Franchising is a useful means of scaling a business that hits a cash flow crunch, or establishing a new business under an existing brand. We asked a major franchise operator for his tips on making a franchise model work.
Business owners may look to franchisees and think they have it easy – someone else takes care of marketing, property management and other roles that need filling when they appear – aspects of running the business that are not directly tied to core business activity.
However, a lot of hard work goes on in the background from the franchisor's perspective that is more similar to other business owners than they realise.
Justin McDonell, founder of 24-hour gym chain Anytime Fitness Australia, says that for a franchisor like himself, his customer is actually his franchisees, and it then falls to the franchisees to ensure Anytime Fitness Australia members are taken care of.
“We really focus in our corporate office on looking after our franchisees. If they're happy, making money, then they'll look after the members,” he explains.
Justin shares his tips for how franchise business leaders can offer value and support to their franchisees – skills he says can be transferred to any franchise business in any industry:
1. Enforce your standards for uniformity
Before a franchise is even up and running, both the franchisor and franchisee need to come to an agreement of what will take place.
“We try and vet the process in making sure they understand exactly what they're getting into,” Justin says.
“People will say, ‘Can you change this part of the franchise of the agreement? Can you change that?’ And we say, ‘That's the agreement. Understand what you're getting into.’ This is the relationship. We provide you the framework and the tools.”
Justin says that altering the local marketing or trying something new within the business to better the customer experience is perfectly acceptable, but changing core aspects of the brand, such as its image or logo, is a no-go.
“If you want to change the design or the logo, we're not interested in doing that. Certain things, they just cannot change,” he says.
“They should just focus on running [their] business.”
2. Take an active role in property management
With the agreements out of the way, the next step in the franchisor process is establishing the physical premises of the business.
This is something that Justin does not want his franchisees burdened with, and as such is another aspect that he believes the franchisor should help with.
When Anytime Fitness Australia first opened, the business established a property department to locate appropriate buildings on behalf of franchisees.
“We have certain criteria we look for in a building: size, access to parking, ceiling height, security. And then, obviously, securing the right deal as well – we don't want franchisees paying too high a rent,” he explains.
Today, Justin says Anytime Fitness Australia also has its own construction team in place, which takes the role of property management one step further and allowing them consistency and ownership of the process, rather than relying on a third party.
“[The construction team will] work with preferred builders. We do in-house planning, making sure our product is consistent,” he says.
“The franchisee just focuses on the people side of the business, and not worrying about finding a leasing agent or a builder.”
3. Be ruthless in the franchisees you take onboard
Justin recalls that when Anytime Fitness Australia first started, some franchisees were not keeping up with the overall growth of the business. It was then that he realised he needed support in the people side of the business to ensure that all franchisees brought into the business reflected its core values and growth ambitions.
“My skill set's not on running 70 people. I focus more on strategy, and I quite like looking under the bonnet with the figures as well,” he says.
“[We] got to a point where we now have a CEO who runs the main operations.”
Today, Anytime Fitness Australia has grown to the largest Anytime Fitness brand worldwide, with 450 different locations and 450,000 members.
- Analysis: How likely is an interest rate cut in June?
By Adam Zuchetti
- Workplace wellness is the real trickle-down economics
By Adam Zuchetti
- Opinion: Why do so many claim to represent small businesses?
By Adam Zuchetti