What Your Business Can Learn From Franchising

What Your Business Can Learn From Franchising
Franchises, you love them and you hate them.

You hate them for creating a mediocre (not always so, see below), cookie cutter style of doing business, but you secretly thank them when you've been driving cross country in the car with the kids for the past 6 hours and spot those “Golden Arches” coming up on the horizon.

When we think about franchising, we inevitably think of fast food because it's everywhere and a part of our everyday environment.  But that's only one example of what a franchise actually is, and it can create misconceptions on what franchising really is.  Did you know that Ruth's Chris Steakhouse is a franchise?  Pretty much every hotel you see on the side of the highway is a franchise.  You probably don't complain about finding a Double Tree hotel (owned by Hilton) when it's midnight and you need a place to crash after a long day of driving.

The concept of franchising has very broad applicationCreating a written operations manuals, it's just that most people only associate it with the bottom rung of quality and service.  In a nutshell, franchising is bringing a group of people together, under the same brand, to dominate a market through a standardized marketing,  distribution, and operating plan.  You can standardize low standards or high standards, it's up to you, the person creating those standards.

The idea of creating a franchise format for an independent business became popular in the groundbreaking book, The E-Myth, by Michael Gerber.  A great book, full of terrific concepts, but it has its flaws.  A lot of his suggestions centered around creating a system of doing business so that you can hire low cost, unskilled labor to run the business.  Here is a quote from the book:

The Model Will Be Operated by People with the Lowest Possible Level of Skill. Yes, I said lowest possible level of skill. Because if your model depends on highly skilled people, it's going to be impossible to replicate. Such people are at a premium in the marketplace. They're also expensive, thus raising the price you will have to charge for your product or service. By lowest level of skill I mean the lowest possible level necessary to fulfill the functions for which each is intended. Obviously, if yours is a legal firm, you must have attorneys. If yours is a medical firm, you must have physicians. But you don't need to hire brilliant attorneys or brilliant physicians. You need to create the very best system through which good attorneys and good physicians can be leveraged to produce exquisite results.”

It's pretty difficult to create an outstanding business when you create an assembly line style format for doing business, run by people making minimum wage.  That's not fun, or creative.  In Seth Goden's book, Linchpin: Your Are Indispensable, he references The E-Myth and the philosophy of creating an assembly line way of doing business with this:

“Here's the problem…If you make your business possible to replicate, you're not going to be the one to replicate it. Others will. If you build a business filled with rules and procedures that are designed to allow you to hire cheap labor, you will have to produce a product without humanity or personalization or connection. Which means that you'll have to lower your prices to compete. Which leads to a race to the bottom. Indispensable businesses race to the top instead.”

The problem I see is that once again, we're talking about franchising as a bottom rung business model, one where minimum wage and unskilled labor rules the day.  That idea sucks. What budding entrepreneur dreams of a business like that when they're first starting out?

Options for starting franchise

I'm a proponent that you can take the best that franchising has to offer and apply it to your business, without losing an ounce of your independence or creativity.

How can that work?

It's taking the operational concepts of franchising and applying them to your business.  And before we go on, these concepts don't only apply to franchising, but to any corporate or private business that expands successfully.  Chipolte and Starbucks are just two examples of non-franchised businesses expanding with massive success.

You can only expand and grow your business beyond yourself when you take what's in your head and put it in writing.  You create a handbook on how to run the business.  If you're not looking to expand, that's great, but you still need to do it if you ever hope to take time away from your business.  You can't always be the one doing everything, that's what eventually kills most small businesses (and sometimes their owners).  They get so burned out from the daily grind that they lose the will to keep going.  And if you've ever had your own business, you know that sometimes your “will” is the only thing keeping the doors open.

You're not going to “systematize” every aspect of your business, turning you and your employees into mindless robots.  You're going to create a system of “how” you do business, so the quality and standards you set as the owner are also performed by your employees.  If you don't do this, you run the risk of your employees (and yourself, depending on your mood), delivering a different experience to your customers, depending on who is serving them.  It's hard to “Wow” your customers if you consistently mess up on the little things.

Creating a predictable experience is vital to creating a great business and loyal customers.  It's up to you whether you want to make it a great experience or a mediocre one.  People have a misconception that people don't like predictable.  They don't when predictable sucks.  Would you like it if your Mucho Mocha Latte (I just made that up) tasted different every time you went to Starbucks?  Would you like it if your grocery store decided to change the layout of the store every 3 months because they “don't want to be predictable”?  No, of course not, predictable is good, as long as it's something we like and gives us comfort.

Create an Operations Manual For Your Business

To start the process of creating an incredible, yet predictable experience, is to put everything you do to run your business on paper.  You do this by creating an Operations Manual for your business.  If you use a certain method to create the perfect cupcake, you need to create a step-by-step written guide on how you do it.  You then need to create a system of how you will train others to maintain those high standards when they make those same cupcakes.

If you don't do this, two things will happen;

1- You're the only one who can ever make the cupcakes.  You grow to hate your business because you can never take more than one day off……forever.

2- You have others make the cupcakes when you're not there.  They don't have a strict guide on how to do it and they don't remember everything you told them last week when you were explaining it.  So they do the best they can, substituting their own way of doing it when they can't remember yours.

Both options aren't very good.

Create very specific, precise guides to how you want these functions performed.  Create a rock solid system for delivering “Awesome”, each and every time, regardless of who's working that day.You then will create a system on how you will train your employees, so receives equal training and are given the same set of expectations. This isn't creating a cookie-cutter way of doing things, it's ensuring your high standards are met even when you're not the one doing it.

So how do you maintain your creativity and uniqueness as a business?

It's understanding what functions of your business need tight controls and which one's need general guidelines.  The ingredients and method you use to create the perfect cupcake are unwavering, no room for creativity.  You want to produce a fantastic cupcake every time, no room for your employees to try anything different.  This requires a step by step written guide so there is no room for ambiguity.

When it comes to how your employees interact with your customers and each other, you understand that you cannot create a system of what they will do and say. In this case, you hire the right team members and have them understand what customer experience you want to create for your business.  It's up to them how they will deliver on creating that experience, but they understand what the outcome should be.  You're not telling them what to say, you're giving them guiding principals on how they should deliver the goods.

Many good franchises will do this, with the smaller franchises giving more wiggle room than bigger franchise concepts.  They know when to implement strict guidelines and when to give general concepts, and allow the franchisees and their employees decide on how to deliver it as long as it's in-line with their business model.  This enables you to create a predictable,high-qualityy experience, without losing what makes your business special.  Think of it like a car.  The engine needs to have precision and predictability in order to function, but you're free to paint, modify, or “trick out” the rest of the car however you like.  Precision and creativity working in harmony with each other.  That's what you want for your business.

All this is nothing new, businesses do this all the time. They are the one's that have happy owners, because they aren't trapped in their business, they are thriving in it.  They can step back whenever they want and enjoy their business, knowing that it won't fall apart because they caught the Flu.

How do you feel about creating a franchise type format for your business?  Do you have a written operating plan for your business?

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CEO at 3Bug Media
Gary Shouldis is the founder of 3Bug Media, a web marketing company that helps businesses create 360 Marketing Strategies to dominate their market. His blog is read by over 20 thousand small business owners a month and has been featured in the N.Y. Times Small Business, Business Insider and Yahoo Small Business.
8 replies
  1. Shannon Elizabeth
    Shannon Elizabeth says:

    I read your other article on creating an operations manual, I purchased screen steps and love it! I find it hard to create documentation like this, but screen steps makes it easier, especially for inserting images. We’ve found it easier to train new employees since making the effort to write our processes down. Thanks for a great article!

  2. Rob
    Rob says:

    Nice article. Once I figure it out, I’d like to create a manual like this to help train new employees and remind the older ones how it should be done.

  3. Gary Shouldis
    Gary Shouldis says:

    Screen Steps is a great tool for creating instructional documents, I recommend it to anyone looking to create a manual for their business. I always tell people to start small and build your manual slowly. Most people, once they get the feel for writing it, find creating an operations manual easy.

  4. Gary Shouldis
    Gary Shouldis says:

    Figure out your business best practices first and make sure they work before writing anything down. You don’t want to have to scrap it and start over if you find the procedure doesn’t work. Good luck!

  5. Heather Stone
    Heather Stone says:

    Hi Gary,
    Replicating a business model is certainly one way to scale. However, I sometimes wonder if doing so doesn’t also limit your brand in another way. If your product or service is individual, special and less repeatable, it could also be more unique and more valuable. Just a look at the other side. Thanks for sharing with the BizSugar community!

  6. Gary Shouldis
    Gary Shouldis says:

    Hey Heather,
    If a business has visions of expansion, then a more formal business structure needs to come in to play, or else expansion is near impossible. If you’re happy with being a 1-2 employee business, that is equally terrific and you may not need as much structure. Many business owners have difficulty transitioning from solopreneur to entrepreneur. Many times it’s due to the inability to replicate the way “they” do things hiring/training their employees. Once you go beyond a few employees, you’re no longer able to have your finger on every detail of your business.

    To your comment, I think there is a misconception that creating a formal set of standards and procedures will turn your business into a cookie cutter operation and take away from your uniqueness. To finish with an example of how structure and creativity can go hand in hand, Shakespeare created some of the greatest poetry in history using Sonnets, which follows a rigid set of rules for structure and cadence.
    Thanks for the comments, I love being part of the BizSugar community!

  7. Harry
    Harry says:

    Every business can benefit from the thinking and creativity of its employees. However, not all business functions need to or and should allow employees to try different things. As you suggested the operations of the business where customers expect consistency should ask for a manual so that the customers always get the same quality of “McBurger” every time and every place. On the other hand letting employees make apply their thinking and creativity in customer service or new product development certainly can help the business.

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