What makes a good franchisee?

Andrew Robertson 2007 FCA Franchisee of the year Andrew Robertson knows a thing or two about succeeding in franchising. He was named Australian Franchisee of the Year 2007 at the Franchise Council of Australia’s prestigious Excellence in Franchising Awards.

Andrew purchased a Worldwide Online Printing franchise in Brisbane in 2003 and, despite having no printing experience, quadrupled its turnover in four years and soon was able to purchase his second franchise close by.

Is there anything Andrew wishes someone had told him at the outset that could have made him a better franchisee?

“I certainly wish I’d had a better understanding of the difference between cashflow and profit. I was running a very profitable business but all the same outran my working capital because I hadn’t fully appreciated the importance of cashflow. I learned that one the hard way.”

“You need to make sure you have enough working capital. Franchisors recommend a certain amount but you should really treat that as a minimum. You can never have too much.”

What are the other things he thinks help make a franchisee successful?

Understanding the role of the franchisor

“You really need a clear view of what you are getting into. Franchising isn’t about paying your money and then sitting back and watching the money come in.”

“A lot of franchisees expect too much. The franchisor gives you access to a brand, systems and methods of doing business. It’s still up to you to make a success of it.”

“There are a number of key benefits that joining a franchise group brings – access to operating systems, a recognized brand, marketing and technical assistance, buying power, and a network of fellow franchisees to support you. This all comes at a price, and it’s important to recognise the value that you get for your royalty fee.”

Managing risk

Another key factor Robertson identifies is the ability to manage risk.

“It’s definitely part of the package and sometimes the stresses and strains are rather different from those of an employed person. You get individuals entering franchising with a golden handshake payment after many years as an employee. They want to be their own boss. That’s all well and good, but it comes with risk.”

“One day they wake up and realise ‘Gee, I’ve put my house on the line! I can’t sleep. I’ve got this debt to worry about’ and it comes as a shock. They then start to make decisions based on fear rather than on what’s best for the business. The truth is debt is a fact of life when you own your own business.”

Interpersonal skills

People skills are another key area Robertson emphasises, though he points out there’s no single right way of relating to others.

“It’s crucial to be able to relate positively to people . Obviously the most important people that you’ll deal with are your customers, so be prepared to impress them, to see the inevitable (although hopefully rare) customer complaints as an opportunity, and to ensure all your customer interactions are handled with respect and have a positive focus. Equally as important are your skills in communicating with your staff. The skills required with this can vary widely, for example in some fast food franchises you need to be able to deal really well with the young people who staff your business. The key is knowing where you have those interpersonal skills and choosing the franchise where they can be best used.”

Appetite for self-improvement

“You should be focused not just on building a great business but on improving yourself. In fact if you focus on becoming a better manager the business will probably take care of itself.”

“A piece of advice I often give people is that if they spot a problem in their business the very first question to ask is whether they might be the problem. Look at your own actions first. Be self-critical. If you want to see change in your business then usually that will mean making changes to your own attitude, knowledge or skills, so be prepared to invest time and money on improving yourself.”

Balancing working in the business and on the business

“You need to be prepared for a constant and continual battle between time spent hands-on in the business and taking time to be more strategic. Both are important.”

“It’s important to try to work at every level in your business so you understand the roles your staff play and can manage them effectively. But you can’t get so buried in operations that you can’t step back and look at the bigger picture.”

Hard work

“You really will have to display a considerable work ethic in the early days. You’ll need to keep your head down and bum up and do some long hours. It’s hard to avoid coming home with your head still in the business. Some people are naturally better at compartmentalising than others and can switch off. Luckily I believe it’s something you can learn to do.”

“Your long hours can take a toll on your family and it helps if they’re prepared for it from the outset. Ultimately I don’t know anyone who doesn’t feel the effort has been worth it in the end.”

Positive mindset

Finally Andrew says that a positive mindset is important, but that’s normally something that franchisees have anyway.

“Thank goodness there aren’t a lot of pessimists who choose to become a franchisee!”