With more and more entrepreneurs taking advantage of franchising opportunities in Nigeria, there is a need for both “franchisors” and “franchisees” alike to have proper understanding of the business model and the support services required. Although franchising as a business model has been in existence for over a century, operating it within the Nigerian business environment can be tough if you do not understand the business and how to adapt it to suit the Nigerian business environment. You will also run into problems if you do not know the support-areas involved in franchising and or know where to access such support in Nigeria.
If you are a practicing franchisor or potential franchisor who wants to know what, how and where to get support for your franchise venture or if you are a potential or practicing franchisee wondering what support you can access and how to access them, this write-up is for you. Below are some guiding tips:
Support for the Franchisee
A franchisee is the individual or entity who has secured the rights to leverage the brand, license or system of a franchisor to operate a venture. At the point of deciding to secure this relationship, or having already secured one, below are typical support, usually contained in the franchise contract, which the franchisor owes the franchisee:
- Site Selection & Development: A good location is paramount to the success of a business. Most franchisors will provide you with information on the standard criteria for site selection. Typically having a unit providing this support, they will inspect any available site you have in mind and go ahead to recommend another if it does not meet the standards. On approving your site, same team usually working with approved vendors will be providing you support in developing the location in line with the site development requirements including layout, decoration, signage, furniture, fixtures, equipment etc.
- Initial Training & Hand-holding: To ensure that standards are upheld, and that the initial phase of the new business is well managed to stability and growth, most franchisors provide trainings through both hand-holding and classroom experiences. The hand holding requires the franchisor placing an experienced business manager to manage the franchise for usually a couple of months. The operations team would also maintain a close contact with the new employees of the franchisee, ready to resolve challenges that may arise in areas like accounting, service delivery, technology etc. The classroom training is done both by the operations team and external subject matter experts, both for role specific and industry trainings.
- Marketing & Advertising Support: There is usually a marketing plan to support the new business to grow its market share at the territory at least for the year of operation. It includes location targeted marketing materials and all other activities and channels of marketing that will be deployed, which in some cases include a website. It also usually includes the total cost breakdown for every marketing effort to be made, as well as the promotional elements that the company deploys. The Marketing Support Team of the franchisor takes the lead in assisting the franchisee to book the advertisements and implement the marketing programme, to ensure every area is covered. Most franchisors will also require you to contribute to a brand fund that will be used to support the marketing programme for collective advertisement of both franchisee and company-owned locations in your market territory.
Support for the Franchisor
The franchisor or an aspiring franchisor whose business has grown a proven system and attained scalability, usually gets support from franchise development consultants such as Franchise Business Development Services (FBDS). Below are some key support need areas of businesses in this category:
- Franchise Development Support: An aspiring franchisor will require firstly, a successful Business-to-Franchise programme procedure which includes a feasibility analysis, business current position review, global model benchmarking, and franchise strategic model development. A documentation of the developed franchise model in form of operating procedures and policies would be prepared for the new franchise business. This documentation would include a franchise manual, a Franchise Disclosure Document, a Franchise Agreement, among several others. Afterwards, pilot test of the developed franchise model would be conducted for a proof of concept, to support the brand for an eventual launch of its franchise programme. nationally and internationally as it grows and expands.
- Franchise Prequalification: Franchisee Prequalification involves vetting and thoroughly assessing investors or potential franchise buyers with interest in franchises, as regards their preferences, passion, investment capacity, credibility etc. This process comes prior to recommending the potential franchise buyers to matching franchisors with suitable franchise propositions. A franchisor would require the support of expert franchise brokers such as FBDS, to find prequalified potential franchisees.
- Franchise Health Check: Smart franchise operators know to track the performance of their franchise programme often. There are often emergence of unexpected operational, technology or economy based risks in business. These risks, particularly for franchises, if not detected early and resolved, could potentially be a threat to the brand and not just a franchisee outlet. A Franchise Health Check assesses the status of the franchise systems in view of industry risk trends, to establish potential or existing risks the brand is endangered to for resolution.
- Mystery Shopping of Franchise Outlets: Towards demonstrating a commitment to accuracy, sustaining business standards and maintaining the brand promises to its customers, it is recommended that franchisors should “Mystery-Shop” both the company owned and franchisee owned outlets at least twice a year. It takes just one franchise salesperson who takes the entrenched systems for granted, to cause the franchisor years of grief and potential litigation. A franchise lawsuit caused by misrepresentations can easily erase years of profitability. Some of the areas to be assessed during the mystery shopping include the following:
- Physical environment and ambiance of outlets
- Compliance with entire operational and policy guidelines
- Transactions speed and accuracy
- Level of professionalism and courtesy in handling customers and their requests
- Effectiveness of service channels and facilities
- Other operations parameter that may be of interest to your franchise
- Franchisee Associations: A sign of good franchise support is the presence of recognized and respected franchise owners associations. The franchise associations play the roles of providing guidance and support to franchise operators. Such support includes comprehensive information about franchising and franchising opportunities; provision of training, seminars, conference and franchise exhibitions to disseminate information about the franchising industry etc. Nigeria International Franchise Association (NIFA) is one franchise association in Nigeria that franchise operators in Nigeria should take advantage of.
- 1.Amarican Association Of Franchisees & Dealers (AAFD): https://www.aafd.org/good-franchise-support-what-to-look-for/.
- 2.FBDS resource: http://fbdsnigeria.com/ongoing-periodic-services/, http://fbdsnigeria.com/franchise-development-procedure/
- 3.DFID 2016 Nigeria Franchise Study: Tackling Access to Finance: The Potential of Franchising in Nigeria.