The Olympic has ended recently and we have seen and heard of many world champions, record breakers and medallists celebrate their achievements and victories. Their route to success was never an easy one and a lot of efforts had been put in. These not only apply to the winners but also those who made it to London 2012. To be there, it is not only the athletes’ own efforts but also other people behind them, especially their coaches. The coaches are the one that train, guide and monitor them. The coaches are not the one in the arena, court, field or track during the competition but they can see a bigger picture from the outside. The coaches might not be a world champion themselves but they can produce world champions. In franchising, the consultant plays the roles of a coach.
This topic is written for those interested in becoming a franchisor and thinking of engaging a consultant to take them there. There’s always a joke about consultants among my friends – a consultant is a person who con and insult another party. No, that is not entirely true and I know of many good and dedicated consultants out there.
I have written about franchisor selection by franchisee, franchisee selection by franchisor and talked about franchisor selection by consultant. Now, this is probably something out of norm – consultant selection by franchisor. Why is consultant selection important? Taking the first right step is always important. Like what I mentioned in the previous issue, a franchise does not start with a franchisee but rather it starts with a franchisor and it is important to start a franchise with a good franchisor. However, even if the potential franchisor has the right mind-set and ready operationally, it does not mean that they will be able to become an effective franchisor. Most franchisors engage consultant to go into franchising. And in this case, consultants are the one taking the potential franchisors into the first step of franchising. So, consultants play a very important role in shaping the potential franchisor not only as a franchisor but an effective franchisor. Their roles are like the coaches to the athletes. They need to see a bigger picture from various perspectives and provide a good guidance to the franchisor. This explains why selecting a good consultant is important for the potential franchisor.
Many business people who plan to go into franchising by engaging consultant will enquire on a few consultants, get quotations, ask for the scope of work, etc. Well, this sound like any normal procurement procedures and those steps are necessary. However, these are the normal quantitative evaluation. There are also other factors to consider when evaluating and selecting a consultant.
The first general question to be posed to a consultant is probably what business can be franchised? If the answer is that all businesses can be franchised, then be careful with the consultant. This type of consultant is probably more of a conman than a consultant. They are more than likely interested in getting the “consultant fee” only than doing the job right. Most probably all that they will do is to rush out a Franchise Agreement, a Disclosure Document and an Operation Manual from a template and tell the franchisor that the work is done. Here, I would like to emphasize that it is not entirely wrong to use template, but only for some basic and common things. Every industry and business has its own uniqueness here and there and a template does not fit them all entirely. At end of the day, if a consultant does that for a franchisor, it will put the franchisor in a bad shape when real franchising starts. It’s a time bomb. Whether a business can be franchised or not, depends very much on the business model and concept. If the business model and concept is not easily duplicable, then the answer is simple – the business is not franchisable unless the business owners are willing to change them.
Ask the consultant how involved will they be in the creation of the operation manual. Some consultants will tell you that this is your business and you know your business best. That is very true – you know your business best. And this is also a way for them to tell you that, no, they are not going to be very involved in the creation of the operation manual and their job is mainly compiling your business process and put it nicely into a document. A good consultant will want to understand your industry, business concept and operation model. From there, they can add in more value with their third-party point of view, thus enhancing your business process especially at the franchisee’s operation level. It is just like the coach who gets to see things at a bigger picture and provides the guidance and advice.
Try to get to know the consultant better. The consultant is going to take your overall business to the next level, and they should have at least some basic knowledge in certain fields besides franchising. Two important aspects to evaluate are legal and finance. They should be aware of certain basic requirements in the law. They should also possess some basic understanding of the accounts. Check if they can give some views in these two areas. One thing of course is that you cannot expect them to explain things like a lawyer or an accountant because most of the time they are not from these professional background. However, like I said earlier, they should have some basic knowledge and if they are not able to go deep into the topic, they should be truthful about it. No humans are perfect anyway. If they do not have the slightest idea about these two areas, ask if they have a team of people with them who is knowledgeable on these.
One interesting thing to observe is to see if the consultant themselves are the compliant type of people. You see, you need your franchisees to be compliant to your standard operating procedures, guidelines and rules. So, you will need to be compliant to these yourself. It is called leadership by example – something that we heard of very often. However, are the people taking you into franchising have such a character? If they are telling you that you do not need to follow the laws and the rules and regulations, ask for the reason. Is the reason acceptable? Think of the implications should your franchisees get to know about this in the future.
Check with the consultant if they have any business process for you as a franchisor in the newly found business venture – franchising. If the franchisees are getting an Operation Manual for the business they are going to run, I don’t think it will be too much that there should be an Operation Manual for the franchisor to manage their franchisees. Frankly speaking, this is actually pretty important when you grow bigger and need to appoint master franchisee. The master franchisee will need this type of Operation Manual to manage the sub-franchisee and you will need to support them on this especially in providing guidance. A lot of the time, management of the franchisees is done without much proper system.
Reference check! In large corporations, many of a time reference checks are done on potential employee, potential supplier and even potential customer. These are done either officially or unofficially. So, why not do some reference checks with the other clients or affiliates of the consultant. After all, you are about to put your new business venture into the hand of the consultant. Ask about the working style of the consultant. Ask about the good and the bad points of the consultant. A good point to another party does not necessarily means a good point for you. Vice versa, a bad point by another client does not necessarily means a bad point for you also. It is about what suits your need and what you can accept and expect from the consultant.
At the end of the day, business has to be done truthfully. We do not want to do onto others what we do not want others to do upon us. Franchising is about win-win situation. When businesses of both parties are going smoothly, then it will be a harmonious situation and everyone can focus on growth and taking the business to a higher level. Consultants have a part to play in moulding this up on a franchisor. So, franchisor needs a good consultant that they can work with. It is like looking for a good master to learn and become good at a martial art.
This article was first published in Business for Sale Magazine Issue No. 28 Oct/Nov 2012