Value-adding virtues for franchisees

Our March 25 on franchising caught the eye of Ricky Mercado, an old friend from our high school days at the Ateneo de Manila University where he is now teaching family business, strategy and franchising. I did not realize that he had been avidly following the series. He raised some good points that will help our readers who want to move into franchising.

Nice article that I read in Star regarding franchising. I must admit that what you have mentioned is exactly what I caution my students to take note of. I will show them your article to prove that someone sides with me.

However, there are two more important activities that I challenge my students to do before they plunge into the franchising world.

(1) Do a self-test to determine if franchising is really for them. As franchisees, they will have to learn and follow systems and procedures. Obedience is an important requirement. Of course, while they can question and propose improvements, this has to be done through the right channels. And here, patience is a virtue that must come into play.

(2) The other is to pose these questions: Are they really interested in the type of business being franchised? Do they really believe in the products and services? Can they not fabricate or provide these items or processes on their own? As a whole, is the business interesting to them?

Thanks, Andy, for allowing me to add my two cents worth of comment to your well-presented article on franchising.

Indeed, the comments of Ricky Mercado are good additions. They are not only two cents worth, they can be worth a lot of money to many wannabes.

Because of the nature of the franchising game, the operating characteristics require that the franchisees have particular virtues. As Ricky pointed out, these are obedience and patience.

Obedience is a virtue because procedures and processes must be adhered to. Mature franchises have time-tested and mature systems and procedures. These systems have worked and have produced results in different circumstances and situations.

On the one hand, to question and to disobey them is tantamount to questioning the wisdom of the franchiser. On the other hand, if the franchiser is too forgiving and readily accepts any changes a franchisee gives, then the robustness of the franchise can be doubted. What is really being franchised if the system and procedures can be changed too easily?

The other virtue is patience. There will always be room for improvement in the system. But in a mature franchise, it will take long. Although it is best that this process of change be made, a mature franchise will take some time to evaluate the proposal against their substance and strategy. Taking too long will be bad for the franchiser. This implies that it takes too long to react to changes in market and operating conditions.

A franchisee must have the patience to work within the system. Some entrepreneurs may not be willing to do this. Most entrepreneurs want to apply their creative juices and create waves in the market place. I’m afraid that applying creative juices may have to be coupled with a lot of patience in a franchising mode. If one is unwilling and/or too impatient to live and follow rules, systems and procedures, franchising may not be advisable. One may be better off developing a new product and/or service concept, that is, starting a franchise instead of getting a franchise.

Ricky’s last point has to do with passion. The franchisee must believe in the product and/or service being franchised (either because he does not have the time nor the competence to develop the product and/or service). If there is no entrepreneurial desire or spirit, then the franchisee will just be going through the motions of doing business, not entrepreneuring. As I have mentioned in a previous article, a business without an entrepreneur will not last long.

Our earlier article on franchising talked about important skills that must be applied by a wannabe: cost-benefit analysis and micro-market analysis. Topped with Ricky’s tips on obedience, patience and passion, franchising may yet be your best game.

(Alejandrino Ferreria is the associate dean of the Asian Center for Entrepreneurship of the Asian Institute of Management. For further comments and inquiries, you may contact him at: [email protected]. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at http//: www.aim.edu.ph).