Following on from Ian’s live webinar on the subject of Pilot Franchisees, he has written a blog on the subject. You can view the webinar here:- https://www.youtube.com/watch?v=DiaUh_GGoGo
Read on to find out more…
We are currently looking for four great individuals, to join My Window Cleaner, each as a pilot franchisee. But what does being a pilot franchisee actually mean and what are the implications?
Well, the process starts with both parties having various meetings, going through the business plan model, the marketing activities and the obligations from My Window Cleaner to the franchisee and vice versa. The important part of this stage is that there is a natural fit for both; that the working relationship works and that there is a genuine commitment to each other’s success.
From the My Window Cleaner perspective, we have developed our core business over the past 22 years and have been working on a business franchise format operation for the last four of those. We are keen to expand our business and wish to find like-minded people, to help us grow the brand, as well as supporting them for their own benefit.
Having developed a fully working model and created all the support mechanisms a franchisee will need, we require the right individuals to implement this, to prove that the model can be achieved in an identified Territory, over a period of time. If this is successful, then we can role out the franchise opportunity into other territories. It is therefore crucial to ensure that we have the right people as pilot franchisees, who will achieve these goals. As such, we will be looking for the best people and expect a result rate of one pilot franchisee to one hundred applicants. That’s how good you have to be!
From a Pilot franchisee’s viewpoint, there are some main considerations, the risk, can you work with the franchisor, is there a working trust in the relationship and the potential upside. Now taking these in turn…
There is obviously more risks associated with a pilot franchised business, than a fully developed operation. The model is unproven as a franchised model; the support mechanisms have not been tested etc. The risk should also be assessed financially.
Can you work with a franchisor? Now I don’t mean chat on the phone and attend the odd meeting. I mean, can you work with the franchisor to develop the model and systems further, to hit key KPI’s and to appreciate how the partnership can mutually develop (but through hard work!).
Can you trust them? I don’t mean financially, because that has to be a given in the first place; otherwise don’t apply! To elaborate on this further, by the time a franchisor has got to the start point of being in a position to grant pilot franchise territories, they have probably (if they are doing it correctly) already spent near £100,000. So a franchisor is not going to benefit from one or two small one-off license fees. This is not a get rich quick scheme!
What I mean is, can you trust them to commit and support you as an individual and your business? You need to do your homework here and find out more about the Director’s, the business, the historical accounts and look at the systems, like the Operations Manual, CRM etc.
Indeed, have they become members of the British Franchise Association (BFA)? This is probably the only kite mark that you will need, to give you the confidence to move forwards. If they are members, then their model, franchise agreement and financial stability have all been independently checked out and verified against the BFA’s standards and code of ethics. Membership does not mean automatic success, but it does mean that the franchisor has gone about setting up and running their business in a correct and professional manner.
The potential upside could be significant. A Pilot Franchisee will pay a lower License Fee than franchisees joining the business in future years. Why? Well it takes into account and recognises the risk factors, discussed above. A pilot should always be discounted and ours has been from £9,000 down to £6,000.
But pilot franchisees can benefit from being “first mover” too. A franchisee, whether a pilot or not, should be looking to grow an asset (their business) and make a capital gain, when they come to sell. If the overall business and brand do well in the future and it becomes a more attractive proposition, then your business is worth more. Think of it as a win/win scenario.
With a mature franchise, the risk has been taken out of the model; the franchisor and the support mechanisms are obviously good and are in place. There are a proven number of franchisees trading well, in a territory where the demographics work. The risk has diminished significantly, but the franchisee will definitely be paying a premium on the License Fee, because of that added security.
Both a pilot franchisee and a person looking to invest into a mature franchise probably have the same qualities in running a business, the same ambitions and outlook. But is their mind-set different in taking that leap of faith?
Lastly, & most importantly, no franchisor set out to fail. Their main goal is to make their franchise network as strong, profitable and successful as possible; especially in the pilot phase. So the real risk is do you go it alone (& make the same painful mistakes as everyone else) or do you buy into 22 years worth of knowledge and know-how, to take that risk element out?
The choice is yours...