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Information and Advice That Matters
 November 2005

 

In This Issue

  • China and Asia Continue Rapid Growth.
  • Successful Franchisors Have Strong Franchise Operations.
  • Finding Franchisees In The Future Through Technology.
  • Selecting The Best Franchise Candidates.
  • How to Promote Your Brand and Sell More Franchises.
  • Considering International Expansion? Some Good Advice.
 

China and Asia Continue Rapid Growth.

DHL plans to invest $110 million to double the capacity of its air-freight hub in Hong Kong, in part to cope with a rising volume of parcels and documents from China. DHL will open its expanded sorting facilty at Hong Kong International Airport in 2007, six years earlier than it had anticipated when the hub began operating last year, said Scott Price, CEO for DHL in the Asia Pacific region.

According to Mr. Price, revenue from DHL's business in China rose by between 50% and 60% last year, and China is now the company's biggest market for shipments within Asia.

DHL is the third major logistics company to announce plans in recent months to enlarge its foothold in Chinese territory. UPS said in July that it will open a hub in Shanghai, China's commercial capital. FedEx announced later in July that it will build a hub in Guanzhou in China's industrial Pearl River delta.

DHL predicts that Asia's economies will grow on average at least 7% annually over the next decade, or at twice the rate that it foresees for the rest of the world.

DHL is also seeing very high levels of growth in India and double-digit annual increases in volumes to and from Japan, Mr. Price said. The company estimates that Asia's transportation market, now valued at about $700 million, will balloon to $1.3 trillion over the next 10 years, and the logistics and express delivery business will increase even more quickly than transportation overall.

The information in this article is from a column by Bruce Stanley of the Wall Street Journal

"The Chinese understand the outside world much better than the outside world understands China." James McGregor--Author, One Billion Customers

Please Note: In February of this year the Chinese Ministry of Trade and Commerce enacted regulations that require foreign owned franchisors to operate a minimum of two pilot locations in China for a one year period before franchising in China.


 

Successful Franchisors Have Strong Franchise Operations.

If one were to consider the attributes that successful franchise companies share, the list would include:

  • Franchisees are meeting their financial expectations.
  • Franchise system standards are upheld and enforced.
  • There is a positive climate of franchise relations.
  • There is a high level of communication between the franchisor and its franchisees.
  • Franchisee litigation is negligible.
  • New programs and products are readily accepted by franchisees.

I'm certain other items could be added to this list, however, for our purposes we'll use only those listed above.

When considering these various attributes the responsibility for implementing, evaluating and monitoring them rests upon the shoulders of the franchise operations department. There is no doubt that the sale of new franchises and creation of new sales and marketing programs is a critical component of successful franchise programs. Yet without the organizational structure and personnel to train the new franchisees, support new and existing locations and deal with the everyday problems that franchisees face a franchisor will not fulfill its true potential.

Franchisors who wish to achieve success and reach their goals require a competent franchise operations department. The following are the key requirements necessary to establish a successful program:

  1. Franchise operations should report to president or CEO. This allows for open communication flow between the franchise leadership and operations.
  2. Operations must have a role in the sale of new franchisees. In many companies the operations staff is not included in the franchise sales process. This practice excludes those most familiar with the operation of franchises from being able to qualify and render their judgement on future franchisees. Some franchisors go so far as to grant the operations department veto power over the selection of a new franchisees.
  3. There needs to be an organized program for gaining franchisee feedback through the operations staff. Field staff who deal with franchisees on a regular basis are in the best position to gain unfiltered feedback from the franchisees.
  4. Strategic or important decisions which impact the franchisee community should include the participation of the franchise operations leadership.
  5. Franchise operations leadership needs to have experience and credibility since they represent the face of the franchisor.

Franchise operations is an integral part of all successful franchise programs. The lifeblood of a franchisor depends upon the addition of new franchisees who can promote the brand and increase revenues. However, without a strong franchise operations component which is actively involved in the day to day operations of the franchisor the road to a successful franchise network will be filled with obstacles.

By Ed Teixeira

" An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage." Jack Welch

 

Finding Franchisees In The Future Through Technology.

Data Mining is becoming more sophisticated in government, politics and many industries, says Stephen Brobst,chief technology officer of the Tera- data division of the NCR Corporation.

Someday franchisors may be able to pinpoint franchise prospects and the best way to reach them.

Read On From The New York Times ( Free Registration)


 

Selecting The Best Franchise Candidates.

A major requirement for successful franchise growth is the addition of qualified and competent franchisees. New franchisees promote the franchise brand, add vitality to the network and increase franchise revenues and market penetration.

Much has been written about the various ways to attract franchise prospects, what advertising venues work best and in general how to sell more franchises. Yet all of these activities are for naught if a franchisor fails to properly select the most qualified franchise prospects for their system.

Following are some useful tips for selecting new franchisees:

  • Identify qualifications and attributes for new franchisees and adhere to these traits
  • Compromise only in those cases where there is a high probability for success
  • Conduct credit and background checks on all prospective franchisees before the process is completed. Investigate any red flags. Consider using testing to help qualify franchise prospects.
  • Request a business or marketing plan from franchise candidates. This will help to gauge their business knowledge and provide the franchisor staff the franchisee's plan. The plan can be reviewed and add insight into the ability and expectations of the candidate.
  • Utilize diverse members of franchisor staff to interview and offer feedback on candidates. This will allow for more objective feedback from various individuals who represent the franchisor.
  • Provide field staff an opportunity to meet with or interview franchise candidates. These people deal with franchisees on a regular basis and know the questions to ask.
  • Don't compromise your standards and qualifications in a haste to sell a franchise.
  • Have "criteria for success" or a franchisee profile based upon traits of existing successful franchisees.
  • Consider utilizing certain franchisees for screening and/or providing feedback on franchise candidates. Existing franchisees have a stake in the success of new franchisees. Be wary of utilizing franchisees who might feel threatened in their territory by the new franchisee.
  • Be wary of granting extra territory to sell a franchise. Use performance requirements before giving up more territory than normal.

By following these tips franchisors can minimize the risk of granting a franchise to the wrong candidate but rather increase the success rate for new franchisees.

" Management is doing things right; leadership is doing the right things." Peter Drucker

 

 

How to Promote Your Brand and Sell More Franchises.

Franchisors can use a newsletter to help establish a data base of visitors who visit their web-site. This can enable the franchisor to promote their brand and also sell more franchises. Learn more about the use of newsletters and how to compile a mailing list.

Read More....

 

Considering International Expansion? Some Good Advice.

If you're a franchisor considering exporting your franchise to other countries here are some good tips to follow.

Read More