by Rosie Clarke
18th April, 2018
The positives of franchising for franchisees
They call it a ‘model’ for good reason; there’s a level of professionalism, showmanship and influence that comes with a franchise.
Been there, seen it all
Many independent owner-operators and managers come into the industry fresh from completely different careers, learning the accommodation ropes as they go. Franchises are well-versed machines that, in many cases, have been operating accommodation in Australia for decades. They tend to offer in-house training and ongoing support where needed; they have a wealth of information and have ‘been there, seen it all’, which offers reassuring appeal to new faces in the sector. Not to be sniffed at either, being part of a franchise network means that operators have a network of other operators they can connect with, vent to, advise and receive tips from. The management tiers that come with many of the franchise chains also provide a support system for any issues that arise whether it’s trouble with an OTA, a guest or the property itself.
Sharing tips and tricks with properties similar to your own that are scattered across the country but share a common interest in being part of the same brand, is a luxury when you are used to viewing your neighbours as the competition. It expands the notion of loyalty from a concept limited exclusively to guests, to one that includes not only fellow properties but a much wider vicinity of local business.
Venturing out into the big, wide world
When it comes to the ‘little guys’ in more rural areas, particularly the independent properties, trying to stand out on online travel agencies and social media to target a fair share of guests is an uphill climb. Of course, there are ways – whether outsourced or in-house – that independent properties can maximise outreach, and very special properties can try to rely on word of mouth. However, joining a franchise solves a lot of the problems independent owner-operators face. Many look to join a franchise because they crave access to more extensive marketing and booking parameters that these networks can ideally offer. In that same vein, choosing a franchise to join has its own set of complications but the key factor in the decision-making process should always be, ‘which franchise best suits my property?’.
Cross-sell, up-sell, marketing as well
Franchise networks frequently boast some sort of loyalty network of scheme. For guests, this incentivises them to stick to a particular brand; for franchises, this means repeat business and shared guests with other franchisees. Business guests who can accrue points, etc., on work trips are more likely to return with their families and book direct.
Franchises will also tend to have a property management system of choice, either their own or a recommended supplier. This allows them to cross-sell and create marketing campaigns, coordinated across all platforms, that will encourage guests to book with any of their franchisees.
Teamwork makes the dream work; this holds especially true with franchises, where a fellow franchisee can create such a luxe experience for their guest that it convinces them to book with you because you share the same brand umbrella. The cross-pollination of guests is especially terrific for properties in competitive areas, where guests are likely to ‘go with what they know’. Which brings us to the next benefit…
Reputation, reputation, reputation
Perhaps even more than location in 2018, reputation is everything. With the likes of Uber making it easier than ever for tourists to reach tourist destinations, being right on the doorstep of a hotspot isn’t the drawcard it once was. Having a good reputation, on the other hand, can secure you fast bookings any day.
While independent properties have to start from ground zero when it comes to reputation, building on guest reviews and trying to create high standards of quality; franchisees benefit immediately from the reputation of a parent franchise. They also have a predetermined set of quality standards that they must meet; so there’s never a question of ‘what are we doing wrong’.
OTA commission rates
Incentivise direct bookings all you like, guests will continue to check room prices on Booking.com and TripAdvisor. That said, it doesn’t take much to realise that losing the business of a company with 100+ hotels is going to put more of a dent in an OTA’s bottom-line than the loss of a small boutique hotel.
It makes sense that franchises often have power to negotiate lower commissions on behalf of their franchisees. Having said that, it is still possible to win the game of OTAs if you are independent, so long as you have the right social media savvy, marketing ingenuity and some very vocal guests.
Another ‘pro’ relating to bookings, is that larger accommodation brands often have successful strategies in place for increasing direct bookings. They also tend to have the available resources to ‘experiment’ with different advertising campaigns and techniques. While guests might not think to check the website of a niche property to see if there are any benefits to booking direct, most people tend to know that big brands offer free wifi or complimentary items to whoever books direct. The hurdles are greater when you are going it alone because social media savvy and marketing ingenuity are not things that can always be grown organically, they cost money.
The temptation when marketing a piece of accommodation online, or anywhere for that matter, is to romanticise it and make it sound more impressive than it is. However, the more realistic the expectations going in, the easier it will be to avoid disappointing (and then to impress) guests. With a franchising agreement, these guest expectations are pre-ordained and pre-managed. As a franchisee, there is no ambiguity or confusion surrounding guest expectations. There are very specific standards in place that, when maintained, will meet those guest expectations at every turn. So anything an accommodation provider does to go above and beyond those expectations will hit home.
Typical guest expectations for a franchised property will usually involve standardised services like mattress quality, free wifi, room service or convenience food, particular amenities, etc. Some of these are things that can be more difficult for independent properties to provide off their own bat. Free wifi in particular is something that can be expensive and difficult to manage but is made easier by having a third-party or franchisor supporting it.
In the end, that is the draw of a franchising agreement: it allows independent properties the chance to market themselves and offer services they wouldn’t otherwise be able to afford or have the time to implement. It is not for everyone though, the franchises themselves are the first to admit that. There is a lengthy selection process for every brand looking to acquire new franchisees.
Accom Management Guide (AMG) spoke to Quest about the positives of franchising…
Brendan Du Kamp, Quest Geelong franchisee, said:
“I started my career with Quest in a management role at Quest Docklands, where I gained a solid understanding of the value the brand offered. Quest offered me outstanding training opportunities and mentoring, which helped me gain an understanding of the business from the inside out, and to develop the confidence to become a Quest business owner. Taking the next step in becoming a Quest franchise business owner was a great opportunity for me and my family.”
The process of purchasing the franchise “was fairly daunting, as I had never been a business owner before”.
“The support offered by Quest, and the establishment team in particular, was vital in helping me to seamless establish the business.”
Brendan said his experience since joining the brand has “been extremely positive”.
“I really believe in our product and the value Quest offers its customers. Quest’s corporate office offers tremendous support, which gives me confidence in the running of my business on a day-to-day basis. I also like having the ability to share ideas and advice with other Quest franchisees across the network.”
He offered the following recommendations for other potential franchisees in the industry:
“I believe it’s important to work with a brand you truly believe in, to know what it stands for and who it best serves. When you have established your business, you need to own your relationships with key people and clients, making sure you are always available to support and educate.”
AMG asked about the biggest challenge he faces in the industry right now…
“For me, the biggest challenge is in maintaining relationships with key clients, rather than losing them to third-party websites. Heavily marketed third-party booking sites have always existed, and now more than ever are trying to own the booking process. It’s essential that I have the technology and the reach to maintain my guest relationships.”
David Ridgeway, Quest general manager – franchise operations, said:
“When you go from being an employee to a business owner, it’s a huge leap mentally, Quest’s franchise business format model provides framework for those who are ready to take that leap. As a franchisee, you can make decisions and run with them. There’s an agility and responsibility that comes with running a small business. It means you have the opportunity to understand your key corporate clients needs and be very responsive to your guests and discover what works for your business, while still operating under the business format franchise framework and support offered by Quest as a franchisor.”
AMG asked if there are any issues within the accom sector (OTAs, Airbnb, etc.,) that he thinks franchises are better equipped to inform or help managers with…
“At Quest, we understand our core business is the extended stay corporate traveller, and we have developed the expertise and knowledge to provide personalised care for this market. As a franchise business owner, it’s essential to develop ongoing relationship with your key corporate clients and customers to provide a great guest experience. A franchise business owner will go the extra mile to maintain a long-term relationship.”
David offered the following suggestions of where to start for new managers confused about all their options:
“For those who have a genuine interest in becoming a franchisee, a great first step would be to contact the Quest Franchise Establishment Team, who are more than happy to discuss the process.
“Quest also regularly hosts Franchise Insight Seminars in capital cities. These seminars provide a great snapshot of the things that need to be considered in becoming a Quest franchisee, including learning about the franchise business format model and developing a better understanding of the accounting, legal and finance aspects needed to invest in your own business.
AMG also spoke to Next Story about the positives of franchising…
Next Story managing director John Warren, and franchise support manager Jeff Claxton, said:
“The continual popularity and appeal of franchising is driven around new models or product offerings. In most cases, people looking to go into business for the first time will consider a franchise model because they believe that a franchise model is a tried and tested model. This gives them a sense of security knowing that the franchisor has also got a vested interest in the brand. The power of the brand and expertise of the business will ensure they are successful whether this is the first time in business or they are a previous business operator.
“Most people going into a franchise arrangement understand from the terms and conditions, that they will be required to pay a royalty or service fee for the use of the franchisor’s identifying name or trademark. Being with an experienced franchisor/operator provides franchisees with the confidence and backing of a proven concept and a brand with a good reputation. Having the backing of a franchisor and being offered a product, service and trademark, as well as the entire business concept is why franchising as a rule, continues to be popular amongst small business operators.
“With systems and support in place such as marketing strategy, operational standards, systems, training, quality control, guidance, ongoing assistance and supervision provides these operators with the skills that they typically would not receive by being in business on their own. It’s all about the systems and expert support that Next Hotels & Resorts provide to ensure a successful outcome.
AMG asked whether there any issues within the accom sector (OTAs, Airbnb, etc.,) that they think franchisors are better equipped to inform prospective franchisees on?
“Our franchisees are better equipped to understand and work with OTAs and the GDS than other ‘only online’ organisations, such as Airbnb through Next Story Group’s online distribution capability. Next Hotels & Resorts has a strong relationship with the OTAs and manages inbound and outbound contracts on behalf of franchisees to ensure the strongest result is achieved, whilst also supporting their revenue management. With the franchisors involvement in these issues, it allows the franchisee valuable time to get on with running their business.
“A Franchisee will get a quicker update to any online reputation or guest feedback on such sites as bookings.com, TripAdvisor or Expedia just to name a few. Being part of an organisation that is digitally savvy enables franchisees to be best-in-class with expertise in marketing, superior reputation management, training, online reviews and developing their social media presence.
John and Jeff offered the following tips:
“The most important tip or suggestion to anyone considering signing up to a franchise business is to do their research. Start by researching the brand to find out vital details about the franchise company, as well as initial fees, investment and obligations. Visit the website, visit some of the locations and discuss any issues or concerns with both existing franchisees and the brands franchise manager. Obtain an information/franchise pack to read and we recommend getting external advice from both financial and legal experts. Make sure you read and understand the Franchise Disclosure Document (FDD) and Franchise Agreement before making a final decision.
Disclaimer: Regardless of anything quoted above, Next Hotels & Resorts, a subsidiary of Next Story Group, always recommends obtaining independent legal and financial advice before committing to any franchise business venture.