Look for Franchise opportunities with a Sustainable Competitive Advantage
Maria Walton| HR Manager/ National Franchise Manager | MISTER MINIT Australia
When it comes to business, today’s early moving companies can have their business model’s copied. But there are some things that are very hard or impossible to copy. We caught up with Maria Walton, Franchise and Human Resources Manager at Mister Minit to hear about one of their sustainable competitive advantages and how you can determine whether the franchise opportunities you are looking at have sustainable competitive advantages.
At Mister Minit we have a culture and ethic that is centred upon meeting the needs of our customers. For us, that means staying focused on the customer offer and really ensuring this offer continues to be relevant. Notwithstanding our 55 years of history the market is changing at an increasingly faster rate and we must ensure that our offer reflects this. For example, we have recently introduced a new service for cutting electronic car keys and have supporting processes to ensure our customers are happy with this specialist service. This is an outcome of many years of research and product development. This is just one example of how we focus on continually upgrading our offer with changing market needs in this case automobile key technology.
Every industry and company is different. So when you are looking for franchise opportunities with sustainable competitive advantages a few questions you should ask a franchisor are as follows.
"Franchise opportunities should offer a clearly defined and easily understandable business model for turning a profit. If you cannot understand how a franchise system makes money and derives value, it is best to avoid it."
Ultimately, your success will depend upon whether your franchise business’s end customers are satisfied with your product or service. Ask prospective franchisors to explain how they add value to their customers’ purchase experiences on a regular basis, as Mr Minit does. Ask them what they’re investing in to ensure their brand is relevant in five or ten years’ time. A purchaser of a franchise needs to look towards tomorrow as well as today.
- How have you adapted your offering over the years to keep your competitive advantage over the competition?
We live in a time of rapid change, much of which is due to technological advances. Businesses must adapt or perish. Over the last ten years, for instance, the rise of e-commerce on the internet has required that retailers maintain an online presence if they are to remain competitive. Investigate whether franchise opportunities of interest have an adaptable business plan that can endure over time.
- How do you make your money, and what drives the economic value for your franchise company? And is that linked to a competitive advantage?
Franchise opportunities should offer a clearly defined and easily understandable business model for turning a profit. If you cannot understand how a franchise system makes money and derives value, it is best to avoid it. If the business’s economic value is linked to a particular competitive advantage, such as a unique product or service, enquire how the franchisor plans to maintain that advantage in the future. Likewise ask how the franchisor makes their money. It is generally preferable that the franchisor’s returns are linked to the franchisees over the long term rather than through one off sales of franchise transactions.
- Why did you franchise in the first place? Was it for customer service, building the brand, or some other reason?
Many businesses decide to franchise in the first place because they hold a competitive market advantage such as superior customer service, brands, or products, which they believe can be reproduced by franchisees. In reviewing franchise opportunities, enquire why a franchisor has made the decision to franchise when evaluating whether its business model is likely to succeed over the long haul. Likewise it is useful to understand whether the franchisor has already taken the business development risk in terms of the brand and business model. A franchisee should generally be buying into a system that is proven and should be cautious in reviewing businesses in the early stages of development.
Ensure that the franchise opportunities that you pursue have distinctive, sustainable competitive advantages and you can see them being around in 10 or 20 years.
In summary, look for a Franchisor that is continually driving the customer offer and remains relevant to the market. They have a proven franchise model and are continually looking forward and investing back not only for today but as well as tomorrow.