Knowledge of Success

Traditionally, the characterization of the franchise can only be accepted in the presence of three elements:

The know-how is recognized by all as a fundamental element of the franchise and even as its main interest.

The practice shows that franchise networks do not function well even though franchisors have, in accordance with the classical definition, transferred to their franchisees, the famous know-how. The know-how related to the concept, though a necessary element to the franchise, is nevertheless insufficient alone to ensure the success of the network. Most of the difficulties faced by franchise networks are due to the following fact: the franchisor does not have an organization know-how or even partially. (See: Olivier Gast « Plaidoyer pour une révision de la notion de savoir faire en matière de franchise : « Du savoir-faire au savoir -réussir » ["A plea for a revision of the concept of know-how as regards franchising: From know-how to knowledge of success "], Petites Affiches, November 1995).

It is now essential to adopt the vision of knowledge of success. This Knowledge of success is the combination of two skills:
- The know-how related to the concept
- The know-how related to the organization

Know-how related to the concept

This is the classic notion of know-how in franchising as comprising a set of technical, commercial and administrative knowledge necessary to the operation of the company.

Under “the Block exemption on Vertical Restraints” (2790/1999) for franchise agreements in 1999, the know-how related to the concept must be: identified, substantial and secret. This concept must be tested and standardized, it becomes then a repeatable business model. A franchisor can hardly claim to have this experience if it has not tested its product in several retail outlets and for a sufficiently long period. (See Article “The 3 / 2 rule” by Olivier Gast, Franchise Magasine1982). The franchisor must control not only the product but also know the whole market.

This rule does not claim to be absolute. But before making a commitment, any candidate franchisee should adopt this criterion to assess the strength of the know-how related to the concept it intends to exploit.

Know-how related to the organization of the franchisor: The 5 professions of the franchisor.

Knowledge of Success is a particularly rich organizational know-how (secret and non-transferable to franchisees), as important as the know-how related to the concept and certainly more difficult and expensive to acquire. To be a good professional, the franchisor must be able to exercise the five professions of the franchisor.

1st profession: concept marketing

It is for the franchisor to alter its concept for consumer expectations and economic data. For that the franchisor has three tools:

- Pilots to test innovations. The franchisor should not be content to have new ideas; he must test and imitate them. The pilot stores allow this.
- Dialogue with the franchisee to collect innovations originating in the field,
- Market research to anticipate the changes (which will accelerate because of the high-tech world in which our civilization has entered).

2nd profession: “It is by franchising that one becomes franchisor”

For a franchise to succeed it is essential that the franchise is expanding its network and expanding rapidly and smoothly. The franchisor must be able to:
- Select suitable locations for the concept,
- To acquire locations,
- To build franchise units,
- To sell its franchise,
- To select franchisees,
- To train them.

In practice it is rare that the young franchisor knows how to exercise all these professions. But it is by franchising that one becomes franchisor!

He should not be afraid to hire a "pitbull" of development (not many on the market but there are a few).

3rd profession: To Animate – To Communicate – To Control

This is the fundamental and core profession of the franchisor. It requires that the franchisor:
- Wins the trust of its franchisees by going to see them several times a year
- Checks with great care compliance by the franchisees of the business model and the brand image transmitted,
- Continues to promote its franchise system.

Controlling the franchisees and promoting the concept can sometimes seem incompatible. That is why the franchisor must be careful to assign tasks to different individuals within its staff to avoid confusion.

It is the job of the famous director of network, which covers two different departments: development service and animation service.

4th profession: Logistics

This know-how consists of supplying the network in products, which the franchised outlets need. Supply deficiencies seriously harm to the reputation of the network (quite common in the textile sector).

To meet supply needs, the franchisor must here also have a structured organization. Any trader who intends to integrate a franchise network must first ensure that the franchisor will be able to secure orders. And of course it goes without saying today, at competitive prices, the relocation of industry (China for example...) is a vital necessity.

5th professsion: The ability to be both a manager and a leader.

If there is an imbalance, the franchisees are dissatisfied, in one case because the network is poorly managed and they don’t make enough profit and in the other case, because the lack of dynamism and reputation of suffering and a lack of leadership.

Knowledge of success is the combination of know-how related to the concept and the five professions of the franchisor relating to its organization.
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