A good location or a great franchisee: what will make the franchise a success?

Does a good site create a good franchisee, or is it the other way around? Is it the abilities of the franchisee that ultimately determines the success of a franchise location?

Are some franchise brands so strong that that they can withstand the impact of a non-involved franchisee, or does it all come down to having the right person representing the brand?

These are complex and vexed issues that have no doubt kept many a franchisor and franchise management professional awake at night, and were addressed by Michael Sherlock at Griffith University’s Asia-Pacific Centre for Franchising Excellence’s recent Franchise Growth Masterclass.

The Masterclass, hosted by Sherlock in conjunction with senior business coach Alan Anderson, attracted a diverse selection of existing and aspiring franchisors in the food and beverage, services and sporting/fitness sectors. All attendees were seeking to accelerate the growth of their businesses and received personal insights into the processes that Sherlock and Anderson implemented to drive the expansion of the Brumby’s Bakeries store network and share price, leading up to its sale to Retail Food Group for $46 million.

As the former managing director of Brumby’s, Michael Sherlock retold his own experiences in learning the importance of selecting the right people as franchisees.

Franchise location

“We had a very prominent site in a well-known Melbourne suburb that we thought was a great store location, but we had two consecutive failed franchisees there. Then the third franchisee in that same site went on to have tremendous success,” he said.

“So in my experience the most important thing is the ability of the franchisee, not the site. You also need to remember that franchising is not just about opening new stores. You also have to ensure that your existing stores are trading profitability. Your most recently opened stores are the most important and must trade solidly as it reflects on the overall business.”

While a firm believer in the power of a good franchisee to make a site work, Michael admitted that geographic location was also a key factor and the two elements – the person and the site – needed to come together to achieve success.

He conceded there were even some occasions where a good franchisee can be hampered by an unviable or unsuitable location, and site relocation was required. On the whole though, the ability to identify what makes a good franchisee was crucial to the success of any franchise system.

What makes franchisees successful

Sherlock advocated the merits of a process that combines both scientific and gut-feel methods.

“Like a job interview, a lot of franchisee applicants will tell you what you want to hear. It can be difficult to qualify what they will be like on the job,” he said. “Everyone now has access to numerous questionnaires and psychological assessments that can be done to help determine franchisee suitability. You can also do your own research into what has made existing franchisees in your system be successful.

“Get prospective franchisees to talk to these people and observe and even trial the work process. Having a go at it can often sort a few people out.”

Now in many areas it is also possible, and is becoming more common, to test a potential new franchise site or location area with pop-up stores, mobile vans and on-line purchase data. As well as having the right people at the franchisee level, this focus should also extend across all aspects of a franchise business, from staff to management and leaders and everyone in between.

“You have to get the right people on the right seats in the bus to get to where you want to go from the very beginning,” Sherlock said.

Michael Sherlock and Alan Anderson have worked with more than 100 Australian and international franchises across all sectors and co-authored the book ‘Jumpshift!: Shift Your Business in Hyper-Drive’.