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Pilot franchises: The flight path to franchise success?
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We’re in the middle of the long summer school break here in the UK, and whilst the skies above us are busy with so many people jetting off on vacation, the next generation of would-be franchisors will be considering how best to get their franchise opportunities off the ground and flying high.
A pilot franchise can be a great way for a new franchise brand to test their franchise model, usually offering the pilot franchisee the opportunity to own and operate their first franchise at a reduced cost, or even at no cost at all. Often, but not always, the pilot franchisee will already be familiar with the business or have a relationship with the franchisor – they may be a current employee, a customer of the business or be connected to the brand in some other way.
Launching with a pilot operation has a number of advantages for the franchisor. Firstly and most importantly, it gives the franchisor the opportunity to test the waters, to check that the business will translate well into the franchise sphere and will actually work as a franchise model. Even though a business may have a fantastic product or service, that does not necessarily mean that it can be developed into a viable franchise! A pilot operation will prove (or disprove) that the business can be successfully and profitably operated by someone else in a different geographical area, and that the original core business is not just a success because of the skills, talents and personality of the founder or some specific characteristics of its place of origin.
The success of any franchise brand is reliant upon the success and happiness of its franchisees, running their franchise businesses with the benefit of the know-how, training, systems and procedures and the support of the franchisor. A first pilot franchise is usually very much a work-in-progress, with the pilot franchisee understanding that they are taking on a business which is still in the beta-testing stage. The franchisor will be able to use the pilot franchise experience to fully assess what is needed to launch, train and provide ongoing support to a franchisee, informing future decisions on elements ranging from the format and contents of operation manuals, how initial franchise training should look and be delivered, to financials and what is included in the franchise. In doing this, the hope is that by the time a first full franchisee comes on board, the franchisor can feel fully confident in the franchise offering, and the vast majority of any “teething issues” have been successfully ironed out. They should also feel confident that they’ve got their sums right and that they’ve accurately costed up their franchise package
Expanding a brand by way of franchising is a big step which will undoubtedly impact in some way on the original core business. And not everyone is suited to the role of a franchisor – or the role of a franchisee. A pilot franchise can allow a budding franchisor the opportunity to assess how they respond to the role dealing with issues and challenges from a franchisee, how they feel about the loss of an element of control which inevitably is part and parcel of franchising, and consider any changes in culture or otherwise that the parent company may experience as a result. It will also enable the franchisor to gain a better insight into what their “ideal franchisee” might look like.
A pilot franchise would, of course, be the planned first step towards actively recruiting for full franchisees. And that pilot can become a significant marketing and sales tool, providing facts and figures, testimonials and valuable social proof for future potential franchise owners who are more likely to be willing to part with their money and invest in a business that comes with some track record of success, albeit limited at this early stage.
There are also advantages in the arrangement for the pilot franchisee. They have the opportunity to own and run the franchise usually at significantly less cost than market value and to be heavily involved in the development of the franchise model. Due to the higher risk element involved in being the brand’s very first franchise owner, pilot franchisees do tend to be more entrepreneurial in nature, excited to be part of the journey and involved in shaping the brand. That in turn can come with its own challenges for the franchisor, which is why taking time to select the right person to become the first pilot franchisee is absolutely key.
For the reasons above, a pilot franchise can be a great way for a new franchisor to take their first cautious steps into the world of franchising. Not all pilots will be successful, and if that is the case then the brand owner can relatively quickly and easily reassess their position and look at alternative routes to expansion if appropriate, without incurring further significant cost and investment. But done right, with a successful test venture under their belt, a pilot franchise really can propel a franchise brand onto the flight path to franchise success.