NexThought Monday: Franchising at the BoP – Identifying Best Practices: The book ‘Fairplay Franchising’ presents principles that apply across franchise models
Best practices for BoP franchise models are constantly evolving. New and existing franchises alike regularly look to one another for advice. Now they have another resource: Waltraud Martius and her book Fairplay Franchising. The book presents a set of principles that apply across franchise models. Martius’ name has been abuzz within the BoP field since she was a panelist at the 2012 Ashoka Globalizer Summit in Geneva. The advice she gave at the conference has caused some BoP franchises to substantially change their strategies.
Martius has worked on more than 1,200 franchise projects. She studied business management at the University of Innsbruck and has been working as a franchise consultant through her business SYNCON since 1989. She also co-founded the Austrian Franchise Association and sits on the board of directors. Martius is also a co-editor of the 2003 book “Franchise – The King’s Class of Distribution Systems.”
The underlying idea behind Fairplay Franchising is that a clear concept and functioning business are not enough. Rather “soft factors” such as trust, security and protection, esteem and recognition, participation and empowerment are essential for the development and survival of successful franchise systems. The book is filled with checklists and selected examples from the practice of franchising. Published in German, the book is not available in English. However, here are some of its key ideas:
Trust – Franchisors have a moral obligation to not misuse the trust a franchisee places in them to buy a ready-to-use concept. Cooperation is based on trust and trust creates potential for success in franchise systems. High trust motivates individuals; they feel respected and don’t want to disappoint the trust placed in them.
Fair guidance – In the book, Martius states that advisory boards are essential; they provide a connection between franchisees and franchisors. It is a way for franchisees to provide feedback on what is and isn’t working while remaining a source of information for franchisors. Martius also notes the important role of annual conferences for franchise systems to set the mood for the upcoming year. They also serve as a mirror in addition to a setting for informal exchange.
Pride – Franchisees should be confident about the quality and value of the products they offer, and be proud of their operations and approaches to markets. Martius says pride is the most important aspect of connecting franchisees emotionally to a franchise system.
Participation – A franchisor must focus their management on participation and communality rather than subordination.
Regarding growth, Martius says that there is no clear answer for the right-sized growth, but that it is important to not grow too fast or too slow. She does say that after a successful pilot period, a franchise system should grow by about three to five franchisees per year. If it grows too slowly, then franchisees will begin to ask themselves why there are few new franchisees. Whereas, if a franchise grows too fast, the franchisor risks not being able to provide sufficient resources and support to franchisees.
Martius’ years of experience provide valuable best practices and lessons. Together the soft factors she highlights hold much potential to significantly strengthen the contract between a franchisee and franchisor. Indeed, as Martius warns in her book, if franchisors do not pay enough attention to soft factors they won’t progress. Although I won’t delve into all the soft factors Martius mentions in her book here, we are curious to hear your opinion on what soft factors you think are most important to the success of franchise systems. Please share your thoughts in the comments section below.