Recruitment of suitable franchisees is the largest obstacle to franchise growth, according to a new study.
Research by the University of Surrey found that solid recruitment was one of four chief characteristics of a successful franchised business. Successful franchises also displayed a strong knowledge of or experience in franchising, a secure financial base and an uncomplicated system of management.
A recent survey by the British Franchise Association (BFA), which commissioned the University of Surrey’s study, found that of these criteria, franchisee recruitment poses the biggest barrier for 39% of franchisors.
“The ability to recruit suitable franchisees, whilst in part a reflection of the track record of the system, also seemed to be closely related to the wider economy,” said Dr. Anna Watson, who conducted the study for the University of Surrey.
“In the early 1990s, during the recession, it was far easier to recruit franchisees, as there were a large number of people with extensive management experience with redundancy packages to invest.”
After recruitment, Watson said many franchisors suffer from a lack of finance. She said that for a business to make the move into franchising, it must understand the financial implications. A firm looking to expand must have a strong trading record and balance sheet, as well as reserves of funds in place for long-term support.
Successful franchisors will have also invested in a dedicated support structure, she said. Owners and managers need to see and manage their business as a network, and Watson found that the most successful of franchisors hold regional or national meetings for their franchisees and support franchisee advisory councils.
“The companies all stressed the importance of these councils in terms of helping manage the franchisee/franchisor relationship,” said Watson. “The presence of franchise councils is perhaps indicative of the fact that [franchisors] fully appreciated that franchisees have to be managed differently from employees.”
