Brian Scudamore: Founder and CEO, 1-800-GOT-JUNK? and 1-888-WOW-1DAY! Painting
Before you can consider franchising, you need to have a proven business model. It took 10 years to develop and grow the Rubbish Boys into a successful business before we renamed it 1-800-GOT-JUNK? and began selling franchises. Our second brand, 1-888-WOW-1DAY! Painting, previously known as One Day Painting, was successfully operating in Vancouver before I partnered with the founder and started franchising. The founder, Jim Bodden, had 20-plus years of experience owning and operating his own painting business.
I believe in order for any business to be successfully franchised, there also need to be well-documented systems in place that your franchises can follow. When I moved to Victoria to start the second office and operation of the Rubbish Boys in 1995, I picked up The E-Myth Revisited by Michael Gerber and read it cover to cover – twice! Gerber's assertion that "people don't fail, but systems do" inspired me to write an operations manual filled with one-page best practice summaries for each activity required to operate and expand a 1-800-GOT-JUNK? franchise. But I challenged each "best" practice as I documented them. By the end of 1997, my operating systems were so tight that the business looked and felt so much like a well-oiled franchise business that franchising became my model for growth.
With 1-888-WOW-1DAY! Painting, Jim and I again have been capturing best practices in a similar format and challenging them as we document them, so that we also can help our franchise partners hit the ground running.
Franchising is definitely not for everyone. But when carefully planned and executed, it can be a successful growth vehicle for your business.
Peter Snell: Partner, Gowlings
Many businesses may be franchisable, as long as they present some basic characteristics. Since your franchisees need to duplicate the business, the success of the business should not depend entirely on your personal skills or network. Your business's mode of operation should be capable of standardization in complete and easy-to-follow operating manuals, and the goods or services offered should appeal to a broad market.
You can profit from economies of scale by growing your business without assuming the operational risk of each new location by yourself. Franchising allows you to access other people's money to expand your brand. Increased presence in one or more territories might help develop brand recognition, brand value and market share. You may be able to advertise more efficiently and enjoy increased purchasing power by pooling or collectively managing franchisees' contributions.
One of the most important assets you can provide to your franchisees is the use of a popular, recognized trademark or brand identity. Many businesses also rely on trade secrets or proprietary materials to provide their offerings – think a secret spice mix, copyrighted teaching materials or a piece of patented special equipment. Your website and your operations manuals are also important copyrighted materials. Make sure you register any trademarks or patents and properly mark any copyrighted materials and secure the services of a specialized intellectual property lawyer. Don't disclose your trade secrets before you have a confidentiality agreement in place with your franchisee.
The key to a successful franchise is consistent high-quality customer experience, so make sure your franchisees know how to provide it.
Robert Dymont: Principal, Dymont Team, former president and CEO, Sutton Group, and director of franchising, RE/MAX
Are you a possible franchise entrepreneur whose models can be replicated across North America and potentially into the global market?
Here are some questions to consider:
•Can your company operate based on or with a known set of defined principles, knowing that truthfulness comes from adherence to those ideals? Those beliefs and that truthfulness will provide a significant differentiator that will make both you and your company invaluable to your investors and franchisees.
•Do you have motivation, knowing exactly who you are and what you are doing?
•Are you driven by the vital priorities that will help you achieve victory?
•Will your investors be assured that their risk portfolios are safe with you because you won't deviate from what you said you would do? By being resolute, you are efficient and thorough; are you knowledgeable in your specialty and will you become the dominant player in franchising that specialty?
•Can you provide feedback to your franchisees with the foresight of what they can become? Can you assist them with conception of their goals, and what it takes to achieve those goals and ensure that their mental picture and yours are aligned without leaving your thumbprint on it?
•Can you provide direction to stimulate your franchisees? Can you operate according to your principles and command respect through management by example and doing what you set out to accomplish?
To become a well-established company, you must provide predictable consequences for growth through franchising on a large scale and understand that profitability is driven only by the recurring royalty streams.
