Lesson 5-8 Business Strategy & Franchising PDF

LESSON 5 It is the process of creating a business strategy Strategic business plan and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. It desc...

LESSON 5 It is the process of creating a business strategy Strategic business plan and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. It describes the foundations of a company, its Business plan owners, its capabilities, the industry and market(s) in which it operates, how it generates revenues and its financial projections. assesses the current environment of a business, both internally and externally. It establishes future Strategic plan goals and targets and describes the strategies it will implement to reach them. refers to a manager’s potential to express a strategic vision for the organization, or a part of the Strategic leadership organization, and to motivate and persuade others to acquire that vision unique business model that requires both franchisees and franchisors to work together Franchising towards a common goal. 1. Visionary thinking 2. Adaptability 3. Communication skills 7 Key Traits of an Effective Franchise Leaders 4. Commitment to training and development VACCERA 5. Empathy 6. Resilience 7. Attention to detail 1. Lead by example 2. Continuous improvement 7 Strategies for Effective Franchise Leadership 3. Delegate wisely LCD LCD N 4. Long-term planning 5. Customer-centric approach 6. Data-driven decision-making 7. Networking and collaboration 1. Upper level of management 3 different levels of management 2. Middle level of management 3. Lower level of management This level of management consists of supervisors, foremen, section officers, superintendents, and all other executives whose work must do largely with Lower level of management HR oversight and the direction of operative employees. comprises the top tier of an organization whose responsibility it is to make strategic decisions and Upper level of management plans. They are responsible to the top management for the functioning of their department. They devote Middle level of management more time to organizational and directional functions.  READ A BUSINESS PLAN ANSWERS THESE QUESTION: What is my idea? What will be my playground and market scope? What investment and financing do I need? When will I generate revenue and profit for my business? What do I need for my idea to succeed? What value will my idea bring to my business and shareholders? A STRATEGIC PLAN ANSWERS THESE QUESTION: What are my current capabilities, values, mission and vision? What are my goals, and what should I do to achieve them? Who does what, how and by when to get where I want to go? LESSON 6 1. Maintain an Undying Devotion to the Brand 2. Balance Interests of Franchisor, Franchisee 5 Habits of Highly Successful Franchisor and System as a Whole MB SOE 3. Stack the Deck with “Ace” Franchisees 4. Obsess Over the Franchisee’s Bottom Line 5. Empower Franchisees 1. Executive Summary 2. Marketing Research and Analysis 7 Parts of Strategic Business Plan 3. Rationale For Franchising EMRT COE 4. The Franchising Program 5. Corporate and Financial Matters 6. Operations And Management 7. Exhibits This section must present to the reader all relevant and current information regarding the size and strength of the market for both franchisees and consumers, trends in the industry, marketing and Marketing Research and Analysis sales strategies and techniques, assessments of the competition (direct and indirect), estimated market share and projected sales, pricing policies, advertising and public relations, strategies, and a description of sales personnel. This section should provide an overview of the franchising program with respect to key aspects of the franchise agreement, a description of the typical site, an overview of the proprietary business format and trade identity, the training program, The Franchising Program operations manual, support services to franchisees, targeted markets and registration strategies, the offering of regional and area development agreements, and arrangements with vendors. This Section should briefly describe the current officers, directors, and shareholders of the corporation. An overview of the capital contributed Corporate and Financial Matters to the company thus far should be provided, along with an explanation of how these funds have been allocated.  This introductory section of the plan should explain the nature of the business and highlight the Executive Summary important features and opportunities offered by an investment in the company. A detailed analysis of sales and earnings estimates and personnel needed for a typical The Franchising Program facility should be included. Discuss marketing strategies relevant to franchising such as tradeshows, industry publications, and sales techniques. This section should explain the underlying rationale for selecting franchising in lieu of the Rationale For Franchising other growth and distribution strategies that may be available This section provides the current and projected organizational and management structure. Identify each position by title with a description of Operations And Management duties and responsibilities and compensation. Describe the current management team and anticipated hiring requirements over the next three to five years. This section includes exhibits in the presentation copies of the franchisor’s trademarks, marketing brochures, and press coverage, as well as in Exhibits sample franchise agreements and area development agreements. READ 1. Executive Summary The executive summary should be no longer than one to three pages and include the following: 1. The company’s history and performance to date. 2. Distinguishing and unique features of the products and services offered to both consumers and franchisees. 3. An overview of the market. 4. A summary of the backgrounds of the leadership team. 5. the amount of money sought and for what specific purposes. 2. Marketing Research and Analysis The following issues should also be addressed: 1. Describe the typical consumer. How and why is the consumer attracted to patronize the franchisee’s facility? What relevant market trends affect the consumer’s decision to purchase products and services from the franchisee’s facility? 2. Describe the typical franchisee. How and why is the prospective franchisee attracted to the franchisor’s business format? What factors have influenced the prospect’s decision to purchase the franchise? What steps are being taken to attract additional candidates that meet these criteria? 3. Describe the market. What is the approximate size of the total market for the services offered by the franchisee? The approximate market for franchisees? 4. Describe the strategy. What marketing strategies and techniques have been adopted to attract franchisees and consumers? Where do referrals for prospective franchisees come from?  Do existing franchisees make referrals? Why or why not? (Include sample promotional materials as an exhibit.) 5. Describe the performance of the typical franchisee. Are current stores profitable? Why or why not? What factors influence their performance? LESSON 7 1. Technology 5 Elements of Business 2. Professionalism TPCPC 3. Creativity 4. Partnership 5. Communication ELEMENT OF BUSINESS a franchisee is continually reassessing their involvement in a franchise model. It is the never-ending question of, “why am I paying for Creativity this?” As a franchisor, it is our responsibility to continually answer that question with new ideas, insightful business strategy and a helping hand when needed. OL; ELEMENT OF BUSINESS in today’s business marketplace, it is essential that a franchisor embrace the tools and systems available to them from a technology standpoint. Technology With ever-increasing technological capabilities and standards, great technology is available at a fraction of the price for most Franchisors. ELEMENT OF BUSINESS Everyone loves a discount and a “Friend in the Business”. It is a franchisor’s responsibility to find Partnership what needs the franchisees have on a regular basis, and then research what resources there are to assist with those needs. ELEMENT OF BUSINESS As a big powerful franchisor, it can sometimes be easy to forget about the other side of the coin. A franchisee typically will have a much different perspective on things than the franchisor does. Communication Good franchise management requires looking at scenarios and situations from all angles and taking those into account when making impactful decisions. ELEMENT OF BUSINESS having spent a great deal of time working with entrepreneurs and working with literally hundreds of Professionalism small business owners, we have seen our fair share of unprofessional business acumen. Franchisor, you cannot overlook the “small stuff”. 5 Attributes and traits of a successful franchise 1. Show Compassion company leader 2. Effective communicators and listeners 3. Have Business Acumen SEHAA 4. Are Mentors and Coaches 5. Are Change Agents ELEMENT OF BUSINESS  Franchisor leaders are typically strong communicators and public speakers and have an ability to motivate and inspire an audience of franchisees, especially when changes to the system Effective Communicators and Listeners are being introduced. They are also great listeners and actively seek the input and constructive criticism of their franchise network and take action in response to their legitimate concerns. ELEMENT OF BUSINESS Franchise leaders think like coaches and mentors—they are accessible, team builders, care about each player, and genuinely enjoy the process of helping others and developing their businesses. They do not coach from their armchairs; they visit Are Mentors and Coaches the field often and demonstrate their commitment to the franchise system in person and with enthusiasm. They tend to command respect and do not hesitate to also give respect to others when it is earned. ELEMENT OF BUSINESS Franchise leaders display a heartfelt commitment to the success of the system and understand the premise that if the franchisees win, then the Show Compassion franchisor will win. Their attention is not just on the strongest franchisees but also those who are struggling. ELEMENT OF BUSINESS Franchise leaders commit themselves to continuously learning both the fundamentals of the business and the art of franchising. They stay on Have Business Acumen top of new developments in the marketplace and are often respected market leaders and pioneers in their industries. ELEMENT OF BUSINESS Franchise leaders welcome and embrace change. They understand that the franchise system must Are Change Agents continue to evolve and do not fear be the agents and advocates to implement these changes. READ Management and Leadership Issues in Franchising Business - After marketing a franchise system successfully, a good franchisor will provide meaningful support and guidance to the new franchise partners on a consistent basis. The value of a franchise model should add up to much more than just the collection of a franchise fee. There should be substantial value 6 months, 2 years and even 10 years into the franchise relationship. Like any marketing or sales model, it is much more efficient and profitable for a franchisor to retain happy, profitable franchisees than to continue going out and looking for new ones! Managing a franchise system requires skillful technique and a great deal of carefully thought-out planning. Relationship Management - The essence of franchising is relationship management, and franchisees enter the relationship with an expectation that the leader of the franchise system will be committed to the success of each  franchisee, work hard to continue to make improvements to the franchise system, and be a role model in communicating clearly and effectively the vision and goals of the franchise system. Building a Management Team - Recruiting and retaining a talented management team can be one of the most difficult aspects of managing the growth of a franchise system. Early-stage franchisors are not only competing with big firms with larger resources but also with each other. Let’s face it—there are only so many highly qualified operations and field support personnel who will work for an unproven franchising system, let alone a sales and marketing veteran. But many early-stage franchisors have improved their ability to compete for talented staff by offering benefits that bigger franchisors may not necessarily offer such as an opportunity to participate in ownership and critical decision making, flexible schedules, informal work environment, less red tape, and an openness to new ideas and innovation. Creativity, flexibility, and aggressive performance-based compensation are the best tools available to small and emerging franchisors. - Recruitment efforts should therefore focus on sharing the franchisor’s medium-term growth objectives and career advancement opportunities, its leadership style, training opportunities, and respect for the work/life balance. Emphasize any unique or general programs that are or may soon be in place to facilitate quality of life issues, such as on-site childcare, affiliations with nearby health clubs, casual dress policies, or willingness to support telecommuting. In review and evaluating potential candidates, emerging growth franchisors need to look for workers who have strong communication skills, who are willing to be flexible and take responsibility, and have a positive attitude and high energy levels. These intangible skills may need to compensate for a lack of direct experience or academic credentials. - Recruiting practices need to be a lot more systematic. Job descriptions should be prepared, shared, and where appropriate modified with the input of the new employee so that expectations are clear from the outset. However, it is also critical that the employee understand that early-stage franchisors are not the same as larger franchisors, and that the elements of the job description may change quickly as different growth objectives are set and subsequently achieved. Questions should be tailored to ensure that the candidates would be comfortable and productive in a culture of rapid evolution and change. A process that looks for candidates who are naturally curious, enjoy problem solving, are creative, and are flexible will help ensure that there is a fit with the culture and that they are likely to encounter in an early-stage franchise. LESSON 8 Whom does the senior management team turn to 1. a formal Board of Directors and for advice and guidance? 2. an informal Advisory Board Who provides the general policy and direction to 1. a formal Board of Directors and the franchisor’s executives around which a 2. an informal Advisory Board specific growth plan is built and executed? 1. Duty of Care 3 Formal Responsibilities of BOD 2. Duty of Loyalty 3. Duty of Fairness One of the 3 formal responsibilities of BOD where it requires each director to exercise his or her powers in the interest of the corporation and not in his or Duty of Loyalty her own interest or in the interest of another person (including a family member) or organization. One of the 3 formal responsibilities of BOD where directors must carry out their duties in good faith Duty of Care  with diligence, care, and skill in the best interests of the corporation. One of the 3 formal responsibilities of BOD where a Duty of Fairness director has to the corporation is that of fairness. Tips on how to easily manage your franchise business: 1. Follow the proven system. For those franchisees that came before you, it’s very likely to work for you too, if you follow the systems already set up. 2. Hire the best people and treat them right. Your most important resource is the staff. Create an environment in which great staff members can thrive and are invited to become problem solvers. Avoid micromanaging your staff. 3. Delegate to your employees. Franchisees can’t do everything there is to do within their businesses by themselves. That is why we hire employees. Delegation relieves some of the load from the franchisee and provides the employee a sense of importance and ownership in the operations of the business. This will help to develop loyalty from your staff and create a winning team environment. 4. Use what your franchisor gives you. Employ the programs and product offerings from the franchisor that are designed to market and build your business. 5. Manage your time efficiently. You should work with your team and do all the things you need to address today’s workflow but pay attention to the bigger picture. Attend to those important tasks and develop the presence of mind to know when to proceed to the next item if something is taking more time than expected. To avoid bottlenecking, if there is an item on your list taking an inordinate amount of time, move on to the next item and address / reassess later. 6. Acknowledge the fact that you will likely need franchise mentoring and assistance. Being humble and receptive to help and mentoring won’t simply minimize mistakes but may also save money, time and frustration. 7. Give yourself a chance to work on your business without having to always work in the business. Throughout the life span of our business, my aim isn’t to be printing business cards. My goal as a manager is to be outside fulfilling our clients’ needs and making sure that they are receiving the best personalized service. I am to educate them by reviewing quotes and uncovering new opportunities. If I am stuck in my shop doing production work, then I’m not using my tools or my time as the business owner wisely. 8. Managing the business includes managing the company culture. It’s your job to create a positive culture from the top down. Sure, you have the ideal people and equipment. Identifying trends and taking advantage of them falls under this umbrella and thus does ensuring your team is sticking to a philosophy. For us, this means providing high quality products over relying on pricing alone. Think about yourself as an air traffic control. You’re watching all the items departing the business and ensuring all of it is being handled correctly in accordance with high standards. You do all of this while keeping an eye on horizon for future growth. 9. Ensure you have the right group working in the proper roles. One common mistake business owners make is having the right people but not putting them in the right positions to succeed. Make sure your staff knows what’s expected of them and do not let them lose focus. 10. Have a road map for the next few months and even the next few years. As a manager, you need to get that vision of that you want to achieve at different stages of your business. For me, I see wide format printing, signs and banners, promotional products, screen printing and embroidery as logical growth areas. You need to have vision to take your organization to the next level. You cannot do this by simply resting on your laurels and sitting inside your center. 11. As the manager of your franchise business, remember that YOU are setting the tone. Going back to the concept of being part of a team, I like to be seen as active and focused and let my staff know that WE are growing a business together. You must set that type of tone for your company to generate progress. You must convey that in whatever you do and set the tone for what kind of franchise you are going to be to achieve the desired results. GUIDELINES FOR ESTABLISHING BOARD OF DIRECTORS AND ADVISORY BOARD Being a leader is not just being a boss. It takes so much responsibility being one. True leadership is much more than authority and recognition from the outside world. Instead, leadership is all about developing people and helping others reach their full potential. Good leaders are made, not born. If you have the desire and willpower, you can become an effective leader. Good leaders develop through a never-ending process of self-study, education, training, and experience (Jago, 1982). The quality of the leadership team of the franchisor is critical to the long-term success of the franchise system. But whom does the senior management team turn to for advice and guidance? Who provides the general policy and direction to the franchisor’s executives around which a specific growth plan is built and executed? For most early-stage and growing franchisors, the answer is twofold: (1) a formal Board of Directors and (2) an informal Advisory Board (or series of advisory boards for specific purposes). Formal Responsibilities of BOD Duty of Care. The directors must carry out their duties in good faith with diligence, care, and skill in the best interests of the corporation. Each director must actively gather information to make an informed decision regarding company affairs and in formulating company strategies. In doing so, the board member is entitled to rely primarily on the data provided by officers and professional advisors, provided that the board member has no knowledge of any irregularity or inaccuracy in the information. Duty of Loyalty. The duty of loyalty requires each director to exercise his or her powers in the interest of the corporation and not in his or her own interest or in the interest of another person (including a family member) or organization. The duty of loyalty has several specific applications, such as the duty to avoid any conflicts of interest in your dealings with the corporation and the duty not to personally usurp what is more appropriately an opportunity or business transaction to be offered to the corporation. Duty of Fairness. The last duty a director has to the corporation is that of fairness. For example, duties of fairness questions may come up if a director of the company is also the owner of the building in which the corporate headquarters are leased, and the same director is seeking a significant rent increase for the new renewal term. It would certainly be a breach of this duty to allow the director to vote on this proposal. The central legal concern under such circumstances is usually that the director may be treating the corporation unfairly in the transaction, since the director’s self-interest and gain could cloud his duty of loyalty to the company. General Guidelines of the Board of Directors The directors should be furnished with all appropriate background and financial information relating to proposed board actions well in advance of a board meeting. Remember that a valid meeting of the board of directors may not be held unless a quorum is present. Work with your attorney to develop a set of written guidelines on the basic principles of corporate law for all officers and directors. Keep the board informed about recent cases or changes in the law. Many of these guidelines, albeit in a diluted format in some cases, can be adopted to govern the selection and operation of the company’s Advisory Boards. Work closely with your corporate attorney. If the board or an individual director is in doubt as to whether a proposed action is truly in the best interests of the corporation, consult your attorney immediately—not after the transaction is consummated.  Keep careful minutes of all meetings and comprehensive records of the information upon which board decisions are based. Be selective in choosing candidates for the board of directors. Avoid the consideration or nomination of someone who may offer credibility but is unlikely to attend any meetings or have any real input to the management and direction of the company. In threatened takeover situations or friendly offers to purchase the company, be careful to make decisions that will be in the best interests of all shareholders, not just the board and the officers. Any board member who independently supplies goods and services to the corporation should not participate in the board discussion or vote on any resolution relating to his or her dealings with the corporation to avoid self-dealing or conflict-of-interest claims. A ‘‘disinterested’’ board must approve proposed actions after the material facts of the transaction are disclosed and the nature and extent of the board member’s involvement is known. Questionnaires should be issued periodically to officers and directors regarding possible self-dealings or conflicts of interests with the corporation. Incoming board members and newly appointed officers should be provided with a more detailed initial questionnaire. These questionnaires should also always be circulated among the board prior to any securities issuances (such as a private placement or a public offering). Don’t be afraid to get rid of an ineffective or troublesome board member. Don’t let the board member’s ego or reputation get in the way of a need to replace them with someone who is more committed or can be more effective. Board members who object to a proposed action or resolution should either vote in the negative and ask that such a vote be recorded in the minutes or abstain from voting and promptly file a written dissent with the secretary of the corporation. Following these rules can help ensure that your board of directors meets its legal and fiduciary objectives to the company’s shareholders and also provides strong and well-founded guidance to the company’s executive team to help ensure that growth objectives are met.