Operations


Business operations are defined as the harvesting of value from assets owned by a business. The franchisor is the expert in their respective field, how well they convey that expertise to their franchisees will determine the success of the brand. The St. Gregory Development Group understands the dynamics and efficiencies that need to exist in a successful franchise. Having a strong operational system means having fail safe processes in place. Creating and maintaining a comprehensive training program is the first step in determining the success of your franchise community. Once the franchisee has been trained, you must continue to earn your royalty and have knowledgeable support to offer franchisees in their journey towards financial success.

Operations Summary

Once the franchised business is up and running, the franchisor must be able to provide guidance in continuing operational functions. Marketing and advertising is one of the more important tasks towards driving new business to the franchisees on a local level. Having a reliable accounting system in place that allows both franchisor and franchisee transparency into the business financials is a must.

Franchisees must be supported on all levels of their tenure within the business. At the beginning, the support is focused on getting the business started with such tasks as finding real estate. As they move further down the path, business development

We live in a litigious happy society, so having a strong legal structure is an absolute necessity. Whether it is drafting a comprehensive and compliant Franchise Disclosure Document and registering that document in the applicable franchise registration states, navigating through the myriad of federal and state franchise regulations, building the a solid infrastructure and human resources department that will enhance your chances for compliance and better prepare your organization for legal disputes, or hiring the right people to protect and defend your organization, you need to make sure that you are protecting yourself and your business interests.

Training

An effective and comprehensive training is the lifeblood of future revenue stream for you as the franchisor and the backbone for longevity and profitability of your franchisees. No matter what the background of a new franchisee in your organization, it is imperative that you assume that they know nothing about running a business, or how to be successful in your industry. In the Marine Corp, boot camp concentrates on breaking down a recruit and then building them back up (from scratch) the way the United States military sees fit for combat.

You are preparing your franchisees for battle. Simply training your franchisees and allowing them to go off and open their units is not enough. Even franchisors with thousands of units agree that no two units operate exactly the same. For one thing, the customer base differs from market to market and even from unit to unit in the same market. A new franchisee lacks the experience to read the subtleties of equipment, product, service, and customer differences, as well as other nuances in their new businesses, and will need your expertise to make whatever adjustments are appropriate. No matter how extensive and intensive the initial training program at your headquarters training facility, once they get to their own site and the doors open, they will be in shock and will need your hand holding until they get on track. The St. Gregory Development Group can assist you in designing a training outline and platform that will enable you to successfully train your franchisees now and into the future.

Support

The level of support that a franchisor provides franchisees in many cases is a reflection of profitability for both ends of the spectrum.  In a sense, franchising should be looked at as a partnership; and in any partnership, communication is essential.  In order for the relationship to prosper, the franchisor must identify a platform to keep the lines of communication open. There is a big difference in running your franchisees business for them, and holding their hand along the journey.   The St. Gregory Development Group firmly believes in creating systems that allow for communication forums, continuing education, and mentorships. Knowledge is power, and if the franchisor has efficient systems for delineating information, the partnership becomes stronger.

Marketing & Advertising

How you promote your business is vital to success. In franchising, there are many ways to set up your marketing/advertising plan. Most franchise systems utilize a cooperative as the basis for their marketing plan. In a true marketing cooperative, the franchisor acts as the marketing coordinator and pools funds from the franchise community in order to provide the company’s message on a much larger scale. The idea is power in numbers – the franchise community as a whole can provide a much more powerful message than any one individual franchisee. The amount of money and method by which the funds are collected is truly unique to the business and industry. The St. Gregory Development Group can assist you in selecting which system or format is right for you and your franchise community to market your produce or services.

Some of determining factors in creating a comprehensive plan include:

  • Marketing plan to its franchise community
  • Budgeting
  • Demographic Analysis
  • Facilitation
  • What advertising will be used?
  • Public Relations

Accounting

Accurate accounting systems are crucial to an operating system. The size of the company and the industry will greatly affect the systems that are put into place. No matter what system is used to outfit the franchise system, it is important that franchisors and franchisees alike are provided with a system that provides clarity and real time accounting reports. Accounting systems not only need to provide accurate revenue reconciliation, but also may provide outlets for things such as payroll management, inventory controls, accounts payable, accounts receivable, etc. The more comprehensive the accounting system, the better grasp on unit economics the franchisor will have – and in turn serve as a tool for providing better efficiencies.

The St. Gregory Development Group can help you design an accounting system that will work for you and your franchisees and will provide you with a marketing analysis of what is currently being used in your respective industry.

Real Estate

If the location of your business is important to generating customer traffic, you may want to assist your franchisee in finding a suitable site. Typically, as a first step, the franchisor provides each franchisee with a list of site criteria. Among these criteria might be population density within a specific radius; income, age and buying patterns of this population group; traffic patterns near the location; and preferred types of businesses in the area. Many franchisors use specific real estate demographic software to help find the right locations.

In some cases, the franchisee will take the list to a real estate broker, who in turn will suggest several available sites that best fit the list. Once the franchisee has selected the site that best meets these criteria, he or she will submit a description of the site for the franchisor’s approval.

Even in cases where location is not vital to customer traffic, the franchisor may have suggestions as to the preferred type of business establishment, market characteristics and location within the franchisee’s territory. With the assistance of a nationally recognized real estate development team, the St. Gregory Development Group can assist the franchisor in identifying the protocol for site selection and developing a system to which franchisees must adhere to.

Business Development

Just because a franchisee has attended training and has retained a copy of your operations manual does not mean that the job of the franchisor is over. The franchisor is responsible for keeping franchisees on the forefront of innovation within the industry. This may include, but is not limited to, product development, promotions, and technological advances. Information is gathered in many different ways including trade shows, research, focus groups, and franchisee “feedback forums”.

As franchisor, it is important that there is a predetermined plan for staying current on business ideas and having a platform for which to distribute new ideas to the community. The St. Gregory Development Group can help to facilitate a plan of attack for systemizing and maintaining a steady influx of information to keep your business on the cutting edge.

Human Resources

In Jim Collins’ book Good to Great, he discusses the importance of “who” and then “what”.  He is referring to the fact that it is imperative to have the right people in place first and foremost, then no matter what your product or service, you will thrive.   Your business is only as good as the employees that help you build it.

In order to build a good team, it is critical to lay out expectations and qualifications for employees to manage the operations of your business.  Since employees are the backbone of your business, it is common for a franchisor to layout expectations both in training and in the operations manual.  Once the employees fit your model have been found, you must now create a system that outlines the employment policies of the business.

Policies on fair employment practices, creating agreements for non-disclosure and non-compete, and sample advertisements for recruiting are just a few of the things that will need to be created and systemized for your operation.  The St. Gregory Development Group can help identify what those needs are and create a model that will allow you to outline and educate your franchisees on the policies you deem important.

Compliance

Entrepreneurs invest in your business because they want to be part of a winning team and share in a winning organization. A franchise system is meant to replicate a winning idea and portray a sense of uniformity, so there has to be a system to make sure that franchisees are staying within the confines of the recommended business practices.

It is particularly important to respond and act immediately when any deviation or lack of compliance occurs. Don’t let it go, especially early on. You will only set the stage for bigger problems down the road. Deal with these issues early on in a congenial, supportive, and motivational manner. You have a responsibility to protect the livelihood of those franchisees that are compliant within your system and the franchise brand that you have worked so hard to build.

There are many ways to protect yourself and your franchisees from those that stray from the system by creating procedures for handling compliance issues. With the assistance of outside counsel, the St. Gregory Development Group can assist franchisors in creating procedures and best practices to maintain a compliant franchise community.