Franchising might be a solution for your business (Part 1) By Strive Masiyiwa
__A powerful model to consider.
There’s a very popular television show for entrepreneurs in the US called “The Profit” in which a billionaire entrepreneur called Mark Lemonis goes around the country investing in struggling small businesses, usually with a great product, but who don’t yet have the processes (or capital) needed to be successful.
It’s one of many such shows that will be aired on Kwesé TV, as we hold the exclusive rights to broadcast this show in Africa. Kwesé TV will have a 24-hour channel dedicated to entrepreneurs called Kwesé Inc.
Mark Lemonis argues that three things are necessary for a business to be successful: People, Process and Product. I agree with him completely, and have written here recently about my experiences with some of these issues.
This brings me to what I want to talk about in this short series:
THE FRANCHISE BUSINESS MODEL
__This is one of the most powerful business models ever devised and it creates literally millions of jobs around the world.
# Franchising significantly reduces the risks associated with starting and running a business successfully.
# As a “franchisee” you don’t have to spend time trying to develop a product or service yourself, but you take a proven product or service which people already want.
# A good franchise normally comes with well-established processes, and training and support done by highly-skilled professionals. This helps take out the risk associated with creating and managing your own processes.
Having passion and being prepared to work is simply not enough, you have to know what you’re doing. A franchise helps you learn at the feet of experienced entrepreneurs who have done it before.
I’ve experienced both sides of franchising:
# Franchisee: This is when you operate a business as a franchise from someone else. For instance, I’ve operated a Coca-Cola franchise for many years. It’s a beautiful business: I don’t have to think about the product or do research into what customers want. Coca-Cola takes care of everything! All I have to do is manage my people and the cash register!
# Franchisor: I’ve learnt more than a thing or two from the masters like Coke and McDonalds, and I’ve also used the Franchise Model to expand my own businesses:
When we set up Mascom Wireless in Botswana, I wanted to get shops up and running quickly. I wanted them in the cities’ best locations, so I went round the cities and literally chose the sites myself. These were usually occupied by businesses doing different things. I would approach the current owners and tell them they could make more money in a new industry called mobile phones… This was Franchising!
We would then strip out their stores and re-brand them. Their people were trained by us and wore the same uniforms as our own staff.
This meant I didn’t need the headache of operating so many stores, and I shared the entrepreneurial burden with others.
I’ve used this model time and time again to scale quickly, reduce capital requirements, and also to use the entrepreneurial zeal that staff sometimes cannot provide.
Growing your business by franchising is also a way of reducing the capital required to scale your business. In fact, if you really understand franchising you will realize it’s another way to raise capital to expand your business.
Ray Kroc who grew McDonald’s into the most successful franchise in the world, said something interesting: “The two most important requirements for major success are: first, being in the right place at the right time, and second, doing something about it…”
Do you think he’s right? What are some other requirements we’ve discussed?