Niche Positioning in the Franchise Industry

 

Entrepreneurs perceive and pursue new opportunities. What distinguishes entrepreneurial ventures from other business is that they are based on a perceived new opportunity which could arise anywhere in the value chain, and in any industry. Flexibility, focus, and individual initiative in an enterprise provide the required impetus for growth. Increasingly, the impact of entrepreneurship on economic growth is being felt in many parts of the world, and not all of it a result of large corporations or their innovative output. If this output is expressed as a per-employee rate, small businesses come very close and even exceed large firms in some industries, like technology, process-control instrumentation and biotechnology.

 

Research shows that smaller firms are also more likely to develop technology for niche, but not necessarily smaller markets. This is the reason many organizations have taken the franchising route to business expansion—remaining, in essence, a small business but catering to a large and rapidly growing market that requires deep penetration through a global network of service providers. The small and medium sized business (SMB) market is one such market that is increasing at tremendous speed and with great diversity across the globe. Franchises that serve this market are many and offer a variety of products and services to meet the growing SMB demand for value-added and specialized offerings. Intense competition, like in any other industry has created a franchise clutter and it takes a keen evaluation to differentiate and distinguish what really makes a franchise stand out in the crowd.

 

So what does a would-be entrepreneur and/or a potential franchisee look for? In a recently aired interview on World Talk Radio, Ron McArthur, president of WSI (We Simplify the Internet) said, “With over a decade’s experience in the franchising industry, our research provides us with the knowledge that what a potential franchisee is looking for is really and truly, a franchise with a strong SPIRIT. 

 

• S – Proven SYSTEM
• P – Ongoing PROFITABILITY
• I – Recognized Brand IDENTITY
• R – Recurring REVENUE
• I – Low Financial INVESTMENT
• T – Continuous TRAINING“

This conceptual acronym largely sums up the best practices and nice positioning that a leading franchise, regardless of its industry, must adopt and offer as its value proposition to franchisees. As a franchisor, the opportunity to work with entrepreneurs from all over the world is perhaps the most intriguing, yet exceedingly challenging, part of a global franchise system. A franchisor must focus on continuously enhancing its franchise offering, gathering and sharing best practices within its network and staying in touch with end customers to always meet their needs. On the other hand, an entrepreneur who chooses to be a franchisee rather than starting a business independently must believe in the franchise system and make a commitment to follow it. The biggest benefit a business owner can derive from a franchise system is to not have to re-invent the wheel but instead, rely on a system that is proven to be successful.

 

A franchisor must provide and make easily available to its franchisees the products/services that help them deliver a return on their customers’ investment. To continue on the subject of SMBs, one of the biggest challenges facing this segment is being able to identify and channelize the right resources to harness the immense potential of the Internet—the only true ubiquitous market in the world. No doubt, larger corporations have had the advantage early on to tap into Internet profits. However, leading Internet franchise firms offer this advantage to the global SMB market.

 

As franchisees grow their business and continuously strive to exceed their customers’ expectations, franchisors must provide a very high quality and breadth of franchise support services. Round-the-clock support via telephone, email or in-person is what potential franchisees should look for when considering investment in a global franchise. Imagine your situation if as a business franchise owner you had to wait for your franchisor’s corporate headquarters to start their business day when you are close to the end of your day and struggling to resolve a customer’s urgent issue! Franchise support also covers the provision of standardized marketing and sales tools which are adapted to work in a majority of global markets. A lack of appropriate marketing materials, branding and communications tools, sales presentations or techniques can be a big hindrance in operating a profitable franchise. 

 

That really is the bottom line: being able to run a profitable franchise. Low initial investment with early RoI, incremental recurring revenue from multiple sources and ongoing success and profitability based on enduring and deep relationships with clients are some of the value drivers.

 

So how does an industry leading franchise stay on top of its franchisee’s needs and continue to deliver what is required to keep the network motivated, successful and always, profitable? Perhaps one of the most important ways of doing this is through performance monitoring and measurement on an ongoing basis. Many firms do this as a routine exercise, but most do it randomly, internally and dwell, therefore on skewed results. Companies that take this more seriously utilize advanced measurement metrics, internal and external audits, conduct customer focus groups and feedback sessions, hire top quality research firms to run independent surveys and drill down into the detailed analysis of their performance indicators.

 

Last, but certainly not the least, potential franchisees must try to find a franchisor’s heart beneath its spirit. Corporate Social Responsibility or giving back to the community is no longer a desired ‘halo’ but indeed, a sign of good pedigree. Franchisees, as business owners themselves will benefit hugely from a larger corporate outreach program that allows them to contribute in some way to the community in which they operate their business. One such movement is the Make Child Poverty History (MCPH) initiative which facilitates the enrollment of individuals and corporations into programs operated by experienced and established charities with the infrastructure to accomplish positive and tangible goals on the ground. MCPH’s mandate is to make child poverty history—one child, one village at a time.