When Is A Management Franchise Not A Management Franchise?

The franchise model has many benefits and is great for de-risking the launch of your own startup business. You get the benefit of someone else’s proven business and all the learnings and mistakes have been made and lessons learned.

You don’t have to invent something from scratch.

The franchise sector has evolved over time and we are long gone from the ’60s and 70’s where pyramid selling and franchise formats were no more than network marketing scams.

An overview of the franchise industry

Today we have a range of well-established behemoths like McDonald's right down to the “Be Your Own Boss” job postcode franchises where you are a one-man band, perhaps as part of a delivery network or you tender lawns or swimming pools, there truly is a full range of options out there.

A new breed in the last couple of decades is the emergence of what is termed “Management Franchises” or “White Collar Franchises”. These are models that look towards business professionals to utilise their skills, experience and expertise in starting their own business.

These skills can be something specific like legal, accounting or even a vocation such as property professionals or insurance and financial services professional. This caters for those that have built a career in a vocation but for want of further advancement, they feel they would like to start up on their own but with the safety of an established brand and network so they don’t have to start from scratch.

B2C Franchise Models

There are a number of B2C management franchise models and they include the home care sector, lettings, tutoring, bathroom and kitchen design, home cleaning and delivery. These help you get into a consumer business without the larger investment requirements of the traditional retail and food franchise models.

They also involve the possibility of employing personnel to do the doing, but there comes with it the trials of staff turnover and reliability. They tend to be in commoditised sectors of the market with a lot of competition.

You can go and find a job as a supervisor of a manager in one of the corporates but if you want the independence and control you can take up one of these models. The reason they call them management franchises as to differentiate them from the postcode job franchises, however, they are only one stop from a postcode job franchise and can mean you are on 24x7 on call - the consumer has the habit of not sticking to the 9 to 5 timeframe.

B2B Franchises

The other type of management franchises are the B2B models. Business-to-business franchises account for a huge proportion – more than a third – of franchise systems in the marketplace.

These are where you sell services to other businesses. Did you note the word “Sell” in there? There is a predominance of models predicated on having sales skills of one sort or another.

They also offer the prospective franchisee some compelling advantages over retail, leisure and other business-to-consumer (B2C) franchise fields. They do require less investment and they are more 9-to-5 (if you believe that working in your own business doesn’t mean 24X7). At least overall the business community won’t be calling you up on a Sunday morning.

When it works

A business-to-business management franchise will suit a range of people, depending on the specific sector of course. But generally speaking, if you’ve come from the corporate world and been involved in the management of departments or across organisations, then you’ll probably have some of the basic commercial skills.

You will also have a specialism that may suit certain fields and markets. They may have less of a commoditised model than the B2C management models as they will rely on a certain level of professional skills in the product or service itself.

Examples would be accounting, legal or industry knowledge in a particular function so that you can consult or coach the B2B customer to help improve their business.

The Issue Remains...

The underlying issue, however, is that it can be compared to buying a job. You would be doing a very similar role as you were in corporate life.

The thing, however, is you are on your own to a large extent. They say that they put all the support structures in place and tell you that you’re part of a like-minded set of people, but essentially you are on your own. If you do not succeed, then there is no one to rescue you like in the corporate world.

You do need to sell to eat. They are not automatic business models.

The reason for this is that a generic service such as consulting, business coaching, accounting services and the like are dependent upon your own capabilities and relationship building. They say people buy from people and in B2B consulting and support services this is doubly true.

In this sense, you are the product. You are the salesperson. You are the delivery person. Each franchisor is different and each model is different. You must look under the bonnet at the business model. Some franchisors have matured and provided a lot more support and training. Some have tried to create frameworks and support with sales process and tips, but others simply rely on you and your own talents.

The fundamentals under their model remain the same.

Products vs service

Whereas the retail and food models actually have a product that is branded and consistent, a B2B management franchise service such as consulting or coaching is a tailored service designed to your specific clients' needs.

By definition, it cannot be consistent and standardised. Productized consulting or business coaching services would fail if it was one size fits all.

The inference of the term ‘management franchise’ is that you would be managing a business, managing resources when in actual fact you are most likely just managing yourself. You are your own boss, however without a standardised product scaling and managing a business is not easy.

You have to be a special person as you cannot rely on a standardised product that you can teach, training and replicate your own efforts with a team you build to sell and deliver. Even in big corporate consulting companies such as Accenture or McKinsey the organisational structures are very flat. They are in fact a series of cottage industries. Advisory and B2B services are notoriously difficult to scale.

Taking the leap

I know from my own experience of over twenty years in consulting and coaching business leaders that there is a big leap from a corporate specialism role to becoming a successful consultant. When recruiting my teams of consultants, I always favoured people who had some real-life commercial experience and not wet out of Oxbridge.

However, those that had long term corporate experience were challenged in the consulting engagement with clients. The whole sales closing, relationship build and objection handling were not easy for them. The constant pressure to sell became too much for many of them. I would say only about 50% really made the transition. I would expect that kind of fall out in the management franchise world, especially where it is a consulting-based model. Some models will be better, but it does not suit everyone to make that leap.

For the more business support and B2B franchise service models you will be competing with other accountants, surveyors, insurance providers and the like. Here you have less differentiation and therefore more price competitiveness, however, a generic service is often not a decision for a business owner as compared to taking advisory services.

The rule of thumb is that where you are predominantly the unit of delivery then you are in more of a postcode job franchise than a management model. In a consulting type franchise, it is more difficult to scale and add a similar resource to yourself. One of the reasons is that if someone has the same skills as yourself, why would they not want to be the franchisee themselves? Or ply their trade in the corporate space where there would be more scope for career advancement? It is not impossible, but you have to be a special person and attract such talent.

The role of the franchisee?

This depends upon the franchisor's model. Those that are dependent upon professional talent or a loose service delivery rather than a consistent branded product are more likely to be closer to a job postcode franchising than a management model.

To determine whether you would be successful is to understand what role you as a franchisee would play. And does it suit? The challenge of owning and managing a scalable franchise business is to look for a model that is for business builders. This is working on the business not purely in it.

What you should be looking for?

Look for franchisors that understand the power of scalable products that you can build a business upon. Look for models that have built-in products, automated marketing and a distribution strategy that does not purely rely on your own sales and delivery skills.

The aim has to be to build a business where the business carries on selling and delivering without you being present. Where you are not the unit of delivery and you can delegate selling, delivering and even operational management to a trainable resource.

This purpose of creating a scalable model that can provide a franchisee with a credible business build proposition is the vision we started out with at Sport4Kids. The S4K Business Model is a Business Build not a management or a job postcode one.

The S4K Business Model has key ingredients for building a scalable growth-focused business.

These business building blocks include a multi-set of sixteen market-leading products, trainable talent to perform key functions, multi-routes to market, a comprehensive marketing engine and a digital platform to take the hassle out of administration and training staff.

What to do next?

If you would like to explore a business build franchise model, why not consider the explore S4K Business System? It just might be the right fit for you. It may give you the opportunity to escape the stress of corporate life and build a large business and legacy for yourself and your family. Start today by booking an introduction chat with our Head of Franchising Bev Regan and then, if this is right for you we can book you in for a discovery day with me (Steve Jones) and our management team where we'll show you everything you need to know to make a fully informed decision.

To book an introduction call please click here.