Choosing suppliers in a franchise business model

A lot of companies operate through a franchise business model. This is simply where the owner of the business grants permission to another person or group to operate under the same brand name.

The franchisee is given training, knowledge of business operations and permission to use trademarks for a fee – so the arrangement works out mutually beneficial.

The golden rule of franchising is that one branch must be consistent with another, no matter who is running it or where in the world it is. This is why you can go to fast food restaurants anywhere in the UK and receive much the same food and standards of service.

Because of this, there are some extra things to consider when choosing suppliers if you are operating a venture through a franchise business model. If you are the franchisor, you need to make sure that the suppliers chosen can scale to supply all your future franchisees’ needs too, and if you are a franchisee you need to make sure you know what’s expected of your supply chain.

Stewart Butler, sales director at logistics operator World Options, explains.

Why are the providers pre-set for franchisees?

“At World Options, we produce all our marketing collateral and branded materials, which are available for franchisees to distribute to their customers. These are sourced directly by us, the franchisor, and provided to the franchisee. This means that we can communicate the same messages to our customers and keep the same high standards across the country, and indeed around the world as we expand.

“It saves the franchisee the time and hassle of sourcing this themselves, so they can focus on running their businesses and growing their franchise.”

What are the advantages of this?

“The advantages of this is that the franchisee doesn’t have to worry too much about marketing, branding or sourcing certain suppliers, because this has already been carefully thought out, invested and provided for them.

“In return, the franchisor is safe in knowing their brand image and message to their customers is kept consistent and is not being misused.”

What are the disadvantages of this?

“A franchisee might have their own ideas and might want the freedom to explore this, or feel restricted and want to do their own thing. They might also waste valuable time and money investing and trying out different supplier when they don’t need to, because the franchisor has pre-approved and put tried and tested suppliers in place already.

“That’s why it’s important for the franchisor to clearly outline these processes from the start. The whole idea of a franchise is providing the franchisee with a business that has everything in place.”

What processes are in place to make sure suppliers can cater to all the franchisees?

“Suppliers are chosen based on a need, which sometimes comes from franchisees asking for a particular type of supplier. The franchisor will then evaluate whether there is a real need and benefit for this particular type of supplier.

“Then some time is spent procuring and testing different suppliers to make sure they are suitable for the business and to check that it’s within budget before it is rolled out to the franchise network.”

Are you confident all your suppliers can scale with you as you grow?

“We are always thinking about the future and our growth in the UK and overseas. We choose suppliers who we feel can meet our needs as a business and support the franchise network as we grow, and source those that can also meet the needs of our franchise network in our international locations.”

Total Gas & Power will be exhibiting at the Franchise Show at London’s Excel on 16-17 February, where we’ll be helping franchise businesses with their energy needs. Tickets are free. To find our more visit http://connect.totalgp.com/franchise18

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