What are the risks of undervaluing a franchise brand?

Franchising offers the advantage of an established brand, which can be a head start against local competitors. Recognizing this value, I focus on upholding the franchisor's standards in marketing, customer service, and quality. Skimping on these areas can dilute the brand's strength and my business's potential. I've learned that maintaining brand consistency is crucial—it's what customers expect when they choose a franchise. Failing to meet these expectations can lead customers to look elsewhere for the promise of quality and value they associate with the brand. Therefore, I invest in every aspect that upholds our shared brand promise.

You become a franchisee either because you want to associate yourself with an established brand, or because you're new in an industry and need the know-how and the support to successfully run your business. In both cases, there's a very good chance that you recognize and value what that brand can bring to you. However, it so happens that some franchisees are quick to take the brand and franchise parent for granted and get themselves in a heap of trouble, both financial and legal. As a franchisee, you're a custodian of the brand you align yourself with. If you undervalue it, you shouldn't be a part of it. It's a going full in kinda deal.

A few of the key reasons customers, suppliers, franchisees go with a particular Franchise brand is their ability to access a specific product/service/system that only that Franchisor can offer and provide at their required level, or the Franchisor has the exclusive rights to a brand so publicly loved that itself is what attracts people to favour their franchises amongst other competitors. Consequently, Franchisors need to understand their actual and perceived value from all their stakeholders perspectives, particularly their franchisees, employees and customers, and ensure they are investing in this in a way that meets those value perceptions, otherwise the competitive advantage held over other franchises will risk being lost.

franchise brand can lead to reduced brand loyalty, lower-quality franchisees, decreased customer trust, and hindered growth. It may also make it difficult to compete in the market and attract top talent.

Franchising's strength lies in its network, which offers unparalleled support and resources. I tap into this, embracing the provided training and guidance, which helps avoid costly trial-and-error mistakes. However, underestimating the franchise's value can lead to non-compliance with set agreements and operating procedures, jeopardizing the network's integrity. I’ve seen how not engaging with the network or skirting the rules can strain relations with both the franchisor and fellow franchisees, impacting the business negatively. By valuing the franchise framework and participating actively, I not only uphold the brand's reputation but also contribute to the success of the entire network.

An understanding of what is your brand, why it is important, what can damage it and how, and the flow on impact to every stakeholder and the network, are essential for continual operation and growth, especially as this can be a big reason for your competitive advantage with customers/suppliers/franchises. As such, awareness needs to be apart of all franchise process stages, induction to continual refreshers, for franchisees and franchisor members. Franchisor need to ensure their legal, operational and marketing documents are all consistent with this, and provide the back up to protect and grow the brand as essential investments (and reinvestments given this is a continual review process to ensure it is continually working as intended.

Undervaluing a franchise brand can have serious consequences. It can lead to a loss of brand equity and reputation 1. If a new entrant starts cutting corners, it can result in jeopardizing the brand image because the products and services will become substandard 2. The brand’s image and reputation will suffer due to the fault of a single franchisee

Conducting a careful due diligence using experts (and actually looking at the records and speaking to stakeholders) in the key areas impacting a franchise success are essential factors for any part of setting up a franchise system, buying/merging a franchise system or when buying into a franchise as a franchisee. Nothing will every replace doing a proper due diligence and then having the results and any needed warranties etc all backed up in a carefully created contract with guarantees. Depending on the particular deal, this can include looking into the founder/franchisor, system, IP, specific franchise business being offered, its location/territory, premises (where applicable) and others in the network or competitors outside.

Being part of a franchise means everyone needs alignment to brand. If a franchisor does not build strong relationships with the franchisees the brand is diluted. Franchisors that do not include their franchisees is setting brand strategies and keep culture alive may experience a divide and lack of alignment. Franchisors started the brand but franchisees are the ones delivering the brand promise at ground level. So, in order to have high value in a franchise everyone needs to be delivering on the same brand promise at a global and local level.