UNLOCKING THE DNA OF A SUCCESSFUL FRANCHISE

WITH CHARLES N. INTERNICOLA, ESQ. AND ANGELA COTÉ

BUILDING A SUCCESSFUL FRANCHISE SYSTEM & LEVERAGING

FRANCHISEE RELATIONSHIPS

THE INTERNICOLA LAW FIRM, PC FRANCHISELAWSOLUTIONS.COM

800.976.4904

Angela helped grow her family's franchise, iconic Canadian brand M&M Food Market, to almost 500 locations.

She has been on both franchisor, franchisee side and out in the field supporting franchisees. She helps

emerging franchisors figure out where to spend their time, energy and money

to move the needle towards their growth goals with less effort. She also

works with established brands' franchisees to help improve their

engagement and profitability.

ANGELA COTÉFRANCHISE GROWTH

CATALYST CULTIVATE ADVISORS

Franchise Factories

Franchising is not straightforward and simple.

People think that if they have a successful independent business, that to grow it they just need to find franchisees

who are equally passionate about their product or service, but it is not that simple.

EARLY LEGAL DOCUMENTATION

WEBSITE

OPERATIONS MANUALS

FRANCHISE FACTORIES

NOT FRANCHISABLE CONCEPT

NOT READYRUN OUT OF

CAPITAL

SCRAMBLING FOR FRANCHISEES TO

OBTAIN FEES

BAD FRANCHISEES

BRAND DAMAGE

For emerging franchisors, what do they need to know about building a successful franchise?

Franchising a business is a long game.

When I have the opportunity to work with someone who is exploring using the franchise model to grow, I actually try to talk them OUT of franchising, and I make sure they realize that royalty self-sufficiency, which means when they will finally start to see the profit drop to the bottom line, usually only happens at the earliest at 50 units.

They should only use the franchise model if they have a big vision and the time, money and energy to make it a reality.

Factors for a Successful Franchise

UNIT ECONOMICSUnderstand your unit

economics including giving up a % of royalties, ad fund and a

decent salary a franchisee could take

BE UNIQUEYour brand/concept has to be wildly unique or have a very

strong differentiator

BE “SYSTEMIZABLE”Your offering has to be

profitable without your direct TLC (i.e., if employees need a

very specialized and rare certification)

SELF AWARENESSTake a hard look at your DNA to ensure being a franchisor is the

right fit for you

BE IN IT FOR THE LONG HAUL (CAPITAL!)

Understand that you have to be in this for the long game

What does the DNA of a successful franchisor look like?

The DNA of a Successful Franchisor

GROWTH MINDSET

SYSTEMS VS. ENTREPRENEURIALISM RELATIONSHIP

BUSINESS

LEADER

TRANSPARENCY

COMPASSION

ADVOCATE

INNOVATE

Where do you see startup and emerging franchisors wasting money?

FRANCHISORS ARE WASTING MONEY ON

Portals Google AdWords

Pay-Per-Click

Trade shows

MARKETING TO ATTRACT FRANCHISE LEADS

It’s like the “vultures” are making these early franchisors throw spaghetti at the walls to see what sticks.

NOT CLEAR ON THE FRANCHISEE PROFILE THEY ARE TRYING TO ATTRACT

DNA of a franchisee What traits a franchisee of their unique brand

should have

FRANCHISORS ARE WASTING MONEY ON

NOT HAVING A CLEAR BRAND FOUNDATION

No mission or purpose

Core values are weak or non-existent

(not accurate, not thought out, not lived and breathed, and not put out to the world)

No clear, strong differentiator and/or not

clear on how to communicate what sets

them apart

FRANCHISORS ARE WASTING MONEY ON

OUTSOURCING FRANCHISE DEVELOPMENT TOO EARLY

The franchisor should be handling the franchise recruitment process

for the first few franchisees so they really get a sense of what they are looking for and really understand

the process.

Franchisors should get expertise help to help them

create a customized franchise recruitment

process that clearly defines what happens from the lead coming in to the signing of the franchise agreement

continued...

FRANCHISORS ARE WASTING MONEY ON

OUTSOURCING FRANCHISE DEVELOPMENT TOO EARLY

Brokers and outsourced development people can be a

great strategy.

But, can be costly and some brokers give the role a bad name

because they don’t understand the brand or just look at it as a sale and not a partnership that truly needs

to be a match.

The broker and outsourced franchise development

person isn’t the one who will have to deal with the

frustrations a year or two after the franchisee signs on

when it turns out the franchisee wasn’t a good fit.

FRANCHISORS ARE WASTING MONEY ON

What factors lead to a successful franchise?

Franchisor Success Factors

Simplified actionable steps for all franchisees

to follow

Sufficient capital

Soft skills and natural leadership style needed to create and nurture the

franchisee/franchisor relationship

Structured support

Clearly defined community marketing

strategies that franchisees can

implement to grow their business

Technology that optimizes efficiencies and data

sharing so that franchisees are clear on their metrics and can focus on growing

the business

Collaborative opportunities

Transparency about decisions being

made, metrics, and where ad fund is

being spent

Ongoing training and professional

development opportunities for

franchisees

Where do you see the franchisor/franchisee relationship break down?

Franchisors forget to slow down

Lack of soft skills in general

They have the technical side figured out but they forget or

overlook the fact that franchisees need a little TLC

Take the time to create buy-in

(i.e., deciding to change software or a policy or the product line but don’t

get franchisee input or don’t help the franchisee understand the why

behind the decision)

What advice can you give emerging brands to really energize their franchise relationships to drive unit profitability?

Invest Time & Energy

Work with the franchisee to decide which community initiatives are a fit for them and create a plan and accountability to the plan

(i.e., If they hate networking and you are telling them to network, they will probably not do it - maybe brainstorm an alternate strategy with them or maybe they actually

just need some coaching on how to network

Create Buy-In

Know the franchisees’ long term goals

You can connect the accountability expectations to the long term goals

Be transparent about decision making

continued...

Create Collaborative Opportunities

Leverage the fact that there are other biz owners in the franchise running the exact

same business

Set up mentoring groups

All team brainstorming session

FAC

KPIs & Structured Support

Look at lead indicators, KPIs and expenses with franchisees on a

regular basis

Provide structured support (recurring weekly calls with a

predictable, standardized agenda)

Train, train, and retrain

How do you roadmap what franchise success looks like?

Franchise Success Roadmap Starts here

Start with roadmapping session:

Lift the hood on what you’re focusing on; 30,000 ft. view on what’s going on to really move the needle for them to hit their goals.

Discuss infrastructure required to scale the business; how and when to implement

Avoid franchise vultures - it’s easy to get distracted and not know where to focus and where to put your energy and resources

OPEN Q&A

UNLOCKING THE DNA OF A SUCCESSFUL FRANCHISE

WITH CHARLES N. INTERNICOLA, ESQ. AND ANGELA COTÉ

BUILDING A SUCCESSFUL FRANCHISE SYSTEM & LEVERAGING

FRANCHISEE RELATIONSHIPS

THE INTERNICOLA LAW FIRM, PC FRANCHISELAWSOLUTIONS.COM

800.976.4904