• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint

Construction

The realities of space constraints and market conditions that often influence a franchisor to change the physical layout of an outlet must earnestly be considered before rushing into changing “one small aspect here, another there, and maybe one more over there.” Once the ideal building/space has been articulated, designed, and constructed or modified, it is important to understand that changes can be made to the structure only as long as they are understood in terms of two distinct categories.

The first is that changes to the ideal structure need to be rationalized in the spirit of research and development for new markets or new product offerings. Ad hoc changes should be avoided. Typically, the “standard” design is provided to you by the franchisor. Your local unit development entails many variables that simply cannot be anticipated. Specific land configuration, environmental restrictions, and local zoning laws are examples of an ever-changing commercial landscape. Second, changes can be made only when market conditions dictate making relevant modifications to the existing format. For example, consider the addition of a salad bar to a restaurant franchise. Roy Rogers struggled for many years whether or not to offer a salad bar. There are multiple effects that need to be considered, such as customer flow in a restaurant, the reduction in seating, and an expanded floor plan. Roy Rogers eventually installed the salad bar, but the debate raged on. Over time, Roy Rogers ended up selling off many of its sites. Changes need to occur at the franchisor level after testing that includes investment analysis and revenue and cost implications. How important is the additional offering, and how much revenue can be generated? In other words, “revisions” must be reconciled with your unit economics. Furthermore, contingency plans clearly must be made in the event that the projected results don’t happen. Standardization is the very essence of franchising as a risk-reduction tool for a successful entrepreneurial venture. Your success ratio generally increases when each successive unit is similar to the prior one, and decreases the greater the variance in each successive unit. Can changes to the SDS be reconciled in the context of the entire franchise system? Will franchisees be prepared to make changes to existing facilities and operating systems? TIP 4-3 illustrates further of the necessary considerations when modifying a standardized physical structure.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint