Too often, I come across franchisees, including colleagues within my own franchise organization, with a “what are you going to do for me” attitude. They feel that they bought a “business in a box,” a “turn key” operation and that the franchisor should have everything already figured out now and for all eternity. The franchisor should be a 24-7-365 machine, turning out proven innovative, cutting-edge ways to acquire and keep customers, lower operating costs, and differentiate from competition. Yes, good franchisors are constantly, tirelessly innovating in these areas and become better at doing so as they grow their franchisee and experience base.
But where do you think this proven innovation comes from?
Ronald McDonald and the Fillet-O-Fish Sandwich were not marketing strategies cooked up by expert marketing consultants in an ivory tower at Hamburger University. They were created by franchisees in the field. Lou Groen was a McDonald’s franchisee in a predominantly Roman Catholic area of Cincinnati, Ohio in 1962. He started serving fish sandwiches since many of his customers observed the practice of not eating meat on Fridays. Groen’s innovation was a hit, adopted into the McDonald’s master plan by 1963 and served nationwide by 1965.
Groen saw a need, an opportunity for his business and he took action. He did not wait for McDonald’s to put together focus groups and conduct thousands of surveys or ask that they throw a lot of money in an effort to determine if people might order fish.
And this is how it often happens in franchising, especially in younger franchise systems. The genesis of a lot of innovation is trial and error in the field by franchisees who have a need or see an opportunity and take action. I’m a living example of this. The business system I received when I joined my franchise system in 1999 gave me a foundation to start and grow my business. I mastered the various elements of the business system and succeeded. Along the way, I found many ways to improve the system and identified potential opportunities to generate new business. Somethings I tried worked terrifically, others did not and cost me some time and money. Fast forward to 2011 and you’ll find my thumb print and contributions, as well as those of other innovative franchisees, throughout our franchise training and business systems. Franchisees entering our system today are buying a much more robust business system that contains the wisdom gained from franchisees and the franchisor conducting trail and error than what I purchased in 1999.
Successful franchisees love to innovate and franchisors love innovative franchisees. Some people considering franchising fear that they will be restricted left and right by big brother franchisor. The reality is the majority of franchisors encourage their franchisees to explore new ways of growing and operating efficiently. A franchise system’s best source of R&D are the folks in the field with their thumb on the pulse of what works and does not work in their businesses. This has to be done within reason of course; a franchisee’s innovation cannot encroach on other franchisees’ businesses and it cannot deviate too far from the core business model. Selling tacos out of my Mail Boxes Etc. would have been too much of a stretch. But offering gift wrapping services made sense.
And looking for new ways to improve and expand comes naturally to successful franchisees; it’s what keeps us invigorated and excited about our businesses. I, for one, would become bored with my business if there were no new mountains to climb. Franchisors understand this. They want their high producing franchisees to stay engaged and excited and know that they must not place too many restrictions on their thirst for charting new waters if they want to keep them and their royalty revenue.
The balance of innovation typically does equalize as a franchisor matures. As the franchisee base grows, so does the royalty base, which in part funds R&D and system improvement, but it is never exclusively the responsibility of the franchisor to continue to develop ways to improve and refine the franchise business system. This is important for prospective franchise owners and new franchise owners to understand when they are setting their expectations about what they are going to “get” or not from the franchise system they choose. If a person wants to be a part of a franchise organization where corporate is leading (and funding) the innovation and testing and measuring, he needs to choose a more established company. Choosing a younger franchise can be a terrific way to get in on the ground floor, at a lower cost, and have the first pick of territory but in doing so, you cannot expect a young franchisor to behave like a mature franchisor.
A colleague recently shared a story with me about a woman he helped who chose a very young franchise for all the benefits mentioned. Shortly after joining the franchise, her highly unrealistic expectations came to light. She came from a very large corporate setting where systems and departments were highly organized. As one of the first franchisees, she found that there was a lot of room for growth and improvement in the marketing and operations. She loudly communicated her observations and delayed the start up of her own business, expecting the franchisor to implement all her ideas immediately. She was expecting this young franchise company to look and behave like a mature, sophisticated franchise organization. Other franchisees came on board and started working the business model that was in place and began growing businesses. Seeing others surpass her is what it took to light a fire under her and she began working the model in place.
The lessons to take away here are:
- Those who choose a young franchise must start with the model that exists, the model that has worked for the franchisor. Once you’ve mastered that model, start acting on your ideas. Those that work may be incorporated into the franchise master plan. I can tell you that it is very rewarding to see your ideas and efforts adopted into the overall business system and benefit new franchisees joining the family.
- By choosing a younger franchise system, you are accepting the fact that you are a pioneer. You will spend your time and your money on some trial and error for improving the core business system. If you don’t like this fact, then don’t choose a young franchise. Choose a more established organization.
- While the balance of organizing and funding innovation does equalize as the franchise system matures, it is never exclusively the responsibility of the franchisor to continue to develop ways to improve and refine the franchise business system. I am a part of a 23-year-old company and I am still innovating on my own watch and nickel. I would leave if the opportunity to innovate no longer existed.