We are in the midst of the long summer break here in the UK, and while the skies above us are busy with so many people leaving on holiday, the next generation of future franchisors will be thinking about how to get their franchise opportunities off the ground and soaring high.
A pilot franchise can be a great way for a new franchise brand to test their franchise model, usually giving the pilot franchisee the opportunity to own and operate their first franchise at a lower cost, or even completely free. Often, but not always, the pilot franchisee will already be familiar with the company or have a relationship with the franchisor – they may be a current employee, a customer of the company, or otherwise associated with the brand.
Starting with a pilot operation has a number of advantages for the franchisor. First and foremost, it gives the franchisor an opportunity to test the waters, to verify that the business will translate well into the franchise sphere and actually operate as a franchise model. Even though a company has a great product or service, that doesn’t necessarily mean it can be developed into a viable franchise! A pilot operation will prove (or disprove) that the company can be successfully and profitably managed by someone else in a different geographic area, and that the original core business is not a success just because of the founder’s skills, talents and personality or some specific characteristics of the place of origin.
The success of any franchise brand is dependent on the success and happiness of its franchisees, who run their franchise businesses with the benefit of the know-how, training, systems and procedures and the support of the franchisor. An initial pilot franchise is usually a work in progress where the pilot franchisee understands that they are acquiring a company that is still in beta testing phase. The franchisor can use the pilot franchise experience to fully assess what it takes to launch, train and provide ongoing support to a franchisee, and provide information about future decisions on elements ranging from format and content from operating manuals, what initial franchise training should look like and be delivered, to financials and what is included in the franchise. By doing this, the hope is that by the time a first full franchisee comes on board, the franchisor can have complete confidence in the franchise offering and that the vast majority of any “teething problems” have been successfully resolved. They also need to be sure that they have their sums right and that they have accurately cost their franchise package
Expanding a brand through franchising is a big step that will no doubt impact the original core business in one way or another. And not everyone is a good fit for the franchisor role — or the franchisee role. A pilot franchise can provide a budding franchisor with an opportunity to assess how they respond to the role faced with a franchisee’s problems and challenges, how they feel about the loss of an element of control that is inevitably part of franchising, and cultural changes or otherwise that the parent company may experience as a result. It will also allow the franchisor to gain a better understanding of what their “ideal franchisee” might look like.
A pilot franchise would, of course, be the planned first step towards actively recruiting full franchisees. And that pilot can become an important marketing and sales tool, providing facts and figures, testimonials and valuable social evidence for prospective franchisees who are more willing to part with their money and invest in a company with a track record of success. albeit limited at this early stage.
There are also advantages in the scheme for the pilot franchisee. They have the ability to own and run the franchise, usually at a cost significantly less than market value, and to be heavily involved in the development of the franchise model. Because of the higher element of risk associated with being the brand’s first-ever franchise owner, pilot franchisees tend to be more entrepreneurial in nature, eager to be a part of the journey and involved in shaping it. Brand. That, in turn, can come with its own challenges for the franchisor. Therefore, it is absolutely essential to take the time to select the right person to become the first pilot franchisee.
For the reasons above, a pilot franchise can be a great way for a new franchisor to take their first tentative steps into the world of franchising. Not all pilots will be successful, and if they are, the brand owner can relatively quickly and easily reconsider their position and, if appropriate, consider alternative routes for expansion, without further significant cost and investment. But done right, with a successful test venture under their belt, a pilot franchise can really propel a franchise brand down the flight path to franchise success.