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The 4 elements that constitute a franchise.

The franchise is a contract that links 2 partners, 2 independent companies, the franchisor and the franchisee to copy a proven success, in limiting the risk of the company creation thanks to 4 elements :

1) the customers’ rallying signs : the brand
2) the products and services collection.
3) the transmitted know-how
4) the help

1) The customers’ rallying signs are elements that allow the actual and potential customers to know the network, (notoriety) to know the offer and to appreciate it (brand image) and to be willing to go back there (loyalty earning).

The trademark and the brand are the main visible elements, but also are often the affective link’s support between the network and the consumer. (We like a trademark, we like to go in a store, we like the products, sometimes we like other people to see that we buy this product, we can also like the image that we give of ourselves, etc.)

Customers’ rallying signs generally include the type of architecture and decoration, the graphic charter, the advertising…Of course, for some brands like hard discounters, the symbol erases a lot behind the price/quality and the price ratio.

2) Naturally, a brand or a trademark that would not be clearly linked to a defined and respected products and/or services range could not have a sufficient attraction power. Indeed, if the content is not consistent enough, the brand image is not clearly perceptible. (Let’s imagine that Mc Donald’s sells french fries and steaks served in a plate and seafood, would it still be Mc Donald’s? Let’s imagine what would be Hilton hotels if customers did not know in advance which type of room, services and price they can expect? Would it still be Hilton?)

3) The know-how is divided in two parts :
- the one that the franchisor exploits by himself to give the franchisees more efficient services thanks to the mass effect or the productivity advantages linked to centralization, but also because it is a different job than the one franchisees have in their company even though it is necessary to their performance (national advertising or production of a clothing collection for example)
- the one that the franchisor transmits to the franchisee through the training, the exploitation handbook, etc…in order to make the franchisee efficient in the commercialization, the customer relation, the management, the exploitation of his franchise, etc. It is a know-how transmitted that builds the franchise.

The know-how is the result of the experience and also successes, failures and the lesson that you learn from it. that it is how you improve. It is made of a unit of recipes, of know-how, tricks, management or organization tools, methods that the franchise better uses or that are differentiated in the franchise brand.
The know-how must always evolve to keep active and able to give an advantage to the network’s members compared to competition. It is not easy, that is the reason why it is interesting and necessary to have one or several pilot units that will experiment and validate the concept innovations and the know-how before transmitting it to the franchisees.

The know-how transmission starts when the exploitation handbook is given and the contract signed and follows mainly during the initial training but also goes on all along the network life with the continuing training and the franchisor’s visits, etc.
4) The assistance is essential and complicated. It is an help on site or from distance to help the franchisee analyzing his exploitation, finding his weaknesses, find the right application of the know-how and correct what can be corrected. The franchisor must make sure to give advices and ideas coming from his experience and his analyze without being too controlling because the franchisee is independent and responsible for his decisions.

Jean Samper
Consultant in franchising (AC Franchise)
Member of the collège des experts of the fff

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