Build­ing a strate­gic al­liance

Business First - - CONTENTS - by Stan Gor­don

Stan Gor­don

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.

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