Can Franchising Be Learned?
Formally educated people may make for better franchisees.
Even if you're acquainted with running a business, you may not understand the ins and outs of franchising. So what's the most important factor for success as a franchisee? Is it outside education (in the form of university or International Franchise Association programs), training within a particular system or plain-old hands-on experience? Can franchise education reduce the learning curve of a new franchisee?
Franchise Zone spoke with Lee Sanders, director of franchising for Allied Domecq Quick Service Restaurantsand member of the board of directors for the University of St. Thomas Franchise Institute, about whether franchising education is a significant advantage . . . or a big waste of time.
Franchise Zone:How important is education to success as a franchisee?
Lee Sanders: To be an astute buyer of a franchise, it's important to know what you're buying and to understand the industry and business you're getting into. Education is very important even once you're in the business, because no matter what the category, the commercial market is very competitive, and education is critical to keeping up with competition.
What's more important to franchise success: a formal outside education or hands-on experience?
Hands-on learning. But by that I mean hands-on learning through the franchisor's formal process, not hands-on learning as in just start to work and you'll figure it out someday.
Because a franchise is a business model. Most franchises are business-format franchises-you're buying a format, a model, a system, and you should use that exact system because that's what's been proven to work. The only way you can get the exact hands-on training and usage of that system is through the franchisor's formal process pertaining to the exact business you're buying.
Is it the franchisor's responsibility to provide education?
That's something the franchisee should expect the franchisor to provide, and it's one of the many, many points you should be evaluating a franchisor on: "What depth and breadth of training and services do I get from my franchisor?"
Do you think business degrees specializing in franchising are worthwhile for franchisees?
I think they have a lot of merit for executives on the franchisor's side or for executives who want to be franchisees. But the standard B-school training doesn't really [cover] franchising as an industry or a business model to any great degree. And if you have a good, solid B-school background, but you haven't really taken classes in franchising, you're still not going to be particularly well educated about what a franchise system can and can't do.
The University of St. Thomas franchise institute participates in those B-school programs, and I see a great demand for [franchise-specific classes]. Formal degrees in franchising comprise a growth area of business education, because franchises represent a high percentage of businesses in the United States.
Why are franchise education systems growing in popularity?
Because franchising itself has grown so dramatically in popularity. These systems mirror what commerce in the real world is all about. Some colleges will slowly realize there is demand and bring product to market, while some institutions on the leading edge are already doing it.
How Education Affects Franchisees
Have you seen any difference in franchisees who have gone through some kind of a franchise education program, either through a university or the IFA, vs. those who have not?
Yes, here at our chain we have franchisees who have gone through not universities, but the IFA programs, and they're more strategic in their thinking about the franchise business in general. They have the 60,000-foot view. It's great anytime someone is more knowledgeable about his or her industry.
Do you think eventually, though, that the skills of the franchisees who learn just by working in the franchise will level out with those of the franchise-educated?
At some point, they certainly will. Those who get the outside education are going to have a slight edge over those who learn through the school of hard knocks. But at the end of the day, they probably wind up in similar places. The two parties will probably come to parity at some point, because the real world is a great leveler of life.
Will franchise systems ever require their franchisees to go through some type of outside franchise education?
Probably not, because they're more concerned that franchisees go through their actual training on their business format. There may be an expectation [that franchisees get outside franchise education], but will it be a requirement? Probably not.
If a franchisee is considering taking on a lot of franchise units, would you suggest he or she go through a mini-MBA program?
It depends on the size of the franchisee's network. If a franchisee owns a network of two or three stores, that's probably not as valuable as more tactical-type training. But if a franchisee has a network of 10 to 20 stores, formal training, like the St. Thomas Mini-MBA, is probably applicable.
We have an advanced training echelon in our system that franchisees are obliged to complete. Then as they add more units, we direct them to the marketplace for programs like St. Thomas. We also really encourage all those programs from the IFA Educational Foundation. We're a large system and not every system has the luxuries we do, so sometimes franchisees need to go to the marketplace [for further training].
On the other side, what sort of education should franchisees expect their franchisor's staff to have?
There are good questions to ask: Are the people you're working with in your prospective franchise organization trained? Do they know what they're doing? Or are they just salespeople and not necessarily franchise-related salespeople? You want to be an informed buyer, but in our industry, you might want to look for an informed seller, too.