3. Development of franchise tools

The franchise tools are used to enable franchisees to replicate franchised business model thus creating a profitable and sustainable business faster and with less resources as well as running it more efficiently and with less risk than he or she would manage to do it independently without the assistance of the franchisor. There are two major families of franchise tools – one for transferring of franchisor’s “know-how” and another for transferring of franchisor’s corporate identity elements. The main characteristics of these franchise tools should have been designed during the franchisor’s business planning process, so now it is the time to actually create them.

 

Tools for transfer of “know-how”

First of all, let’s remember the concept of the formalized “know-how” used in franchisor’s business planning process. In the context of franchising, the organization’s “know-how” can have one of three forms:
 

  • Formalized “know-how” that includes objects of the franchisor organization’s intellectual capital that are clearly structured, described, and are systematically applied in the process of business value creation. It could be described procedures, instructions, guides, standards, written organization values, competency matrixes, personnel training programs, etc.
     
  • Non-formalized “know-how” that includes objects of the franchisor organization’s intellectual capital that are not described, but are known to the franchisor’s employees and are more or less systematically applied in the process of business value creation. It could be unwritten rules, not described sequences of steps, organization’s traditions, customer service methods, etc.
     
  • Non-structured “know-how” that includes objects of the franchisor organization’s intellectual capital that are not clearly structured, described, and are not systematically applied in the process of business value creation. It could be one-time problem-solving methods, unique competencies and the experience of different employees, employees’ agreements regarding performance of processes that are unknown to managers, etc.
     

Depending on its form, “know-how” can be transferred to a franchisee by different means:
 

  1. Operations manuals are the key tool for the franchisor to transfer the formalized “know-how” to franchisees. There are three main types of operations manuals:
     
    1. Pre-opening operations manual. It is designed to transfer to the franchisee the franchisor’s “know-how” related to the implementation of the business processes from the conclusion of a franchise agreement to the start of the unit’s operation, to regulate respective actions of the franchisee and to comprehensively describe the interaction and mutual obligations between the franchisor and the franchisee during implementation of this stage.  
       
    2. Franchised unit operations manual. It is designed to transfer to the franchisee the franchisor’s “know-how” related to the implementation of the business processes during the day-to-day operations of the franchised unit, to regulate respective actions of the franchisee and to comprehensively describe the interaction and mutual obligations between the franchisor and the franchisee.
       
    3. Employee operations manuals. They are aimed at transferring to franchisee’s employees, holding specific positions, the franchisor’s “know-how” in the area of their direct responsibility, defining their responsibilities and rights as well as their efficiency, performance and quality standards.
       
  2. Training is the prime means of transferring the non-formalized franchisor’s “know-how” to franchisees. Training are also extremely helpful in ensuring that the franchisee and its employees have done their job properly in receiving, understanding and applying formalized “know-how”. Trainings are grouped under the following categories:
     
    1. Initial trainings are aimed at developing initial competencies in business management and implementing specific job functions needed for smooth running of franchised unit in accordance to franchisor’s standards.
       
    2. Recurrent training are aimed at developing competencies in business management and implementing specific functions needed to adjust performance of franchisee’s unit to changing business environment and to stay in line with evolving franchisor’s requirements.
       
    3. Ad-hoc training that are aimed at developing competences in atypical business situations that need quick and uniform reaction from all nods in franchise network.
       
  3. Support and assistance are key tool to transfer the franchisor’s non-structured “know-how” to the franchisee and ensure that the franchisee’s activities comply with the franchisor’s requirements. The scope of the support may vary significantly depending on a specific franchise. However, three main categories can be named:
     
    1. Methodical support is a predefined set of supporting activities that is provided by franchisor to franchisees before and during the operations of franchised unit.
       
    2. Ad-hoc assistance is usually a franchisor’s reaction to unexpected situations in franchisee’s business that might lead to harsh consequences if not addressed properly.  
       
    3. Control is a recurrent activity carried out by franchisor to ensure franchisee’s compliance with franchisor’s requirements and to provide means for improvement of franchisee’s business efficiency and effectiveness.
       

After introducing you to major tools for transferring “know-how”, let us move to their development part. As you remember, during the franchisor’s business planning you were supposed to take couple of steps related to franchisor’s “know-how”. If have not took those steps before, we briefly remind you of them, because you will need to take them during this stage anyway:
 

  1. To audit all “know-how” available in your organization and structure it by assigning it to the business processes or functions.
  2. To evaluate the level of formalization of your “know-how” and identify what “know-how”, that is not currently formalized, must be formalized before the launch of the franchise.
  3. To categorize “know-how” and identify those “know-how” pieces that are crucial for building and sustaining competitive advantage of your business.
  4. To decide which “know-how” will be passed to your franchisees and which will be kept by franchisor.
  5. To design the structure of your operations manuals, trainings and support.
     

After taking these steps, you are ready for actual development of the “know-how” transferring tools. There is no single standard of these tools and each franchisor might use his own preferred style of structuring information and writing. However, there are some common principles that are important to follow:
 

  • Be unique. Your business and your way to business success are unique. Your “know-how” transferring tools must be the same. Do not try to take a “shortcut” by using template operations manuals or uniform training programmes. Only by creating your own exclusive and distinctive tools, you might expect franchisees to appreciate your true “know-how” and replicate your business successfully and in line with both your standards and values.
     
  • Be yourself. Contents of your operations manuals and training programmes must reflect your current state of business. Do not fall into a trap of drafting “ideal state” of your business processes by describing standards that you are not meeting yourself in your own units. Write text in your own style and in words you actually use. Do not employ overcomplicated language and do not use too much of professional slang without explaining yourself.
     
  • Be simple. The franchisee and its employees, as any other normal human beings, are allergic to boring instructions and manuals. Nobody likes to read long and complicated text. Try to structure and describe your business processes and their “know-how” as simple as possible by using more schemes and pictures or even audio and video clips, where possible.
     
  • Be relevant. Describe most important processes in most details. Identify those parts of “know-how”, which are crucial for creating and sustaining competitive advantage, and define them thoroughly and comprehensively, illustrate them with examples and recommendations. At the same time, do not over-explain simple processes that are not too important for success of your business.
     
  • Keep your “know-how” transferring tools “alive”. As your business model evolves, processes improve and standards rise, the “know-how” transferring tools must be updated and expanded as well. You must be ready to share your business model improvements with all franchisees by including new provisions and removing irrelevant ones from your operations manuals, training and support programmes. Therefore, it is handy to design manuals, training and support programmes to be easily updatable.
     

Finally, please, remember, that professionally developed “know-how” transferring tools will not only enable smooth and profitable operation of the franchisee’s business and its compliance with the standards of the franchise network, but will also allow the franchisor to reduce the extent and scope thus decreasing cost of supporting and controlling its franchisees. In a word, you will save your money and time by investing in professional “know-how” transferring tools.

 

Tools for transfer of corporate identity elements

As you might remember, well-known and popular brands as well as other elements of corporate identity could constitute a huge part of the value transferred to the franchisee. A well-known trademark that creates positive emotions and is liked by consumers also creates long-term value for the franchisor. In the long term, a particularly strong, popular and duly protected trademark can become a major and exclusive competitive advantage in franchisor’s business.

Corporate identity elements include the main business trademark, ancillary trademarks of products or services and other identity elements, such as designs, characters, etc. In order for corporate identity elements to become a key part of business value, the franchisor has to make targeted investments in the enhancement of its identity elements, increase their popularity and improve their reputation. It is also necessary to ensure proper protection of such elements.

The development of tools for transfer of identity elements to franchisees is not complicated, although may require quite a lot of time and some financial resources. The main tasks to be done by the franchisor are as follows:
 

  • The verification of the suitability of corporate identity elements. You must be sure that in the target markets your corporate identity elements and words or phrases used in them do not evoke negative associations to the local population. You must also explore if there are identical or similar corporate identity elements in the target markets.
     
  • Legal protection of corporate identity elements. We highly recommend registering, patenting or otherwise protecting all corporate identity elements that might be protected and are valuable for your business. The minimal “must-do-plan” is at least to register your trademark in all territories and markets of your franchisor’s business development. Since the registration and patenting of trademarks is a specific process, for its execution it is advisable to consult with patent agents and other experts in the field.
     
  • Development of corporate identity application manuals. For franchisees to be clear about how they can and cannot use the franchisor’s corporate identity elements, detailed and visual corporate identity application manuals must be prepared. Usually franchisors develop business style guides, trademark application manual, business unit’s interior and exterior design guides, etc.
     

You also need to bear in mind, that certain countries have strict rules requiring words appearing in publicly displayed trademarks to be provided in a local language. The franchisor must be ready to adapt its identity elements in this way so that they satisfy local requirements without losing their exclusivity and value at the same time.

Developing franchise tools enables you to move closer to the final of the franchisor’s business development process. Next step in this process is development of franchise infrastructure. You can read more about development of franchise infrastructure here >>>>

 

  • Check our presentation about creating a franchisor's business here >>>>
  • Download the e-book “Franchisor's business: the beginning” here >>>> 
  • If you have any question, fell free to contact us here >>>>

 

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