Franchising is No Game – Why Game and other franchisers and franchisees go bust!
Over the years I have been fortunate to do work with some of the biggest and most successful franchises in Australia.
After the recent collapse of the giant games retail franchise GAME it has caused me to pause and think about why so many franchises fail while others flourish.
Franchising is No Game – Why Game and other franchisors and franchisees go bust!
I have come up with what I believe are the 4 primary reasons.
- The value proposition: Some franchiser’s believe that by having a brand is enough to carry them through tough times as well as bad. While this may be mostly true for global giants and household icons like MacDonalds, Hungry Jacks / Burger King, KFC etc, its certainly not the norm for those who don’t have billions to invest in marketing, advertising and branding strategies. Franchisers need to offer more value than a business name and a logo.
- They are great at showing their franchisees what to do but they suck at HOW to do it. It is rare to meet a franchise group that truly invests in helping their franchisees own and run a business. They are great at teaching them the WHAT of the business (mowing lawns, making coffee, fixing computers, making juice drinks, writing a loan etc). Yes they occasionally get a successful franchisee to help show them what they did right but this is often really what they didn’t do wrong. Truly successful Franchise Groups bring in experts on the HOW to run a business, like my team and I (insert unabashed self plug), who understand nothing about what they do but are the experts in the how of local area marketing, sales, operations, logistics, finance, customer service, client retention, referral and repeat business strategies, communication skills, management skills, leadership skills, and so much more.
- The leadership and management of the franchise group are either ex franchisees or came from the industry. Don’t get me wrong, these experiences and the knowledge they bring can be invaluable, but, they don’t offer an alternative or new way of doing business and have no knowledge of how to draw the best of what is being done in other business groups to look at the application and implementation in their business.
- The franchise takes anyone who has a heartbeat and a cheque book. Not looking at attitudinal, behavioral and financial suitability for the franchise or at least not looking at it with the right depth is a significant factor behind franchisee and franchise failure. A franchise is only as strong as its franchisees and as long as many franchise groups continue to either ignore or skim over this simple concept that is so easily integrated into their franchisee selection process there will continue to be problems in this area. As a colleague of mine was so fond of saying “there’s no use having the right people sitting in the right seats of the right bus if they are beating the hell out of each other”
If these 4 simple things were addressed so many more franchises wouldn’t fail and those that don’t fail would not just survive but thrive!
Take care, take action and be relentless…
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