Platt Perspective on Business and Technology

Should I stay or should I go? 18: franchise businesses and becoming a franchisee as a next career step 2

Posted in career development, job search, job search and career development by Timothy Platt on May 30, 2016

This is my eighteenth installment to a series on intentionally entered into, fundamental job and career path change, and on best practices for deciding both when and how to carry through on it (see Guide to Effective Job Search and Career Development – 3, postings 416 and following for Parts 1-17.)

I began to sketch an outline of the franchise option and the franchisee decision in Part 17. And I concluded that by noting that I would more fully discuss the first two bullet-pointed questions from there in this posting, and how they might be addressed:

• Who should consider franchise operations as a career move, as would be determined by personality and personal strengths, professional skills and experience, and according to career goals criteria?
• And would this type of career move work for you and be right for you?

The first of these questions is about fit in general, for taking this type of career move, and the second of them is all about self-assessment. It takes the first of these questions out of the abstract and makes its issues and answers more personal.

Who should consider franchise operations and becoming a franchisee as a career move? As just stated, I initially planned on addressing the questions raised in Part 17, beginning with that. But further reflection has prompted me to change my mind on that decision.

• On the face of it, Part 17 seems to be reasonably written as far as the order of its discussion is concerned. If you are considering a career move, it makes sense to consider the issues involved there, starting with what you bring to the table as the person looking, and what would be a best next career step for you as viewed from that perspective.
• That in fact makes sense when your career options under consideration can be flexibly shaped and formed to meet your own capabilities and strengths, your personality, and your level of comfort with risk, among other factors.
• That approach fully works when you can shape your career options and what you can develop them into, as would hold true when building your own startup and according to your own business model and plans, and with your own selection of products and services that you would offer and that you would build a new business around.
• But when the basic options that you would consider are more fixed in nature, and for what you could offer, what markets you could offer that too, what basic business model and branding that you would have to adhere to and more, it might make sense to start by considering possible next career step options first, and then ask where and how you might fit their requirements, and how they would work for you. So I start here with the less flexible and move to add in the more flexible, and particularly as this is a discussion that centers on the less flexible (for you) factors.

True startups as discussed here in Parts 12-16, offer flexibility in what you would build and how you would do so and even in where you would do this, and in ways that you are very unlikely to find in any franchise business opportunity. To pick up on one detail there that might or might not be important to you, I noted “where” because you do not automatically face the types of location constraints when setting up your own business from scratch, that you would likely encounter if entering into a franchise agreement. Franchise system-based parent companies often and even usually offer sales territories that afford their franchisees a measure of regional exclusivity in their systems, and if you become one of their franchisees you will have to agree to locate in one of their planned out territories that is still available in their system.

When you sign on contractually with a franchise offering company and agree to set up and run one of their franchise outlets as your business and as part of their overall system, you have to expect to:

• Adhere to their standard business model as stipulated in your contract with the parent company,
• And according to their terms. And that means setting up your shop in its appearance and design according to their more standardized patterns and with any exceptions requiring negotiated agreement.
• Offering product and service lines that are primarily determined by the home office, if not entirely so.
• And at prices that are largely set there too.
• Adhering to their marketing campaigns, and both for your more standard offerings and when offering specials. (I am thinking in terms of fast food franchise operations as I write this bullet point, as a source of working examples where specials can mean centrally mandated lowered prices for more regular offerings, the inclusion of seasonal or other short-term product offerings, and a variety of other centrally planned marketing and sales campaigns that essentially every franchisee, at least in some larger territory would be required to adhere to.)
• But I have only scratched the surface up to here of how a franchise system parent company can exert unifying centralized oversight and control over its franchise holders and their local business operations.
• Most sales oriented franchise systems centrally manage inventory sourcing and in effect dictate the fees paid for all inventory received. And this includes finished products and raw materials that would be finished into them on-site that are sold to customers, but it can also include equipment and disposables, including cleaning supplies and the like that a franchise holder would be required to use in their outlet. This can preclude the possibility of being allowed to search for the same products at more competitive prices, and I raise this example and cite cleaning supplies here because I have seen that become problematical for franchisees.
• And to add one more point to this list, I would include quality control and centrally planned and carried out quality assessment reviews and inspections. Considering this point from the parent company perspective, such a business in effect puts its corporate reputation and a significant measure of its overall competitive strength and fiscal value in the hands of its franchisees, as their customers and potential customers see the value and quality of the franchise brand as a whole, at least in their thinking, when they see the values and performance offered to them in their local franchise operations. Poor performers can and at least regionally do bring harm to the overall business as a whole.

I have assembled this partial list of centrally managed and defined constraints on what a franchisee can do, as a perhaps extreme case. And I have only offered one side to that, focusing on the restrictions there. It can at least as validly be added that a well run franchise system parent company can and does offer a tremendous level and diversity of support for its franchisees too, taking a great many responsibilities and sources of potential operating costs out of their hands. Marketing is only one part of that, with franchisees gaining from the overall brand recognition and brand strength that their parent business’ corporate name can offer. When, for example, a franchise system parent company negotiates costs for inventory and supplies for their entire system, they can often reach better prices for their scale of purchases than any franchisee could secure on their own. So franchisees are restricted in what they can do and in how they can do it, but if they work with a good brand and a good parent company that owns it, they can and do gain more value from that than they spend out, in franchise startup fees, ongoing service and support fees paid to the parent company, fees paid for inventory, and so on.

• In this, a great deal of what goes into being a franchisee of a larger corporation, parallels what goes into working in-house for such a business – and particularly when that means working for a direct manager and supervisor who takes a largely hands-off approach as far as managing day-to-day business and decision making is concerned, for the people reporting to them.
• And the average franchisee does hold decision making authority and control there, in staffing and employee management and for a range of other day-to-day operational issues.

And with this in place, I will actually turn to those first two “who would be a good fit for this” questions as repeated above, in my next series installment. And in anticipation of that, I will more fully explore the tradeoffs at least implicit in the immediately preceding paragraph and bullet points here, as well as discussing what a good fit potential franchisee would bring to the table for this.

Meanwhile, you can find this and related postings at my Guide to Effective Job Search and Career Development – 3 and at the first directory page and second, continuation page to this Guide.

• As a final addendum to this, I would add that the order in which you raise issues and pose questions in a business analysis, and in general, can shape and even constrain the range of conclusions that you can reach. Every step in that process can add in unexamined assumptions, and changing the order of the steps you take there can open up those tacit starting point assumptions to direct examination and questioning. I took that type of reorganizing step here, and at least briefly outlined why I did so but this is a point that can offer value in wider contexts too. So I write this final note here, looking beyond the context of this series and this Guide it is in as well. If you do not see your analytical processes as leading to sufficiently meaningful insight, look for gaps but also look to how you orient and order your questioning and thought processes, and for the assumptions that they can come to automatically include in them.

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