Licensing / Franchising
In recent years, franchising has become a successful strategy for companies seeking to expand their presence in new markets. The concept is most widely used by companies in the service, retail and catering industries.
The success of a franchise model depends on a sound and productive relationship between franchisor and franchisee. In most cases, however, building a productive and positive franchise relationship turns out to be a challenging task. To achieve the full mutual benefits of franchising, Roland Berger works with both parties involved in order to maximize the value of a franchise model.
The five success factors of a franchise model
For the success of a franchise model it is critical to generate a common sense and understanding what a franchise model means in real terms: A true partnership with mutual obligations – transparent "win-win" sharing of economics and risks. Roland Berger has identified five key success factors that are crucial for a mutually beneficial franchise system:
- Strong Brand: providing high awareness and appeal to attract and retain customers
- Sustainable business model: creating a standardized, flexible and proven business model
- High barriers to entry: ensuring uniqueness of the products or services and/or guaranteeing cost leadership
- Ease of control: developing clearly defined and transparent control mechanisms
- Expansion management: selecting locations and franchisee with an appropriate set of criteria
Taking into account these factors will help to tap the full potential of franchising by improving the entrepreneurial spirit of store managers. As benchmarks in food retailing indicate, the entrepreneurship of owner-operated stores show significantly higher growth rates (+ >1% LfL growth) and higher EBIT margins (+2%) than regular stores.
We facilitate our clients to achieve these improvements by supporting them in selecting the appropriate franchise model as well as preparing and executing the preferred strategy.