'C' is for...Consultants
Do you need to hire a Franchise Consultant?
This is a common question I’m asked by owners considering franchising their business. The simple answer is no, you don’t. However, if you decide not to hire a franchise consultant then you or someone in your team will need to learn all about franchising (which takes time…albeit excellent resources are available through the British Franchise Association Training Academy) or, you will need to employ someone who is experienced in franchising (which takes time and probably costs more than a consultant!). If you don’t learn about franchising yourself, hire someone who knows what they are doing or engage the services of a franchise consultant, it’s fair to say that you are probably going to mess things up.
Are all Franchise Consultants the same?
Absolutely not and this can be confusing. There are essentially three flavours of franchise consultancy in the UK. Some consultants or consultancy firms may do all the different flavours (like a Neapolitan ice cream), whereas some may specialise in just one or two:
1. Franchise Development Consultants – these are the people who will get you from where you are now to being in a position to recruit franchisees. They will usually help you with a feasibility study to see if your business is franchiseable, then work with you to prepare a Franchise Development Plan setting out what your offer to franchisees is going to be, what they will get for their money, what the business model will be, etc. Most franchise development consultants will also help with preparing an Operations Manual and providing a legal brief to allow lawyers to draft a Franchise Agreement that reflects the way you have decided to operate the franchise.
2. Franchise Recruitment Consultants – these are the people that will help you find franchisees. They will usually start with getting your marketing materials and website in order before helping you determine a recruitment strategy as to where you will go and fish for franchisees. If required, these consultants will handle initial leads in order to filter out the rubbish ones and save you time as you will only speak to candidates that are “pre-qualified” in accordance with the criteria that you have set.
3. Franchise Operations Consultants – these are less common in the UK but usually take the form of people who have experienced life “in the trenches” of a franchisor. They can often help with day-to-day operations and advise on how best to operate a franchise network and get the best from franchisees.
To add a bit of confusion into the mix, internationally there is a fourth flavour of franchise consultant known as a ‘Franchise Broker’. These people usually have a portfolio of qualified candidates looking for franchise opportunities. Brokers act as a match-maker – connecting their candidates with franchise brands. Whilst there are one or two consultancy businesses in the UK that could be described as franchise brokerages, the concept is still in its infancy over here.
What do I need to consider when appointing a Consultant?
A franchise consultant is not a regulated professional like a doctor, accountant or solicitor. Essentially anyone, regardless of experience, can call themselves a franchise consultant. As such you need to look at their credentials such as: are they affiliates of the British Franchise Association? What is their professional background? Who else have they helped with franchise projects?
2. One Size does not fit all
When you go to the optician, you read letters from a chart while the optician tries out different lenses. Eventually, feeling under pressure to make a decision (…and confident that the optician is trying to trick you), you settle on the lenses that work for you. But what if the optician simply took off their own glass and gave them to you saying: “Here you go, these worked for me” and left it at that?
The same is true with franchise consultants – for example, if your prospective consultant has gained their expertise from working in McDonalds for a period of time. They might have a blinkered approach by saying: “This is how we did it at McDonalds”. As such, it is always best to look for a consultant with experience across a number of brands and, ideally, brands in your sector. Be very wary of the “cheap and cheerful” consultants offering little more than templated documents and “off the shelf” advice.
3. How much does a franchise consultant costs?
This absolutely depends on what you want them to do for you. If you are just looking for a feasibility study to confirm if franchising is right for you, then costs would likely be a few thousand pounds. However, if you are looking for someone to help you from inception right through to being in a position to recruit franchisees and preparing an Operations Manual then you would likely be looking at costs of £15,000 - £30,000 plus VAT. The more you work you need the consultant to do, the higher the cost will be. Also, if you are looking to engage a consultant to assist with the recruitment of franchisees they would normally expect a monthly retainer and a commission for each successful candidate that they recruit.
To summarise, franchising is a long term investment where much of the cost is front-loaded. I would normally expect you to have to recruit at least three or four franchisees before the initial costs of franchising are recovered. However, it is worth the investment in setting up the franchise model right from the beginning and a franchise consultant will certainly help you do this.
Next up…‘D’ is for ‘Disclosure’