Franchisees Vs. Entrepreneurs – What’s the difference?

In speaking with a franchisor I worked with for some time, she had a comment that struck me as being something I should write down.

“Franchisees speak with their families, friends, coworkers, hire consultants and develop business plans to build a plane before they jump off a cliff.”

“Entrepreneurs jump off the cliff and figure out how to build the plane on the way down.”

This in a way summarizes the polar differences between an entrepreneur/franchisor and a franchisee. In much of our work with franchisors and start up franchise brands, the transition for a franchisor is many time a difficult one learning how to support, help and work with franchisees who look at business, life and most things very differently than they do.

Many entrepreneurs are fighters, they don’t understand nurturing…supporting and providing a positive environment for people to learn how to be successful. Franchisees need guidance, they want support and appreciate structure. Good franchisors have the ability to bridge the gap between

It is for these reasons that a good franchisor will do their due diligence when prospecting and selling franchises of their brand. It is almost ironic, but entrepreneurs in the truest sense of the definition make poor franchisees in most cases….because they can’t follow the rules.

As a franchisor or a business owner considering whether to franchise your business, working with franchisees can be tricky to manage and understand. From my experience in the business, here are items I would recommend you be aware of or bring focus back to during the franchise relationship management process.

Trademark and Brand: Big Brands like Burger King or Pizza Hut are powerful consumer magnets. This magnetism is created and maintained by years of national advertising-we’ve grown up with these brand names. The power of a franchise trademark is that it promises consumers constancy. As a young franchisor that is new to the market….which is the majority of my experience….you need to sell the vision because you don’t have the brand in place yet. Not once, or just at the annual franchise convention…but in every conversation with every franchisee and every vendor and every opportunity you as the franchisor need to continually sell the vision for the franchise, the brand and remind them why they are a part of this growing company. It is your responsibility as the franchisor to remember that you are ALWAYS on stage!

Systems and Support: Franchisees also put an emphasis on training and ongoing assistance in the operation of the business. The appeal of franchising a business for yourself but not by yourself-is rooted in the know-how and services supplied by the franchisor throughout a long, supportive business relationship. Franchisors need to understand this, much of their life has been managed “by the seat of their pants” and just make things happen as they come up. Franchisees enjoy a plan and knowing that some of the legwork has been done for them and they just need to follow the blueprint. This means as a franchisor that you should have a well-thought out training model in place, good documentation, great training programs and a good sales presentation to show buyers that you have these elements in place.

Sense of Community and Team Work: Franchising offers a new business owner the opportunity to learn how to be in business for themselves while being part of a team. Franchisees from my experience have shown to enjoy both commiserating and celebrating with one another. A franchisor should create an environment that allows franchisees to communicate and work with one another while also not allowing for cancers to spread through the franchise network. This means walking a fine line for a franchisor…ultimately being positive, not taking things personally and working through conflict in a fair and equitable way.

Franchisees want to know they are Building Something. Like entrepreneurs in a way….but a franchisee wants to feel they have a road map to building an asset, wealth and ultimately a business they can sell one day. If a Franchisor manages growth, develops a solid brand and builds the franchise system to effectively expand both in number of units and unit revenue growth, the franchisees will benefit from this in how their businesses are valued. Typically franchised businesses will be valued at 3-5 times net as opposed to 1.5 times net for a non-franchised business.

Time to get to work, if you are a franchisor in the process of franchising your business or are currently adding to your franchise network and expanding your brand through franchising, focus on what your customer(Franchisee) needs and wants and you will experience better growth throughout your company.

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