What does it take to build a strong franchisee/franchisor relationship? According to John Nero, the national franchise development manager at Gelatissimo, it’s simple. Go above and beyond.
Putting franchisees first is more than a mantra, it’s a guide to how to recruit, establish and monitor franchisees, he says.
For instance, if a franchise buyer is uncomfortable with the rental agreement or the available location, then Nero wants them to walk away from the deal, rather than accept an option that is less than desirable.
Franchisees have to be comfortable with their decisions. It’s not about picking a site because Gelatissimo wants to be in the location, nor to stop a competitor from moving in. Nurturing the franchisee into the agreement, and continuing to listen and help with enquiries and concerns is what makes the difference, says Nero. “We should be honoured that they apply to us.”
Expansion is therefore measured and aligned to the successful recruitment of franchisees. Three to five new stores a year equates on a 44-store strong network to about 10 per cent growth. It’s a figure he’s happy with.
“The number one thing I want is sustainable growth.”
The brand is looking west and north for expansion with Western Australian regions, Perth and Darwin the hot location targets.
So how does Nero get on board just the right kind of franchisee?
Here’s an insight into the recruitment process at Gelatissimo
Within 48 hours of an expression of interest a franchisee will be sent an information statement and an ACCC brochure about franchising.
If the franchise buyers like what they read and email their interest in proceeding, they are required to sign non-disclosure and application forms.
In the ensuing interview Nero is looking for culture fit before the applicant gets to move to the next stage.
“We ask them to go back and do due diligence, look at government websites, small business sites. Some people can run with this, some can’t.
“If it’s all good there’s a business plan pack containing the franchise agreement and other documentation. We then review the business plan.”
Franchisees also need to understand which Fair Work awards are relevant to their business operation.
It’s all about implementing good habits at the beginning of a franchise relationship, Nero says.
A day spent working in a corporate store with the head of operations allows the latter to give his stamp of approval from a practical perspective. Then the final interview is conducted with CEO Filipe Barbosa.
If franchise buyers don’t get past the stringent process first time because of financial challenges, there are options: running a franchise as a manager or getting another parther to bring in the money.
A successful outcome takes Nero and the franchisee to the practical element of the buying process.
“I like to bring franchisees on a journey. Trying to set them up for success, pointing out what needs to be considered in a site: traffic generators, foot traffic (where is the ant trail travelling?), who are the direct and indirect competitors.”
All franchise buyers will need to revisit their original business plan once they have done some further research and understand the dynamics and numbers of the proposed location.
“Now we’ve got something real to deal with,” says Nero.
With an eye to keeping costs low he takes on the site negotiations himself.
“I negotiate commercially, I like to hit hard. I like to get a rent free period – this give the franchise time to learn the business.”
Nero points out there’s more to securing a good lease than getting the cheapest option. For instance, projecting the rental figures in five to 10 years to ensure they can still be affordable, or finding alternatives to suit franchisees’ circumstances.
“If you’re concerned with risk, can you look at a three by three by three term?” he says.
Other wins might include a lease agreement which offers three months free to be used mid year to alleviate cashflow in quiet times; or a rent abatement if all the promised neighbouring stores are not yet opened.
In one site the landlord insisted the store walls would need to be made good in red brick at the end of the lease. But with a herringbone tile design fundamental to the Gelatissimo fitout Nero suggested a far more cost effective option – a facing that could be easily removed at the end of the lease, leaving the original brickwork intact.
Success in this process is all about taking away franchisee stress and keeping them two steps ahead, he says
The keys to getting it right from the start is for franchise buyers to do a proper risk assessment and understand their break even point.
“If you are uncomfortable with the deal, you can say no at any time,” he tells franchisees. “We put in checks and balances to make sure the franchisee is comfortable. It comes back to how I want to treat my franchisees.
“I want them to be well informed, comfortable, never pressured, they can call at any time.”
Sustaining great franchisee support
Once in the business, maintaining a strong, supportive franchisee/franchisor relationship is crucial to the network, he says.
“We need to make a profit but franchisees come first. If they are underperforming, we look at why. Are they not garnishing the gelato display, not putting out the top flavours, are they getting customer complaints? Is there marketing in place? Is the centre not generating traffic?
“If the store is established and the area changes, is the store still in the right spot? Is the music too loud?”
Solving underperformance is a combined effort. Nero says Gelatissimo won’t rush into a store refresh unnecessarily.
“When we look at refurbishment, it’s a process. We scope out the work but franchisees run there own refurbishments and need to look at sales results to pick a quiet week to undertake the works.
“If the franchisee is under duress, we can hold off and take it in stages. A partnership isn’t a dictatorship, telling you what to do.”
Franchisors can remove the corporate head office barrier not through words but actions, he believes.