Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 38: goals and benchmarks and effective development and communication of them 18

Posted in startups, strategy and planning by Timothy Platt on June 25, 2018

This is my 38th posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Business Strategy and Operations – 3 and its Page 4 continuation, postings 499 and loosely following for Parts 1-37.) I also include this series in my Startups and Early Stage Businesses directory and its Page 2 continuation.

I focused in Part 37 of this, on franchise systems as an exit strategy that a young business’ founders and owners can build towards, as their new enterprise exits its earliest stages of business development and starts to become consistently profitable. That financial transition point serves as the starting point for a new business’ first real growth phase, and when viewed from the perspective of a franchise system-facing business model, that is when those business owners stabilize and effectively complete their first storefront that they began their business with, at least to the point where it can begin to serve as a prototype model for overall business systems expansion, through a replication process and through bringing in contractually licensed franchise holders to run these new outlets, as they are developed. (As a point of digression of some relevance here, that means in a would-be franchise systems context that this first storefront has reached a point in its development where it can begin to build brand strength that it can use in marketing its pattern as a viable franchise option, and first growth stage here means both further building out that storefront itself as a business in place, and developing marketing strength and reach from it too, as a basis for wider-ranging growth.)

I discussed founders, and those who would set out to build this type of business empire in Part 37. And I turn here to more directly consider the question of what types of people would seek out franchise opportunities as participants in this type of system. And I begin with the obvious – which I refer to as such because the points I will raise here, enter into essentially every pitch that franchise systems have ever offered as they seek to find and bring in, franchisee managers for their outlets:

• People who seek out, or who can be drawn into the possibilities and potentials of becoming a franchisee in this type of business, seek greater autonomy and independence and greater long-term growth opportunity than they have been able to achieve when working in-house for someone else and under their direct guiding management. Here, the guiding mantra that informs those recruitment pitches is “be your own boss and with a proven brand name and business support system to back you up, and increase your chances of success, and your speed to achieving that too. Come in and grow with this franchise system business, as a key participant in its success and as a key beneficiary of its success too.”

There are of course two sides to that bullet point and certainly to my more generically stated recounting of this basic sales pitch: independence, but in the context of a larger proven and established business and business model. And that means accepting trade-offs, and of a very particular type and blend.

Think of taking on a franchise license opportunity as fitting in between two other distinctive and commonly pursued alternative options:

• Continuing on as an in-house employee and manager, and
• Breaking away entirely from that career path pattern and seeking to build your own startup, and your own business future from it.

At least from my admittedly limited experience, most of the people who would find real appeal in becoming a franchise license holder have worked as managers, and generally lower level managers in more traditional businesses. And they have felt stymied there from a lack of opportunity for advancement, and from a lack of appreciation of what they can and in fact do contribute to the business they work for. And franchise opportunities also appeal to those who actively seek out opportunity to break into management and have more of a say in what they do professionally, and who seek to lead and manage larger efforts than just the work of their own hands. A driving need for the type of independence that I cited in the above bullet point enters into all of this.

And a desire to build towards success with a level of support that can ease the way towards that, and reduce the chances of failure in this, also holds real appeal here too. A well run, franchisee-friendly and supportive parent company does in fact provide stable and supportive structure and help while giving their individual franchisees a great deal of hands-on, day-to-day independence in running their own operations in their own storefront.

This type of career move can, and for many franchisees does serve as their last major career step transition in their work life. Well run and effective franchise businesses actively seek to recruit good people into their systems who can really succeed in this type of work environment as local franchise managers. And they seek to retain them, and their growing knowledge and skills sets for making their franchises thrive. So the approach to understanding these overall business systems and from both an overall business owner, and from a franchise holder perspective that I offered above is realistic, and certainly as an intended goal and for all stakeholder types in this type of venture.

Returning to the two career path alternatives to this franchise option that I noted above: a prospective franchise license holder, or a current one for that matter who might be questioning their decision here, needs to ask some basic questions as part of their own due diligence-based decision making process for their moving forward:

1. Would (or do) you have the level and types of support from the parent business that you need and want?
2. Would/do you actually have the independence that you seek, in being able to be your own boss and run your own storefront?
3. Or are you too hemmed in and in ways that are important to you, by the terms of the contractual agreements that have to be agreed to and signed in becoming a franchisee there, and from either a Point 1 or a Point 2 perspective?
4. In that, and as a specific case in point source of examples, are you required to use specific supportive services (such as, for example parent company provided cleaning supplies and only them) that you could acquire locally on your own and less expensively, improving your own bottom line and without cutting corners on maintenance and storefront appearance?
5. Are some of the centrally mandated and run quality control measures that the parent company provides and mandates, disruptive and in ways that they need not be, from a local franchise perspective?
6. And is the parent company too restrictive in what it allows their local franchisees to offer their customers, denying opportunity to them to effectively address local and regional tastes and preferences that they see real potential in meeting?
7. And this is where local autonomy or at least a measure of it in what is offered to the customer enters this picture too. And I close out this list of points with an open question that I have in effect been leading up to here. How can a franchise system parent company and their perhaps very widely dispersed franchisees with their local storefronts, reach and maintain a more optimized balance between what is systematically standardized across the entire system and in its overall branding and brand value, while also allowing for local diversity to address local community and related marketplace diversity?

And that last numbered point leads me directly to the issues that I will turn to in my next series installment where I will consider the issues of business-wide consistency, as well as storefront-level flexibility, and both in prototyping new product or service possibilities and in addressing local-to-store opportunities and challenges. What is and is not supported and even encouraged and rewarded in this? I will at least begin addressing this complex of issues in my next installment. And meanwhile, you can find this and related postings and series at Business Strategy and Operations – 5, and also at Page 1, Page 2, Page 3 and Page 4 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too and at its Page 2 continuation.

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