Franchises
This license usually grants the franchisee the right to open a certain number of franchises in a given area. There is usually a production schedule where the area development franchisee must open a certain number of franchises during a certain period. As long as the area development franchisee stays on track in opening franchises in the area, he/she has an exclusive area where no other franchisees are allowed to open a franchise. Area development franchisees also typically pay reduced franchise and royalty fees.

  • Territory: The area development franchisee maintains an exclusive geographic territory as long as the opening schedule is maintained. The territories range from a small city to parts or all of a larger city.
  • Level of participation: The area development franchisee will be very involved in the opening of the first store to ensure its success. Another important function will be to look for qualified real estate to open the next few locations. Once several locations are open, the area development franchisee will need assistance to manage the units.

Master Franchises
Sometimes called a regional developer, a master franchisee has all the rights of an area developer and usually assumes a larger area. The main difference is that the master franchisee, in addition to opening franchises at reduced franchise and royalty fees, can also sell unit franchises, multi-unit franchises and area development franchises, and profit from those sales. The master franchisee usually receives a part of the ongoing royalties paid by each franchisee. There may be additional income available from distribution of products through the franchisees in the area and possibly some real estate interests in franchisee locations. The master franchisee will usually operate at least one unit for income generation, for use in franchise sales, and for use as a training facility. Master franchises are rare, and when they are available, they are usually sold quickly. Because of the multiple revenue streams associated with a master franchise, the potential return on investment is substantial.

  • Territory: Usually is a large metropolitan area, an entire state, or even several states or country. It is an exclusive area and will remain exclusive as long as the master franchisee meets the development schedule of franchises in the territory.
  • Level of participation: The master franchisee will usually open at least one unit and use a manager to manage it while selling other “sub-franchises” and helping them to operate properly. Very rarely is a master franchisee “hands on” in a unit franchise. They generally spend more of their time operating as a business consultant or coach to their franchisees to help them become successful.

Source: http://www.franstop.com

Types of Franchises Based on Ownership

You can choose from a variety of options if you are looking to take up a franchise. One way of categorizing franchises is based on the operational structure of the business, while another is based on the type of ownership you have in the franchise.

Franchises Based on Operational Structure

A franchise business can be categorized into three types depending on the rights a franchisor gives the franchisee with respect to the products and services.

  • Manufacturer Franchise – In this type of franchise, the franchiseehas the right to manufacture the products of franchisor, and in some cases, get the rights to distribute or sell the products too.
  • Product Franchise – A product franchise gives the franchisee a right to sell or distribute products of a particular franchisor.
  • Business Format Franchise – A business format franchise, one of the most common forms of franchises, gives thefranchisee a right not only to manufacture and sell the products but also to adopt their operational model or structure that has been proven to generate profits.

Types of Franchises Based on Ownership

Franchises are also classified based on the type of ownership a franchisee has over the business. Discuss about the options below, with your franchise lawyer, and chose what suits you.

  • Single Unit – A single unit franchise makes you the owner of a single franchise outlet at a particular location. This is the most common form of franchise that is ideal for beginners. The advantage of this franchise is – the startup costs are low and the franchise can be personally managed by a single person.
  • Multi Unit Franchise – A multi-unit franchise format enables you to start franchises in more than one location within a short period of time. This kind of format can be cost-effective as you get to open branches covering a wider market, and increase your chances of profit. However, you need to constantly monitor the performance of the managers who take care of individual franchise units.
  • Existing Franchise – By investing in an existing franchise, you are taking over an established franchise that was owned and developed by someone else previously. This is perhaps the safest way franchise formats, as you can know what to expect from the business from the start and how to plan your operations accordingly.
  • Area Developer Franchise – Area Developer franchise is an advanced format of the multi-unit franchise, where you need to open a number of franchises in a particular region over a specific period of time.
  • Master Franchise – In this type of agreement, you are not an owner but an intermediary between the franchisor and a number of individual franchisees. In such a format, you pay the franchisor a huge amount as investment to directly collect the fee from the individual franchisees.

Depending on the kind of business you want and how you want to manage it, you can choose a particular form of franchise, but only after understanding the pros and cons of each format with the help of your franchise lawyer.

By:Jonathan R. Bailey http://www.untwistedvortex.com

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