Franchising is a great way to expand a business concept using other people’s capital and skills. But the success of any system depends on good communication between franchisor and franchisee.
| Entrepreneur |
Geoff Cope, Managing Director |
| Company |
Fibrecare Australia Group |
| Business type |
Residential/commercial cleaning franchisor |
| Founded |
1989 |
| Employees |
460 national franchises; 18 administrative staff |
| Head office |
Melbourne, Victoria |
| Contact details |
+61 3 9270 4599 |
Key Learning Points |
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Communication
If a franchisee is having business troubles, counsel them personally. Listen to their problems rather than adopt an authoritarian approach. Their success is the franchisor’s success.
Compliance
The franchisor provides the system and promotes the brand. Franchisees that do not stick to the system will damage the brand.
Franchisee selection
Conduct background checks on potential franchisees, ensure that they have adequate English skills, and confirm that they can pay the upfront and ongoing costs of their franchise.
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The Fibrecare Australia Story
When Geoff Cope purchased the Fibrecare Australia Group in November 2000, he already had considerable experience in expanding a national franchising business. Cope had spent the previous eight years as managing director of Brumby’s Bakeries, expanding the franchise from 50 to 250 outlets.
For Cope, Fibrecare Australia was too good an opportunity to pass up. The Fibrecare group comprised two franchises: Bizzi Beez, a residential and commercial cleaning business operating in four states and Drytron, a carpet and upholstery cleaning service in Victoria.
Cope felt that Fibrecare’s franchises offered a chance to expand a business in the service industry, the fastest growing sector in Australia. He says: “The advantage of franchising from the franchisor’s point of view is that you can grow a business without requiring large amounts of capital. If we were to have a cleaning business with employees, we would have to provide all the equipment, cover all the occupational health and safety things and have a huge staff of 100 people running around trying to cover for people who were absent.”
With the franchising model, a franchisee pays to join the system. At Bizzi Beez, for example, a husband-and-wife team pays $11,000-20,000 upfront for a licence, $2500 to purchase equipment, and an ongoing monthly fee of $450. After a week of training on proper methods of cleaning houses and other premises, franchisees are given free call centre support for 16 weeks. Quality assurance staff check the new franchisee’s work and deal with any problems. New franchisees are given a guarantee that their income will be no less than $1000 a week during the first four months.
Franchisors need to understand that their success is tied to the success of their franchisees. They must be very good people-managers and communicators. Cope says that when franchisees are making lots of money, the franchisor will never hear from them; but when all is not going well, they will refuse to pay their fees and blame anyone they can. He says: “Rather than adopt a ‘big stick’ approach, you’ve got to bring them in and counsel them to get them back on the success trail.”
Franchisors should carefully check the background, skills and financial status of prospective franchisees. Cope says that some franchisors will sell a license to anyone who wants to buy one because it looks good for the bottom line. They may even permit people to buy franchises on credit, which can be costly when the franchisor discovers that his franchisees cannot pay their fees. Cope says: “When we took over the group, we just said, ‘If you can’t afford to buy the business upfront, you don’t get in’.”
Successful franchising is also about compliance. Cope says he learnt that lesson from his lawyers. Franchisors must be strict with franchisees and require them to adhere to the franchise system. It is when franchisees ignore the approved methods mandated by that system that arguments and litigation can ensue.
Cope says: “Some franchisees, for example, don’t use proper cleaning chemicals. Instead, they may simply sell them, then just go in with a cloth and some water. That means they’re not sterilising things properly. Some franchisees don’t wear their uniforms or fail to display the company’s signs on their vehicle, which means that they may find a policeman knocking on the door of the house that they’re in. Adhering to the franchise system protects them from that.”
Compliance also protects the brand. “All franchisees must understand that the strength of the brand is in their hands. If they do shoddy work, don’t turn up or break things, the brand will suffer. This harms their business and in the end, it harms the franchisor’s business as well.”