Building a strategic alliance
is CEO, Franchised Food Company.
There’s no disputing that people are an integral part to any organisation’s success – franchising or not. Good people and honest relationships have the potential to make or break businesses, and for any business owner, the buck definitely doesn’t stop with your team (I never use the word employee).
Strategic alliance means looking at the importance of relationships that extend far beyond the walls of your business be it office block, café floor or fitness studio. The external associations a business has to help conduct the day-to-day operations including its key suppliers, maintenance and external contractors (and to be frank, the associations that keep a business viable), need to be carefully considered and managed.
So why is it important for strategic alliances to be built into the franchise model?
The whole concept of franchising is based on solid, strong and trusted strategic alliances. Everything (and I really do mean everything!) in franchising, is based on building AND nurturing these two-way relationships.
Let them fall by the wayside, and the wheels fall off.
Like most franchise businesses, we have many many strategic alliances, or as I like to call them ‘relationships’. This might be anything from an alliance with a major retailer like Coca-Cola, a confectionary company, an insurance broker, a communications agency, equipment suppliers, shop fitters, landlords…the list is endless.
A strong strategic alliance should be for the benefit of all – but it is a mutually beneficial relationship that relies heavily on three fundamental components - understanding, transparency and honesty. When working harmoniously it means your suppliers know what to expect and customers trust in what they will receive.
For business’ success with the franchise model, strategic alliances are the crux. Franchisors must align themselves with partners to provide expertise in their chosen field; it offers consistency of product, service, best practise, and a buying power that’s advantageous for both franchisor and franchisee.
For example, if FFCo was to say engage 20 different suppliers to make ice cream, we wouldn’t a) have purchasing power we have or b) product consistency. The two things absolutely critical that see our ice cream franchise model work so effectively. Similarly, a business would be inefficient if it shopped around for a different internet provider every month purely to get a better deal… it’s a waste of resources which could be better spent building a mutually beneficial relationship with the chosen provider.
Much of our business success today is because we’ve chosen our field – the tasty treats market - and everything we do as a business aligns to this core offering. If we decided to start selling washing machines, we wouldn’t do well because I’m not familiar with that market and don’t have the networks. But if we were to go into a coffee and cake business I would have the relationships to make it a success! Again, it’s all about finding your niche and utilising and strengthening existing relationships.
Co-branding is a perfect example of strategic alliance within the franchise model and we are already doing it with the Trampoline brand. We are moving into the liquor business and currently building a strategic alliance with one of the larger groups in that market. Why? Because we don’t have the expertise in liquor ….. yet. Admitting this and seeking out more experienced players in the liquor game means we have access to their systems, and in exchange we offer our knowledge of the Australian treats market. The two businesses go handin-hand as they’re both FMCG’s. On the other hand going into a completely different market, like whitegoods wouldn’t work. It’s about finding the balance between a complimentary offering versus a completely different product.
But a word of warning: like any business arrangement you have to take the good with the bad and strategic alliances are not always a good thing. Take our partnership with Souvlaki Hut for example. It was a case of us getting into bed with a franchise system that didn’t work. Equally, issues can arise with the bigger business players fluffing their feathers… so sometimes you risk dealing with abuse of market power and people pushing their own wheelbarrow. Again, do your due diligence and make sure the partnerships are going to be advantageous for both businesses.
Franchise businesses wanting to build strategic alliance into their model, should consider the following key steps: • Research, lots of it. Consider all of the options and don’t make any rash decisions. • Trial and error. Put in the time to actually build the relationship, test the waters. It’s not only about price - of course it’s important – but you must make sure the feeling and fit is right. • Ask yourself will this alliance actually result in a meaningful partnership? The relationship must provide two-way benefits. • Consider all possibilities. How will you cope when/ if times are tough? Are you confident and comfortable you’ll be able to work through the hard times and any differences that may arise? Remember… it takes time and there are no shortcuts. Take it back to the very basis of human relationships. Much like an affiliation between two people, you don’t fall in love in the period of a week so don’t expect a business alliance to be built and flourish at the click of your fingers. Be smart and considered in your approach. Set realistic expectations!
Lastly, don’t forget that things can go slightly off the rails, and that’s just life. Enjoy the ride and remember the positive possibilities are endless.
Visit ffco.com.au for some great franchising tips and business opportunities with Franchised Food Company including brands like Cold Rock, Trampoline Gelato, Pretzel World, Nutshack, Mr Whippy and Europa Coffee.