Australians have taken to the franchising model with gusto since the early 1970s when the major American fastfood brands – Mcdonald’s, Pizza Hut, Kentucky Fried Chicken et al – arrived on our shores. Fast forward 50 years and the franchise sector comprises some 98,000 individual franchised outlets, offering not only burgers and chips but everything from tutoring to dog grooming services.
Collectively, Australian franchises employ close to 600,000 people and contribute $184 billion to the country’s economy, according to the latest estimates from the Franchise Council of Australia.
The rocky road to riches
But while, at first blush, franchising may appear an easy route to expansion and greater profitability, the road to riches can be a decidedly bumpy one. For every homegrown success story, there are plenty of also-rans; seemingly promising concepts that have failed to launch or enjoyed flash in the plan success, only to shut up shop a couple of years hence.
The majority of franchise networks fail in the first year and quite a number fall over in the second, according to The Franchise Institute, a local consultancy that’s helped scores of local business owners franchise their brands successfully over the past two decades. Some franchisors over-extend themselves, trying to do too much, too soon, and are undone by a cashflow crunch. Others don’t invest enough in training their franchisees. Brand damage can result, if the quality of products and services is not consistent across all outlets, or if franchisees are allowed to cut corners to improve their profitability.
Meanwhile, not having the right resources in your head office can be an impediment to success. The skills needed to manage and support a multi-outlet franchise operation can be significantly different from those required to establish and expand a standalone business – and acquiring those skills on the fly is quite the challenge.
Implementing sound, robust systems to run your franchise network will up your chances of being a survivor, not a statistic, as you embark on your growth journey.
Among the most important of these is your revenue management system.
Show them the money
The billing relationship between franchisors and franchisees can be a complex one. It can also be a potential source of disquiet and discontent if the latter perceive the system you use to administer payments between the parties to be opaque or error-prone.
As your franchise network grows and you add additional complexity to the mix, in the form of a loyalty or rebate program for example, these issues can compound and lead to significant conflict. That’s a decidedly sub-optimal outcome if you’re looking to build a thriving franchising network and attract high-calibre franchisees into the fold.
Making your billing processes simpler and more transparent can ameliorate the problem and ensure you and your franchisees are all on the same page, financially.
Choosing a billing solution to support your growth
Invest in an automated revenue management platform with the functionality and features to handle complex invoicing arrangements with multiple parties. That means seeking out a billing platform that encompasses the entire sales and billing cycle, including your payments, revenue recognition, collections, refunds and reporting processes, and one which has the capacity to accommodate the specific needs of your franchising model.
And, regardless of the nature of your enterprise, detailed audit trails that enable you to deliver the visibility and transparency today’s franchisees expect and demand is a must-have.
Systems for success
Success in franchising is all about systems. Ensuring yours are flexible, resilient and scalable will up your odds of success in a competitive and challenging commercial landscape. Against that backdrop, investing in a revenue management platform that can underpin your growth through every stage of your business journey is likely to prove an excellent move.
