Franchising 101: 4 Advantages of a Pilot Franchise
Franchising is a fantastic way to expand a business Ė but not every organisation is suited to the franchise model. Thatís why we recommend you start with a pilot franchise. Read on to find out more.
Developing a franchise can be a costly process, so it makes sense to get it right the first time, rather than spending precious capital on fixing things when the franchise is already up and running. Thatís why, if youíre interested in starting a franchise as a franchisor, you should seriously consider launching a pilot franchise. This will give you the chance to test out your operations and strategies before you roll out the business opportunity to independent investors.
As you can expect, itís vital your model is robust enough to support itself as a franchise operating across the geographical region, the country or even the world. Your pilot franchise will make sure your business can be followed closely by franchisees, even when the franchisor is not involved in the hands-on running of the franchise.
Any issues that arise will be brought to your attention before itís too late, giving you the chance to resolve them in good time. If you donít test your vision with a pilot franchise, you may find you come up against gaps in your operations manual, training programme or processes, causing further complications later on.
Still not convinced?
Letís take a closer look at why pilot franchises are so important.
Any franchise needs to be easily replicable across its multiple locations if itís to be successful. Customers of McDonaldís, Subway or KFC, for example, expect a consistent customer experience across their store chain. Or, to use a different example, a parent who has used tutoring franchise Kumon in one city will expect the same high level of teaching in the different Kumon centre closest to their new home.
Without this consistency of brand identity, product quality and customer service, a franchise is unlikely to succeed. Not only does this stability reassure customers that theyíll receive a high-quality product or service, but it also helps promote professionalism across the network. As a result, the franchisor should take the time to develop easily duplicable operational processes, communication systems and products, allowing franchisees to take the business model and run with it.
During your pilot franchise phase, youíll be able to identify the areas youíll need to work on if youíre to launch an easily replicable business model. From finding out how the pilot franchisee gets on with your business to noticing elements youíre not quite happy with, there will be plenty of opportunities to improve your franchise strategy.
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Advantages of pilot franchises
Here, we dig a little deeper into the world of pilot franchises and find out exactly how they can help you hash out your ideas.
1. New ideas can be trailed in a safe environment
As you probably know, running your own business can be cut-throat, and one wrong turn can have catastrophic consequences. By carrying out a pilot franchise test, you can trial new ideas in a safe environment, as the decisions you make here wonít affect your business in the long term. Treat your pilot franchise as an opportunity to do priceless market research.
2. You can check youíre cut out to be a franchisor
Perhaps you thrive as an independent business owner Ė but this doesnít mean youíd make a successful franchisor. To succeed in this position, youíll need to be dedicated to large-scale business expansion, no matter what obstacles get in the way. Youíll also need to solve issues quickly, with strength and dignity.
Bear in mind that you may have an extensive network of ambitious franchisees one day. Ask yourself whether you have the ability to lead and inspire them in the long term; itís likely theyíll look to you when they encounter any issues with their business, so youíll need to have the professionalism, self-motivation and compassion to help them succeed.
3. You can make sure your business would succeed in certain locations
Some businesses are hugely profitable in one location but fail to take off in another. Itís hard to anticipate whether this will be the case for new franchises, so rolling out a pilot scheme can be a great way to find out.
If your pilot franchise didnít work in a certain location, try to work out why this was the case. Consider whether you can:
- Avoid locations that are likely to encounter the same issues
- Adapt your business model to avoid the issues it highlighted
Obviously, the second option is preferable, but youíll need to find a way to do this without compromising your all-important brand-wide consistency.
4. You can use it to entice future franchisees
When investing in a franchise, entrepreneurs want to know that it has the potential to succeed. Knowing that a franchise has proven successful in the pilot phase will reassure them that investing is a good idea. It eliminates some of the risk for potential franchisees and makes them feel like theyíre taking less of a gamble. Interested franchises can even visit the pilot franchise while itís in operation and get a feel for the brand image and customer response.
So, the pilot franchiseís positive results are the perfect advertisement for your business opportunity. Franchisors can use the pilot franchise process as a powerful recruitment tool for potential candidates Ė and the first step on an impressive expansion journey.
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Are you ready to launch your pilot franchise?
Here are some of our top tips and tricks to get the most out of your pilot franchise:
- Even though you might want to get the pilot scheme over and done with as soon as possible in order to get cracking with your expansion programme, you should invest time and effort into executing it well. This should reduce the likelihood of any setbacks occurring, and make sure youíve covered every base by the time you hand over your first franchise agreement for real. To get the most out of a pilot franchise, you should run it for at least a year Ė two, if possible.
- Donít forget that seasonal factors may have an impact on the success of your franchise. Thatís one of the reasons why we recommend you run your pilot franchise for over a year. Your business may be affected by consumer habits, social factors or the popularity of your product during certain weather, but running a pilot franchise throughout the year should help you think about how you can achieve consistent profitability.
- Consider running more than one pilot franchise. This will put you at even more of an advantage, as it will give you an idea of how your business will perform in different locations.
- This is a precious opportunity to try out new ideas, so donít waste it on the wrong franchisee. If you pick an entrepreneur who is ill-suited to the franchise, it will be hard to separate whether shortcomings were due to the franchisee or the business model. A pilot franchisee should be passionate, dedicated to the brand and committed to proving the franchise model. You may want to offer a reduced franchisee fee as a way of showing appreciation for believing in your brand.
- One of the most important elements of the pilot scheme is making a note of all the issues and stumbling blocks that crop up during the test period. Even if you think theyíre too minor to have an impact on your business in the long run, making sure youíre equipped to deal with it will serve you well, should the problem ever occur.
One final thought...
Remember, running a pilot franchise doesnít indicate anything negative about the franchise. When a franchisor is heavily invested in the running of the business, issues can be overlooked. Stepping back and getting an objective view often provides invaluable insights.
To read more about becoming a franchisor, why not take a look at our other articles on the subject? Just click here to browse our content.
Alice Tuffery, Point Franchise ©
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