Emerging vs Established Franchises: What to Expect as a New Owner

This is a transcript from Episode 14 of The Franchise Champion Show. Listen to the full episode on Apple Podcasts, Spotify, or YouTube.

Alan Regala: So I was speaking with a coaching client of mine the other day, and we were talking about the importance of following the systems and processes that the franchisor has created. That's the whole purpose of buying a franchise, right? Because they have these things nailed down already. And he asked me a great question, which was: What if these systems and processes are incomplete? Or what if some of them don't apply to this situation? What then?

It's a great question, and I think this is something that people run into all the time. This is one of the things that differentiates emerging franchises—emerging brands—from more established brands. You've got more established brands who have had more time over the years to really flush out all of the processes and refine them through time. So you'll tend to have things that are a bit more dialed in when it comes to the brands that have been around longer. And for emerging brands, they have new systems, they have fewer franchisees, fewer people to test things out, fewer locations across the country. So they're being tested in fewer types of markets. Naturally, those systems tend to have more gaps, and franchisees would typically need to fill some of those gaps.

Now, I will say that some established brands probably have some processes that still need refinement, right? No brand is ever perfect and has everything dialed in because things change over time. You've got new products, let's say, that a franchise will offer, new services, and technology changes. So things are really constantly evolving and might need some work over time.

The Two Essential Mindsets

There are two primary mindsets that you're going to want to have when it comes to dealing with the processes that the brands have and having to potentially create processes for things that they're not providing. So the first mindset is with the HiPer8 principle of accountability.

No one is going to make your business as successful as you are. You really need to own the fact that your success is up to you and it's not up to anyone else, including the franchisor. So the first mindset is really owning it. If there's something that is not being provided, high performers will figure it out. And that leads us to the second mindset, which is HiPer8 creative problem solving and asking the question: How can I?

If something isn't being provided to you and you're not quite sure what to do, you ask the question, "How can I?" That puts you in the right frame of mind to solve the problem, to figure it out—instead of "I can't because..." Those are probably the worst words that you can say, which puts you in more of a victim mindset and puts you in a state of mind where you're not actively concerned about figuring it out. You're not actively working towards a solution. Instead, you're waiting for someone else to figure it out for you.

A Real-World Example: The Cash Flow Challenge

Okay, so let me give you an example of this. My client talked about cash flow as being a problem and something that is affecting him. He's in the home improvement space and getting the final payment from the customer after the job has been completed. When his installer is there and finishing the project up, sometimes the client doesn't have a check handy, right? And so he prefers to take payment by check, which is understandable—he doesn't want to pay processing fees. But if they don't have a checkbook, they'll say, "Well, I'm going to have to send it to you via some other means later, maybe bill pay or something to that effect." And so he ends up having to follow up with the clients and track them down and get that payment when it would have been much easier to get in person. And the franchisor apparently doesn't have a process for this—something that's a recommended way of making sure that you get the payment once the job is actually completed.

So how do we solve for this? The mindset we want to get out of is, "Well, they didn't provide me with the information on how to do this. They didn't tell me how to do this. Why haven't they created a process for this?" Well, yeah, sure. Of course, it would be fantastic if they would have told you exactly how to do this. But complaining about it or spending your time emphasizing the fact that they are lacking the process—that is not productive. You want to do something that's productive, and complaining about things that the franchisor should have done or could have done really doesn't help. So spend your energy on figuring out how to solve this problem.

Your Best Resource: Other Franchise Owners

If the franchisor doesn't have the answer, the next best resource is all of the other owners. So this is why it's really important to build good relationships with the other owners in the system. Likely, if you are not the very first owner, there are people that have been there and done that and figured things out that the system or franchise still hasn't implemented yet across the board. But there are people that have probably figured it out. And you want to be in touch with the people that are doing what you want to be doing, that are getting the results that you want to get. These are the people that you want to connect with.

So in this particular case, how do we solve this problem?

As for the problem of getting the final payment, and especially in a check format, which is more ideal than a credit card, the first thing that I would probably do is just try to set expectations. So right at the beginning, once they have signed for the job, let them know that payments will be due at installation. And then, of course, you remind them before the installer actually comes out so that they're prepared and they have their checkbook found. So those are a couple options. And hopefully, by the time the installation is complete, they'll be ready.

Otherwise, the other next best option is to just make it easy for them. And if you still want to have that check or ACH payment, have a platform that allows you to take ACH payments on a mobile device. And that way, your installer can take the payments and have it go into your checking account. Of course, they're a contractor, but either way, have them be able to take the payment and make it easy for them to find. Of course, you can get credit cards as well, which is also another way of making it easy for them. And of course, you'll have to pay the processing fees, which is unfortunately a part of doing business, and we just need to build that into your cost.

The Bottom Line

Well, I hope that was helpful. No one is going to be looking after your success like you will. So you need to own it and figure it out. If the franchisor doesn't have the answer to your question, the next best place to go is your franchise peers, other franchise owners in the system. If they don't have it, then you've got to figure it out and make it work. The point, though, is to not wait.

Emerging franchises might be lacking some of the details, some of the processes that you might need, and it's going to be up to you to help create some of those, help figure it out by asking other owners. And, you know, there might be a little bit more on your plate. It tends to be a bit of a more collaborative environment when working with emerging franchisors because they're going to want your feedback, which can be a good thing if you're open to that. But if you're scared of not having everything completely dialed in, then it might make more sense for you to work with a more established franchise business that tends to have things a bit more dialed in.

I hope this was helpful for you, and I look forward to seeing you next time.