To franchise or not to franchise

With 30 years of experience advising bussiness on their development options, Brian Duckett, executive chairman of The Howarth Franchising Group, has helped groups including Umberto Giannini, Haringtons and Rush to franchise their brands. Here he explains why he believes franchising should be a strategic way to expand your brand - but only if you are ready to take the next step.

As with any growing business, salon owners need to be mindful of the risks and challenges posed by developing their company too quickly. Once you have one salon up and running successfully it may be tempting to buy another outlet and another one; but it might not ultimately be the most lucrative or savvy way to build a brand - and it could lead to failure. One attractive alternative to achieve that multi-salon dream and avoid embarrassment and possible financial turmoil could be franchising.

What are the benefits of franchising?

When trying to grow a branch network, the benefits of franchising are undisputed:

• More outlets
• Quicker growth
• Minimal financial investment.

Franchising does not happen overnight, though. You have to find a franchisee who you can trust and build a strong working relationship with them. However, once this is set up the outlets run more effectively and efficiently because the operator has invested in the business. It is the franchisees responsibility to provide ongoing products and services to customers, while the franchisor provides marketing and technical support, management systems and training, all of which further improve performance all round. As with any method of doing businesses, there are always challenges facing all parties involved. A key issue facing franchisors is managing relationships with franchisees. The simplest way to illustrate this is to compare a managed outlet with a franchised outlet: In a managed network, an area manager will tell a store manager to jump, and the store manager will want to know 'how high?' In a franchised network, a franchise support manager will ask a franchisee to jump and the franchisee will want to know 'why?' Although a franchisee must operate in accordance with a system which supports the franchisor’s brand; they have invested in, and are operating, their own business and they expect to be consulted rather than told.

Are you ready to franchise

Before making a decision to franchise, you need to be sure that you are ready to branch out. If your salon does not match-up to these criteria is unlikely to be appropriate for franchising:

• A proven and established format, with a defined system of operation and a distinctive name and appearance.
• Set-up in an easily replicated format that can be re-produced in a sufficient number of locations to create a manageable and profitable network.
• Simple to learn in a reasonable period of time by someone with the required knowledge, skills and attitude to fit the desired franchisee profile.
• Sufficiently profitable to deliver a significant return on investment to both the franchisor and franchisee.

The right economic climate

There is no right or wrong time to act, as franchising is one of the safest ways to develop. Some would say that franchising is not advisable in periods of economic instability. However, even during the difficult times, franchising can still offer opportunities for success with limited risk. Starting a business or expanding an existing company when others are being more cautious could bring great benefits. Whether a franchisor or a franchisee, being on the front foot when the market returns to normal will mean that your business is better-positioned to take advantage of a sudden upturn in fortunes.Whether franchising for the first time or looking to franchise another hair salon, this method of development has been and will continue to be a lucrative way forward for hairdressing businesses looking to expand their brand.