What does franchisee support entail?

Over the past few months, we have published a series of articles designed to encourage those of you who want to go into business for themselves but not by themselves to consider investing in a franchise. We stressed that whilst there are no guarantees, operating under an established brand and with the franchisor’s full support improves a newcomer’s success chances considerably. Fair enough, but what does franchisee support consist of?

After examining accepted best practice on this topic, we ask Tony da Fonseca, managing director of the OBC Group and chairman of FASA, to tell us how his organisation handles the franchisee support function.

Franchisee support – what does the term mean?
After looking at several local and international examples of best practice in franchisee support, we concluded that whilst business sector-specific differences do exist, a set of overarching principles applies to any and all franchises.

First and foremost, a clear distinction must be made between initial and ongoing franchisee support. Regardless of the type of franchise, newcomers will require a very different set of support initiatives than franchisees who have been part of the network for several years.

Initial franchisee support
Initial franchisee support covers a wide range of disciplines. The overarching objective is that the new franchisee is ready to commences trading and reaches profitability as quickly as possible. It will typically cover some or all of the following:

• Guidance regarding the drafting of funding applications, company registration and statutory registrations.
• Assistance with site selection and lease negotiations.
• The provision of specifications and the sourcing of suppliers for the decorating and equipping of the premises in the most cost-effective manner.
• Initial training in all aspects of operating the business according to the blueprint.
• Assistance with staff recruitment and training.
• Commissioning of the operation prior to the Grand Opening to ensure flawless operation from day one.
• Grand Opening and hand-holding during the initial period.

The importance of initial franchisee support cannot be overemphasised. Experience has shown that it impacts heavily on the quality of the on-going franchise relationship.

Ongoing franchisee support
The overriding objective of ongoing franchisee support is two-fold: Customers’ brand expectations must be met and the franchisee’s business must be profitable. More specifically, ongoing franchisee support revolves around:

• Vibrant national marketing, brand-building and advertising programmes.
• Assistance with local marketing initiatives and their synchronisation with national initiatives.
• Negotiating supply deals granting the franchisee access to the preferential supply of goods and services.
• Providing ongoing training, motivation and coaching.
• Developing initiatives designed to enhance the franchisee’s profitability.
• Creating a platform for the exchange of ideas between the franchisee, the franchisor and other franchisees in the network.
• Conducting performance audits focussing on compliance with network-wide quality and CI standards. *

* It might surprise some of our readers that we list performance audits as a support function. If so, consider this: The network’s standards have been developed to optimise business performance. Unless the franchisee adheres to these standards, projected performance figures are highly unlikely to be achieved.

Tony Da Fonseca

This then is the theory of franchisee support. As a next step, we wanted to find out how an award-winning franchisor provides franchisee support. OBC Chicken and Meat is an award-winning national retailer and a member of FASA. We decided to ask their managing director, Tony da Fonseca, who is also the chairman of FASA, to give us an insight how his company handles the issue.

Q: How seriously does OBC take initial franchisee support?
A: We take it extremely seriously. We have a formal training programme in place that combines classroom training with days spent at one of our company-owned stores. Duration of the programme varies; the minimum period would be one month but we adapt it to the new franchisee’s experience. One thing is certain: We won’t allow a newcomer to operate under our brand until we are satisfied that brand integrity and our standards of customer service excellence will be upheld.

Q: Do you assist new franchisees with site selection?
A: We most certainly do. Members of our senior management team work with the new franchisee to find an optimal site and I am personally involved in its final approval. We also assist with lease negotiations and our inhouse legal consultant scrutinises the lease. We won’t allow a franchisee to accept lease conditions that are likely to destroy the profitability of the store.

Q: What about fitting-out the store?
A: Following the signing of the lease, our store development team takes over. We offer our franchisees a turn-key service. This means that we handle the entire store development process from having site-specific plans drawn up to the point when the store is ready to trade.

On completion of the franchisee’s training, which normally takes place during the period the store is fitted out, we assist with staff recruitment and training, the placement of initial purchase orders and the merchandising of the store.

Q: Do you arrange for a Grand Opening?
A: Absolutely. We inform our suppliers of new store openings and normally manage to secure some very attractive specials on the franchisee’s behalf. We also prepare pamphlets announcing the opening and arrange for their distribution within the target area.

A few days before the Grand Opening, we ensure that everything is as it should be and on D-day, our team is out in full force to offer moral support. As a rule, one of our experts spends a few days at the store to ensure that everything settles in nicely.

Q: Impressive, but what about ongoing support?
A: It gets without saying that we take this seriously as well. For starters, we operate a state-of-the-art distribution facility that enables franchisees to place orders at highly competitive prices and receive delivery according to Just-in-Time principles. This virtually eliminates the risk of stock outages without franchisees having to carry excessive stock.

In this context, I must stress that franchisees are not obliged to purchase from the OBC Distribution Centre. We compete for their business with suppliers on the open market. The only exception is our range of house brands which every franchisee is obliged to carry.

Q: Do you conduct store audits?
A: The area manager responsible for the territory visits the store in intervals of between one week and four weeks, depending on need. His main role is not that of a policeman but to assist the franchisee to drive sales and enhance profitability. Store audits are part of this process. Their prime purpose is to uncover problems and they are shared with the franchisee. We then work with the franchisee to rectify them. Quite clearly, this is in mutual interest.

Subject to need, our area managers can request assistance from merchandisers or other specialists employed by Head Office. I can honestly say that our franchisees receive all the help they need to deliver customer service excellence and enhance the profitability of their stores.

Q: Store visits aside, is there any other interaction with franchisees?
A: Most definitely. The OBC Advertising Club is made up of franchisees elected by their peers and head office representatives; it is chaired by a franchisee. This body meets monthly to plan forthcoming promotions and discuss other issues of concern.

Once a year, we arrange a national meeting of franchisees during which we discuss strategy followed by a celebration of the year that was. This is more than an empty statement. I can say with some pride that the difficult economic times we experienced in the recent past, OBC had consistently reason to celebrate successful trading results.

Q: Deviating from the topic of franchisee support for a moment, is the OBC Group actively looking for franchisees?
A: Given that we are expanding rapidly, we are always looking for new sites and this requires new franchisees. I must add, though, that in both instances, it’s a matter of quality over quantity for us. We will not accept an applicant as franchisee, or a site offered to us, unless we can be reasonably certain that the arrangement will produce a profitable outcome for all stakeholders.

Tony da Fonseca, this has been fascinating. Thank you very much for your valuable insights.

Readers wishing to find out more about the OBC Chicken and Meat franchise can click here. Alternatively, contact Marketing and Business Development Manager Robbie Capazorio – robbie@obcgroup.co.za – or phone him on 082 3377747.