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Mr Franchising - Glenn Griffin

How to prosper in franchising – It’s no secret 

Tuesday, 07 September 2010 12:02
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Glenn GriffinMost people who look to buy a franchise spend little or no time researching and gaining an understanding of what they are about to purchase and then formulating a plan. In fact, they spend more time planning and discussing their next two week holiday than they do the purchase and operation of a business which after all, is going to provide them with their livelihood.

If you are looking to purchase a franchise you will be acquiring an established system, however it still pays to do your homework and to know and understand what it is you are buying, what is expected of you as the franchisee, what responsibilities the franchisor has, and to plan how you will operate your store or service.

Some of the obvious and basic things you are going to need to know are:-

  • What is the royalty or service fee;

  • What advertising levy is payable;

  • How are these collected and utilised.

Some of the less obvious things to find out are:-

  • How do the existing franchisees feel about support for and administration of the group?

  • How successful are the franchisees.

Some of the questions that many prospective franchisees don’t ask are:-

  • What is the prime market segment for the product.
  • What does the franchisor do to appeal to this segment.
  • What are the franchisors future plans for the group.
  • How are these plans going to be implemented.

There are of course many other things you will want to know and should know. There are , many other questions to ask and if you don’t have any questions something is wrong.

Some of the information and the answers to questions will be easy to find, yet some will be quite difficult. You will need to dig to find some of them and some you will need assistance.

There is information that will be provided by the franchisor as a matter of course in documents such as the franchise agreement and the disclosure document and some you will have to construct yourself such as cash flow projections.

No matter how information is obtained, there will be instances where professional advice is required such as a solicitor, accountant or business adviser. These professional advisers will of course charge a fee however the fee is minimal in comparison to the loss that can be incurred should it not work. Believe me, I know this to be true. If you need professional advice pay for it and where possible engage someone who has experience in franchising as it will often reduce your fee as less time is required to review the material.

Every piece of information will provide you with a part of the puzzle.

You need to build a picture of how the organisation comes together, how it currently functions and where it is headed. The last thing you want is for it not to work the way you wanted and be looking to sell the business. The reality is that having paid a lot of money to establish and fit-out the franchised business, if you have to sell it just after you have commenced trading you will lose money and sometimes a sizeable sum. So get it right beforehand.

Researching and planning is not difficult, it takes time and effort, but it works. It shows you whether the business is on track, or off-track.

A simple analogy can be drawn from aviation.

When you board an aircraft in Melbourne to go to Brisbane you don’t end up in Auckland. That’s because the pilots have researched things like the weather the air route the airports, and operational status etc., and have then formulated a flight plan which basically states where they are; where they want to end up; and how they are going to do it.

In business, you too need to know where you are; where you want to be and how you get to where you want to be. You need to have an accurate plan that describes all aspects of the business. Armed with this plan you will understand clearly what it is you are doing.

So go ahead, ask many questions, gather lots of information, formulate a plan and reap the benefits.

 

Dishonest Chinese businessmen not wanted

Tuesday, 07 September 2010 12:02
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Stern HuStern Hu will spend 10 years in a Chinese jail. He admitted taking bribes during his employment at Rio Tinto conducting business on behalf of this country.

The Chinese Government had every right to arrest and bring to trial a business executive who broke the law. Whether or not the businessman's trial was held in open court or behind the door, he admitted the crimes for which he was on trial.

Rio Tinto hired Stern Hu, an Australian of Chinese decent and three others to conduct important trade negotiations with Chinese steel producers who need Australian Iron Ore to survive. Stern Hu sought personal gain from his well paid position and brought shame on himself and Rio Tinto. Australia gave him a new home and through hard work he rose to an important position but when it counted he was dishonest. He betrayed his employer and his new country.

The Stern Hu case is an important issue in China - Australia relations as one man's greed has not brought the trade relationship any long term harm. It is obvious that China remains a dictatorship with sham elections held to elect chosen candidates who behave themselves ( Conform to the one party line ) but when a criminal from China works for Australia and acts dishonestly to the detriment of China then the Chinese legal system is the appropriate applier of justice.

Dishonesty in business cannot be tolerated as it is unfair to honest trade representatives who are disadvantaged when acting on Australia's behalf.

Australia's Prime Minister Kevin Rudd bought into the post trial discussion as Reuters reports: "In holding part of the trial in secret, China, I believe has missed an opportunity to demonstrate to the world at large transparency that would be consistent with its emerging global role," Rudd told reporters in Melbourne.

A Shanghai court convicted four employees of Rio Tinto of taking bribes and stealing commercial secrets, including Australian citizen Stern Hu, handing sentences ranging between 7 and 14 years in prison.

Rio immediately sacked the four, who had pleaded guilty to accusations of bribery, but contested separate charges heard in closed court of stealing commercial secrets.

Rudd said the verdicts left serious unanswered questions hanging over the functioning of China's legal system just when Beijing was seeking global imprimatur for its growing economic and security clout.

But the case would not affect Australia's expanding ties with China built on a strong foundation of bilateral trade. China is Australia's biggest export market with two-way trade worth $53 billion in 2008.

"I believe the bilateral relationship will sustain these sorts of pressures. We've had disagreements with our friends in Beijing before. I'm sure we'll have disagreements again," Rudd, a China rights expert and fluent Mandarin speaker, said."

Franchise ownership; is it just buying a job!

Tuesday, 07 September 2010 12:02
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Glenn GriffinIf you purchase a franchise are you just buying yourself a job?

Without seeming to state the obvious some will say yes and some will say no; it’s all a matter of how you perceive the circumstances and what actions you take.

Many people, will for various reasons leave a salaried job to purchase and operate a business of their own, often this will be a franchise of some description. Because they are buying a franchise business the vision they have is an endless flow of cash, reduced working hours, greater security. They believe they are buying a ticket to easystreet.

Often none of this eventuates and they find themselves working longer and harder than before, with less security and for less money. It doesn’t need to be this way; but you have to make wise, informed decisions.

I have been involved in the operation of established systems for more than 30 years and been directly involved in the franchising industry for the last 6 years.

My initial functions in franchising were training and development, this was expanded out to involve most areas of the business, however in the last 4 years my duties focused primarily on franchisee recruitment and site selection. In this role I was able to increase franchise numbers in a second tier franchise chain by 51 territories; almost doubling the group numbers.

As a result of this involvement I have had the opportunity to meet hundreds of prospective franchisees and existing franchise owners. So what have I been able to glean from this experience.

As an employee in a job you have little or no say in the terms and conditions of that job, however as a franchise owner whilst you have little control over the franchise model and the manner in which the franchisor operates the system you have purchased, you do have control over many aspects of your individual franchise business within that system.

The less successful franchisees are often the ones that have not identified the things they can control, or they just simply chose not to exercise that ability to take control.

How do you avoid the difficulties of establishing a business or overcoming some of the problems you may strike in running a business; well you buy an established system and one that has most of the bugs ironed out; you buy a franchise.

When you purchase a franchise in most instances you are purchasing an established system, and one that has many, if not all the problems sorted out. All the suppliers should be in place; the marketing and advertising already established; a brand awareness already established; the operational aspects all sorted out; proper and adequate training ready to be delivered; the administration of the group in place, and the intellectual property available for use, in other words all of the establishment has been done for you.

OK, so the system is in place but are you going to need to put in some effort yourself; you sure are. I once read that the only time success comes before work is in the dictionary. Like most other aspects in life you will need to take action to gain the result. There is always something that can be done or something that can be changed which will give you a different result and that is within your power to do so.

As a generalisation within most franchise chains a small percentage do extremely well; a majority do well; and a small percentage struggle, some of these will cease to trade. The trick is to make sure you are as close to the top as you can be, these are the people who do the little extra things.

So back to our original question; If you purchase a franchise are you just buying yourself a job; my answer is decidedly NO; however you must undertake due diligence, and chose your franchise chain wisely. You must understand clearly what it is you are purchasing and what you are going to need to do. It does not matter how competent or experienced you are, you will need help. Make sure you get it!

Glenn Griffin was the Franchise Development Manager for Cold Rock Ice Creamery for 6 years and now is a freelance consultant to the industry.
About Glenn

Between 1994 and 2004 Glenn also owned and operated a corporate training and personal development company that provided training and development sessions and exercises to business and industry. Glenn’s clients ranged from government organisations to franchise chains to multi- national corporate entities and included the likes of Australia Post, The Australian Army, Bridgestone, South East Water and Battery World.

Operating the training company the required skills were:-

  • Project management
  • Needs assessment & analysis
  • Training program formulation
  • Delivery of training sessions & workshops
  • Formulation of financial budgets
  • Sales presentation & negotiation

In January 2003 Glenn was successful in winning  a contract to provide customer service training for stores within the Cold Rock Group. As a direct consequence of his performance and the outstanding results achieved, he was  appointed “National Franchise Development Manager” for Cold Rock, and responsible for the sourcing of prospective franchisees, the store sites, and for the conduct of the sales process.

Over a 4 year period the role has been expanded to incorporate lease negotiation, store design, franchisee finance, equipment procurement and fit-out co-ordination as well as involvement in the operational aspects of the business.

Glenn has been a driving force within the business, and has  grown the group from 51 operational stores and 54 established territories to 91 operational stores and 105 established territories.

Glenn’s friendly but firm approach, coupled with his exposure to new and existing franchisees he has been able to establish a high level of confidence and respect from these business owners. This forms the basis of a solid and ongoing franchisor-franchisee relationship into the future.

Contact Glenn