Should a franchise that operates out of a “bricks and mortar” store give territories or not? That is one of the biggest questions in Franchising today.
There are many opinions, and companies do it differently depending on their size, brand awareness, level of investment required by the Franchisee and basically, the view of the CEO or his franchise advisors.
The Franchisor’s views are normally around the line of let’s keep it to a minimum as it gives us more flexibility for the future. The Franchisees view is normally around thinking of it as an exclusion zone and therefore a guarantee that the Franchisor (or his successor) cannot introduce another store into the area.
Published in the Business Franchisor 2011
Anyone who watched John Cleese in Faulty Towers will remember his great lines about ‘Don’t bring up the war!’ The same can be said for territories, preferred marketing areas, exclusion zones, or whatever name you chose to give them. If you are a franchisor, may I suggest you think very carefully about what you agree to right from the start. As, like many things, promises once given are VERY hard to get back!
What's in a name?
The first point I suggest you think about is, “What am I giving a franchisee in terms of a spatial footprint and what should it be called?”
The four most common things that a franchisor gives to a franchisee are:
I have recently felt the need to send this article (a bit tongue in cheek) to a couple of friendly clients of ours who seem to move from one drama to another without any longer term thought, especially on their site selection policies. I hope you enjoy it, and if you feel it fits your situation – then it probably does! Feel free to pass on as you see fit.
When you are up to your arse in Alligators it is hard to remember that the plan was to drain the swamp...
Fast food and Quick Serve Restaurants across Asia have traditionally been “inline” stores in a shopping strip. Across the western world, the trend over the last 30 years has been to Drive Thru’ s, almost at the exclusion of any free standing restaurant that cannot offer a Drive Thru being sold, or knocked down.
In many countries such as Australia and the USA, we would be expecting around 60 - 70% of all major fast food restaurants like McDonalds and KFC to be what they call FSDT – Free Standing Drive Thru, and probably selling well over 60% of their revenue thru the Drive Thru windows
The science of drive thru’ s has greatly improved over the years where the process now starts well away from the store where you read the menu boards and place your order into the microphone. In many large stores you then drive forward into a window where you pay your money, and then drive on again to the window where you collect your food before heading out. This maximises the efficiency and moves the maximum number of customers thru the service lanes.
Article published in Franchising Magazine Jul/Aug 2014 VOL.27/NO.4
Article was published in Business Franchise Australia and New Zealand - Sep 2015
Franchising is all about service. How many times have we heard that or passed it on to our staff or Franchisees – hopefully to see it enacted with the final user – The Customer.
Bridge Rd retail vacancy at 25.5%: A Longitudinal study update on shop vacancy rates on Bridge Rd, Richmond (Melbourne)
Today I did exactly the same walk and counted 203 retail stores....
Article was published in Business Franchise Australia & New Zealand Magazine Nov/Dec 2013
In a franchise operation you need to have teamwork and cohesion so everybody knows what their responsibility and job is, and by achieving that, we normally see the most competitive and effectively performing franchise systems.
When you are up to your neck in Alligators, it is hard to remember that the plan was to drain the swamp!
As a Certified Management Consultant, it concerns me in many franchise businesses in how they are so short staffed that management move from one crisis to another, without setting up the long term position correctly.
I was recently talking to a client who wants to expand their network into strip shopping centres, and he is continually being offered new strip sites. The company has an issue running that is taking up 80 per cent of his time. Unfortunately they cannot seem to address the local issues, so doing some simple planning to prioritise future expansion areas seems out of the question.
In all steps of the franchise process, be it internal operations of the Franchisor, the interface to Franchisees, or the internal operations of the Franchisees, having delegated roles and responsibilities makes the process of getting the job done far more effective.
It is not very effective having the CEO of McDonalds licking stamps for envelopes, and a young backroom burger flipper telling the CFO how to invest the spare cash!
I had the privilege of attending some of the America’s Cup racing in San Francisco this Spring, and if you want to see how to run an efficient operation, just have look at these teams. 3 years ago the concept of racing 72’ catamarans on hydrofoils was just a dream, and never had such a vessel been built.
International yachting came together and decided to start by building and racing Americas Cup 45 Catamarans, to have sailors become use to racing such vessels, and then to graduate to AC72’s around 1 year before the America’s Cup.
This was a “start from scratch” event where the teams had to design and build their vessels, learn to sail them and become extremely competitive for the racing that was to start in July 2013, with the finals of the America’s Cup in September 2013 in San Francisco.
Despite not regaining the America’s Cup from the Americans, in what turned out to be a nail biting series, let’s compare the Emirates Team New Zealand to a Franchise system, and see where it comes together?
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.