ADVANTAGES OF FRANCHISING OVER HARING STAFF
Developing a federal network with the help of a franchise partner network is much more effective and cheaper than using hired employees for this. This will be discussed in our article.
In this article we will try to compare two ways to enter the regional level: building a centralized network or using franchising. The author of the article, being an expert and consultant on franchising, offers the latter option, which has much more advantages over hiring a regional manager.
Sooner or later, your business reaches the regional level, when you need to open new branches and divisions in other areas of our huge country.
The big problem you will face when planning to expand into other regions is the selection of qualified management personnel. The position of a manager, whether for a restaurant, a store, or a wholesale trading company, is key. And the success of your company in the new region will greatly depend on it.
Sooner or later, your business reaches the regional level, when you need to open new branches and divisions in other areas of our huge country.
The big problem you will face when planning to expand into other regions is the selection of qualified management personnel. The position of a manager, whether for a restaurant, a store, or a wholesale trading company, is key. And the success of your company in the new region will greatly depend on it.
Problems of hired regional employees
1. Low motivation - an employee works for hire and usually receives a salary regardless of the results they show.
2. Control problems - control from another region is always fraught with difficulties. You will only be able to partially control your employee.
3. Theft - there are frequent cases when a regional manager, instead of developing your business in the region, improves their financial situation through a "gray" cash desk or some kind of corruption schemes. If you do not have a control system in place, such problems will sooner or later appear.
4. Low qualification - I think you will not argue that the level of knowledge and experience of personnel in the regions is at a very low level. And it takes a lot of effort to find the right specialist, especially at a more or less reasonable rate.
I speak with such confidence because I am familiar with the situation on the labor market in the regions from my own experience. Working as a regional director, I recruited managers from Moscow. And I tell you, friends, it's hellish work: to choose at least a somewhat suitable manager, having sorted through hundreds of resumes and conducted dozens of interviews via Skype.
In short, recruiting management personnel in the region is always a roulette. You always put your business in the region at the mercy of the personal qualities of a particular person, which in itself is a very big risk.
2. Control problems - control from another region is always fraught with difficulties. You will only be able to partially control your employee.
3. Theft - there are frequent cases when a regional manager, instead of developing your business in the region, improves their financial situation through a "gray" cash desk or some kind of corruption schemes. If you do not have a control system in place, such problems will sooner or later appear.
4. Low qualification - I think you will not argue that the level of knowledge and experience of personnel in the regions is at a very low level. And it takes a lot of effort to find the right specialist, especially at a more or less reasonable rate.
I speak with such confidence because I am familiar with the situation on the labor market in the regions from my own experience. Working as a regional director, I recruited managers from Moscow. And I tell you, friends, it's hellish work: to choose at least a somewhat suitable manager, having sorted through hundreds of resumes and conducted dozens of interviews via Skype.
In short, recruiting management personnel in the region is always a roulette. You always put your business in the region at the mercy of the personal qualities of a particular person, which in itself is a very big risk.
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The path to franchising
As the title suggests, in this article I want to propose an alternative way for your company to expand into the regions: expansion through franchising.
Instead of opening your own branches, purchasing equipment and furniture, and sitting around waiting for results, I believe it is more effective to find a strong partner in the region who will take on the development of your brand, strengthening it with their resources and experience. But first things first.
You have a successful business that is showing results, you have at least two of your own facilities, and it is ready to scale up to the federal level. I suggest you take the following steps on your way to a franchise network.
Step 1: Develop a franchise program.
Identify and describe the key technologies, know-how, and business processes of your business for transfer to potential franchisees.
Step 2: Establish work with potential franchisees.
After all, you need to attract, interview and sign contracts with entrepreneurs who will join your network.
Step 3: Establish the launch and support of partner outlets.
Any partner expects to buy a profitable and lucrative business. Your task, as the franchisor, is to do everything to ensure that the partner is not disappointed and thrives together with you.
"What will I get as a result?" - the thoughtful reader will ask.
So, comparing with the similar points at the beginning of the article, you will get:
1. A highly motivated manager for your branch. The partner has invested their own money, they are more interested in developing your brand in the region than you are.
2. An experienced and qualified manager. After all, in order to join your network, they have already earned a certain amount of money and have some experience in entrepreneurship.
3. A partner with regional expertise. They know much more about the rules and traditions of doing business in the region than you do. How often do you hear from franchisees: "You just don't know our city, things are not the same here as in Moscow." So, your partner knows the rules of doing business in the city and will use this knowledge to strengthen your brand.
4. A fresh look at the business. After all, your franchisee, just like you, is interested in increasing profits. Naturally, they will constantly offer you ways to increase profits, optimize costs, and implement innovative solutions.
5. Investments. After all, in addition to all the listed advantages, the partner joins your network by paying a franchise fee and royalties. This point clearly cannot be compared to an employee who, on the contrary, receives a salary and expense reimbursement from you.
I think the advantages of implementing franchising instead of developing your own regional network are obvious. By building a strong team of franchisees, you can achieve large-scale expansion into the regions ahead of your competitors. And to do it more profitably and faster. So, stop feeding regional managers, study franchising, implement it in your business and grow-grow-grow!
Instead of opening your own branches, purchasing equipment and furniture, and sitting around waiting for results, I believe it is more effective to find a strong partner in the region who will take on the development of your brand, strengthening it with their resources and experience. But first things first.
You have a successful business that is showing results, you have at least two of your own facilities, and it is ready to scale up to the federal level. I suggest you take the following steps on your way to a franchise network.
Step 1: Develop a franchise program.
Identify and describe the key technologies, know-how, and business processes of your business for transfer to potential franchisees.
Step 2: Establish work with potential franchisees.
After all, you need to attract, interview and sign contracts with entrepreneurs who will join your network.
Step 3: Establish the launch and support of partner outlets.
Any partner expects to buy a profitable and lucrative business. Your task, as the franchisor, is to do everything to ensure that the partner is not disappointed and thrives together with you.
"What will I get as a result?" - the thoughtful reader will ask.
So, comparing with the similar points at the beginning of the article, you will get:
1. A highly motivated manager for your branch. The partner has invested their own money, they are more interested in developing your brand in the region than you are.
2. An experienced and qualified manager. After all, in order to join your network, they have already earned a certain amount of money and have some experience in entrepreneurship.
3. A partner with regional expertise. They know much more about the rules and traditions of doing business in the region than you do. How often do you hear from franchisees: "You just don't know our city, things are not the same here as in Moscow." So, your partner knows the rules of doing business in the city and will use this knowledge to strengthen your brand.
4. A fresh look at the business. After all, your franchisee, just like you, is interested in increasing profits. Naturally, they will constantly offer you ways to increase profits, optimize costs, and implement innovative solutions.
5. Investments. After all, in addition to all the listed advantages, the partner joins your network by paying a franchise fee and royalties. This point clearly cannot be compared to an employee who, on the contrary, receives a salary and expense reimbursement from you.
I think the advantages of implementing franchising instead of developing your own regional network are obvious. By building a strong team of franchisees, you can achieve large-scale expansion into the regions ahead of your competitors. And to do it more profitably and faster. So, stop feeding regional managers, study franchising, implement it in your business and grow-grow-grow!