It seems like everywhere you look these days, franchises are everywhere. They have taken over suburban shopping malls, neighborhood strip plazas and have even infiltrated the one safe haven for independent businesses……….Main Street.
Independent small businesses are feeling the squeeze from all sides, rising costs……increased competition….and shrinking consumer spending. One of the hardest challenges is competing with nationally recognized franchise chains in your industry. They often bring with them decreased operating costs, group purchasing power and streamlined marketing campaigns.
So how does a small independent business compete with these large chains? You may provide better service, better quality than them…….but if that was the only criteria for success…….old Micky D's (aka:McDonalds) would have gone under a long time ago. People don't go there for the awesome burgers….they go because it's inexpensive, it's everywhere and is of a quality and consistency that is acceptable to many people.
While there are lots of advantages to franchising, there are also some things that can hinder them as a business……and that is your opportunity to take advantage of these “quirks” in the machine and to outperform and outflank them. Below are 5 things you should know about franchising that can help you compete with the big chains.
Franchises are very slow to change
Most franchises (except maybe for the smallest chains) cannot change and adapt the way an independant business can. In franchising, almost every decision will come from the head office and this means that implementing even the smallest changes take a really long time. By the time and idea goes up the chain of command, gets tested, and makes its way back down……several months can pass. And that's if the idea gets accepted at all. Thousands of great ideas from the franchise ranks go ignored every year because the head office has decided to only focus on a select few.
On the other hand, if you had a idea, you could start testing it that day, and within a week or two decide if its an idea worth keeping, worth changing, or worth scraping all together so you can move on to the next big idea. Keeping on the lookout for new ideas and changes to consumer needs can keep you a step ahead of your franchise competitors.
Franchises usually stick with traditional marketing methods
In working with franchisees as an independent consultant, you'd be surprised how many franchise marketing plans still recommend buying an ad in the Yellow Pages book as a reliable and safe way to attract customers. Franchises have to develop local marketing plans for hundreds of local markets and for individuals who most likely have little marketing experience. What this means is that they usually develop a very generic, mediocre marketing plan than involves taking ads out in local papers, doing a direct mail piece and offering coupons. It's a marketing plan meant for people who aren't familiar with marketing.
Now bigger national chains will usually follow up these local marketing initiatives with their own national/regional campaigns, which are usually run by professional marketing companies…….but they still miss out on many local opportunities that you can take advantage of. Networking with other businesses, getting involved and befriending people in the community and working with local charities are all strategies you can implement that are much harder for a local franchise to pull off. Non-traditional marketing is an area that you can take advantage of much easier than your franchise competitors.
Franchises usually focus on the system, not the people
In franchising, it's all about the system. Most franchise systems are developed to work with the minimum amount of talent needed to work the business model, that's why they can grow so large without a specialized pool of people, they just need to train people to work the established system they have in place. People usually go to a franchise business for the product, not for the people. In an independent business, it's usually both….or the opposite…..it's the people and the experience that are important. Invest in relationships.
Invest in your employees, hire people with great personalities and train them to become experts in customer service. Create a personal experience for your customers, make them want to come back to your business because you made them feel good about doing business with you.
Franchises don't know your market as well as you
Many franchisees, especially for bigger chains, do not live in or know much about the area they are doing business in. If they are a multi-unit owner, or are on a waiting list for an available franchise location, many times their location will be in another town or city from which they live. Use your knowledge of the area to find hidden opportunities that a franchise won't bother looking for. What this means is that doing things like creating partnerships with other local businesses and organizations, using your personal network to refer customers and tailoring your message specifically for certain groups are all things a franchise is unlikely to do and can put you at an advantage.
Franchise owners are usually not experts in their field
Most small business owners usually got started in their business because they were doing it previously for someone else, usually for a long time before striking out on their own. In contrast, many franchisees open a franchise, not for the love of the product or industry, but for the financial opportunity. While this isn't always the case, especially for very small franchises, it's usually the truth when it comes to larger chains. I'm sure there haven't been many franchise owners who dreamed about offering mediocre food with customer service to match before opening a fast food chain. Use your specialized knowledge to become a thought leader in your field. Give free talks, workshops and demos……answer questions….write articles……do everything you need to do to establish yourself as the leader in your industry.
The competition is fierce out there
With so much competition and consumers who are watching every dollar they spend, you need to make use of every opportunity if you want to level the playing field with a franchise chain. They have the established business systems, more marketing dollars, and a brand recognition that is too expensive for you to match. The one thing that they don't have is your reputation, in depth knowledge, your willingness to do the little things they won't and your ability to see and seize opportunities when they appear. Take the advantages you have and become your very own version of David and Goliath.
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