FRANCHISORS' DOS & DON'TS

Creating ‘franchisable’ concepts with Sanjay Murthy, co-founder of Figjam, a Dubai-based F&B solutions agency

UNDERSTAND YOUR BRAND

Be clear on the brand’s unique selling propositions (USPS) and ‘why’ (why do people love it, why do people come back, why should people buy or believe), so that you can, in turn, communicate that to your franchisees. You cannot expect them to do justice to your brand if you have no clarity yourself.

FROM SQUARE ONE

When franchising, the number one thing that brands should remember is to build a company that was intended for franchise from day one, not to open the doors and see where it goes. Starting out with a fully formed goal in mind (i.e. franchising) will give you a different perspective when preparing business plans, growth strategies and brand guidelines. When you are in the early stages of establishing your brand - while you are preparing the business strategy and getting the concept right - is the time to make the decision of whether you’re going to franchise or not.

MIND THE LEGAL ASPECT

Have franchise contracts and standardized brand guidelines ready from the outset. Detail everything that you believe will impact your brand’s performance and perceptions, such as the materials, colors, staff and training, the chef, the menu, the music, the sounds and smells.

INVESTORS

Often, a brand is born, becomes successful and investors creep out of the woodwork eager to profit. Owners can be sidelined by big investors fighting over their small operation. It may seem a relatively risk-free option and a way to expand with no capital expenditure for new outlets, but still benefitting from revenues. But when no provision has been made for franchising, problems will arise. If standardizing the brand identity was not considered, what at first seemed risk-free can culminate in the brand losing its individuality, becoming just another soulless chain.

TRUST YOUR FRANCHISEE

While the franchise route may look more attractive - less investment, adequate returns - it means giving up control of your brand. If you place your trust in the hands of your franchise partner and he devalues the brand identity, you lose your place in the market and the consumer’s trust, which it is near impossible to gain back.

TOP SIX TIPS FOR MAKING FRANCHISING WORK

1. Appoint a franchise attorney to protect both parties. A standard business attorney may cost you more in the long run.

2. Choose your partner wisely as the contractual relationship could last five, 15 or 50 years.

3. Do not advertise that you are keen to franchise your brand. It sounds desperate and cheap. Instead, contact a hospitality consultant, who will evaluate your business and introduce you to the right investors and partners.

4. Know who you are working with. Look at how they run their other brands and businesses. Check if they are able to pay the royalties or if the money will go into their other business. Find out if your partner has other franchise partners and if they are happy.

5. Always seek a partner who has an all-round knowledge of hospitality and a passion, not just a financial investor.

6. If you do find yourself in the situation of being offered franchise opportunities, sell, where possible, a small part of the concept first to check if the franchisee is able to run it. If successful, they can invest further.