Franchising and Business as Mission: Expert Panel

1. What are some of the opportunities you see in using a franchising approach in a business as mission context?

John: Franchising thrives by tapping into local knowledge and connections, combining them with the franchise operations system to achieve success.  Compared to setting up a wholly-owned business, franchising offers a faster rate of expansion, with a lower business risk, whilst maintaining a good amount of control from the franchisor’s (the brand/concept owner’s) point of view.

As a ‘BAM’ tool, franchising taps the knowledge and connections of the locals in the field.  This means the ‘locals’ can be blessed by being gainfully employed, whether self-employed or company employed, and earning a livelihood from the labour of their hands.  A franchise that does not require a large amount of capital investment, or does not have a complex and huge scale of operation, can be easily replicated across the mission field, penetrating even small towns or large villages.  Where the franchisee is a believer, the business can be used as forum for discipling that goes beyond preaching and teaching, but into modeling a transformed lifestyle in the workplace.  I can visualise food businesses such as kiosks or small stores and small retail outlets as possible franchise concepts in a BAM context.

Kim: The first and most important step is in choosing a franchise business that suits your personality, style, values, culture and location.  Franchising provides a solid framework in which to replicate a great business model, but it still has to ‘fit’ with the personal style of the business owner.  Regardless of the type of business, or the mission experience,  if done correctly franchising will provide the support needed in the critical early set up stage.  The rewards of franchising include the support network, expertise and know-how that comes with a franchise.  The opportunities are endless as there is a franchise model for every type of business.

Tim: You hear of missionaries that want to start a business but many do not realise that business encompasses a whole field of expertise and skill that they don’t necessarily have. However, they might have cultural and language skills and good relationships and connections. Franchisors have a business model and they are looking for new markets. If this involves going cross-culturally, a missionary in-country might be an ideal bridge between the home culture and the target market culture.  Franchising could open up business opportunities to more people who are not A-type entrepreneurs, but would make great managers. I think to start a franchise business you need a little of that entrepreneurial spirit, but you don’t necessarily need all the ideas. Franchising also provides a support network that offers a better chance of success.

2. What are some of the challenges we face integrating a franchising approach to business with a ‘business as mission’ strategy?

Tim: Franchise businesses typically offer better quality products, but at a higher price. Taking a franchise concept to a new market will always be risky because the price may not be acceptable in that market. There will be franchise fees to factor into costs, so you have to work out whether you can compete with locals. Can you charge a premium for a higher quality product? Can you take up a niche position in the market? As well as the challenges that are typical for any business set up, there maybe particular challenges for franchises. For example, will the trademark or patent be honoured? Will there be excessive red tape? Are there local staff available of the right calibre to meet the standards demanded by the franchisor?

John: Raising capital will be a challenge for mission field franchisees.  But a resourceful franchisor (and its BAM supporters) might be able help raise capital for franchisees through their networks or through micro credit arrangements. I think another challenge is lack of emphasis (and thus under-investment) on building a robust operations system.  Would-be franchisors might think that the lack of business sophistication in the target country means that there is no need to put in place a proper system and that all the franchise needs to succeed is to have the product to sell.  This is misconception.  If the local market lacks sophistication, business skills and adequate education, then a robust system is an even greater requirement in order to make the franchisee’s business less human-dependent and more system dependent.  A robust system doesn’t have to be complicated.  It just needs to articulate standard work flows, clear instructions and guidelines, and adequate training that suits the business concept.  In a food business, it would mean store set-up procedures, kitchen layout, ingredients sourcing, food preparation methods, hygiene standards and service requirements, etc.  The “system” doesn’t have to be written in a 500-page document.  It just needs to be sufficient to suit the local needs.

Kim: A broad range of challenges can usually be divided in to 2 categories: external or internal.  External includes things such as local government franchise laws or copyright laws.  Internal challenges unique to BAM operations that involve mission agencies are those issues related to business ownership and finances, particularly staff salaries and the division of profits.  I have found that there is a range of different opinions amongst different organisations and agencies. Who pays the business owners? Who owns the business?  Does the mission agency or the missionary own the business?  Can staff be paid from the business or must they still raise funds from their supporting or sending churches? Can a non-Christian be an employee, or part owner, of the business?  Can the business be sold or given as an inheritance? These questions must be answered and legally documented BEFORE commencing the business.

3. What are some of the ways we could off-set those challenges and minimise the risks? What are good ways to get started?

Kim: A BAM context should be treated the same as any other business context.  Although the product and service will vary depending on each location, effective business principles are the same the world over.  Franchising forces a business to shift from an ‘oral culture business’ to a ‘written culture business’.  Having the procedures and policies documented helps to keep the company values, goals and strategies at front of mind and on track.  Having a business as part of a franchise also enables the business to maintain a ‘team approach’ through constant reporting obligations that are often required by a franchisor.  This franchise ‘team’ provides accountability and communication which should steer a successful franchise through the numerous and various challenges that any business will face.

Tim: Working with a BAM-friendly franchisor will help bring an understanding of some of the constraints franchisees might be working with. At the very least the franchisor should have some flexibility over cross-cultural and language issues, price-sensitivity, availability of suppliers and equipment, staff training issues etc.  A thorough feasibility study should be carried out for that market, factoring in a potentially difficult business environment and realistic start up costs.  Personal preparation must also be thorough and realistic. Do a self-assessment on your readiness to start a franchise business, ask the difficult questions of yourself and ask others who will tell you the truth. Listen!  I would also add that business must be your core focus to be a success. There is a high risk of failure and an almost certain loss of credibility if the business is just something tacked on to other activities. A franchise cannot be an add-on. The franchisee must embrace business as a calling in itself.

John: First, understand standard business-format franchising in-depth by reading up, asking for advice, having an experienced person in the team etc. This is an important foundation even though a significant amount of customisation and adapation is required in the BAM/mission field context. Second, finding the right franchisee with the right profile (skill sets, background and motivation) is important.  He or she needs to know that they are running a business that should be sustainable, and that they are accountable for what’s been given to them. Third, do not sign up any franchisee until the key pieces are in place.  These would include the operating system and an ‘agreement’ governing the franchisor and franchisee, to avoid any misunderstanding of each other’s obligations.  Granted, the first (or any) franchisee business will not be perfect, because the franchisor is still learning.  But adequate planning and pre-launch system building will make for a more sustainable franchise in the field.