Pitfalls Of Hosting

Jingge Zhuang (a pseudonym) is a national western fast food chain with 36 stores. Among them, there are 23 stores in the headquarters of the company in Beijing.

At the end of 2002, before the official move to Beijing, the owner of Jingge Zhuang had opened a western fast food restaurant for several years in a city in Northeast China. At the height of its success, he had operated 3 direct outlets.

But then, due to the limitations of the local market capacity and business mode, the scale is no longer able to break through.

After careful consideration, Li decided to sell his 3 Western restaurants and bring these funds and several core teams to Beijing, where the market potential is bigger.

In the next two years, Lee boss and his team worked steadily and steadily through the rolling of their own funds. By the end of 2004, 4 direct outlets had been opened, and the profitability of each shop was excellent.

Of course, in the past two years, they have done two more important things: standardization, and consciously training reserve managers.

In early 2005, Jingge Zhuang decided to take Beijing as the center to develop franchise chain.

Standard joining is a problem.

At the beginning of joining, Jingge Zhuang also adopted the most typical single store franchising mode: franchisee set up a Jingge restaurant, and paid the corresponding franchise fees to the headquarters according to the scale of operation. The franchisee was responsible for its operation by the franchisee, and the headquarters provided corresponding assistance and support.

By the end of 2005, 4 franchised businesses had opened, including 3 in Beijing and 1 in Shenzhen.

Jinggzhuang headquarters instruct the location, recruitment, decoration, training and distribution equipment of these franchisees until the smooth operation of the franchisees and enter the normal operation stage.

However, after half a year of operation, the franchisee began to have various problems.

1. individual franchisees think they know western food very well, and often join in "independent innovation" after joining.

For example, in violation of headquarters standardization of product operation process, according to their own routine, resulting in some food color, taste and standards far away.

2. the newly recruited franchisees, many of whom have no service experience in the western restaurant, and Jingge Zhuang headquarters have just started to join in the development. The training system is still not perfect and the training is inadequate, which directly leads to many customers' complaints.

3. what is even more troubling is that Shenzhen franchisees believe that the emperor is far away. In order to earn more profits, they actually work to "hang up their heads and sell dog meat".

For example, to purchase the core material of headquarters distribution as little as possible, and choose to purchase some raw materials with inferior quality under the local standard, which leads to the quality of core products often failing to meet the standards. For example, according to their preferences, regardless of the location of Western fast food restaurants, some popular hot pot series are introduced.

Although there are supervision at headquarters, but there is no way to catch up, a few limited supervisors can't run to Shenzhen far and wide.

4. the franchisee's personal quality and management ability are general, and the quality of the franchisee, especially the middle level, is quite similar to that of the headquarters.

Of course, this is not related to the overall quality of the employees in the catering industry.

Unless you spend a lot of money to dig out a small part of high-quality talent in the industry, you can only slowly cultivate it.

Each question made the Jingge Zhuang who was first joined.

After a year's operation, it is found that the profit margin of franchised stores is only 1/5 of direct outlets.

What should I do?

Reform: franchisees give money, and headquarters come out.

At the end of 2006, Jingge Zhuang high level discussed the matter in depth.

It is agreed that the problems of franchisees and franchisees are all human problems in the final analysis. If there is a strong single store management team that is trustworthy and capable, the problem will be solved.

In the end, the meeting decided that the new trusteeship should be adopted in the future when joining the franchise. At the same time, negotiations with the original franchisee should be held.

The so-called trusteeship, is the franchisee money, headquarters out.

Specifically speaking: franchisees pay for the shop rental, decoration, purchase of equipment, license and other advanced matters. After the store hardware reaches the standard, a single store operation team will be sent by the headquarters, which will be responsible for the operation of franchised stores. Franchisees can only send financial personnel. The wages of the hosting team will be paid by the headquarters, ensuring that they are controlled by the headquarters.

In the following 2007, all the stores that managed to join the store increased significantly compared to the standard franchised stores.

Under the stimulation of this performance, 50% franchisees in Beijing and 2 foreign franchisees in Tianjin and Shenzhen signed a trust contract with their headquarters in this year.

Due to the implementation of full custody, Jingge Zhuang has attracted many investors who do not have western food experience or even lack of business experience and overall quality. Coupled with their long-term brand accumulation, strong single store profitability and publicity efforts, Jingge Zhuang has entered the golden age of investment in the second half of 2007, and investors who want to join Jingge Zhuang are in an endless stream.

Problems of trusteeship

However, in the face of this sudden surge of alliance, Jingge Zhuang headquarters has not made adequate psychological preparations.

In May 2008, the Shenzhen franchise high salary corner company hosted the Shenzhen trust team, and set up a "deep Ge Zhuang" brand, and began to join in the whole country.

This undoubtedly gave some of the top Jinggang Zhuang leaders who had taken the lead.

The headquarters team began to reflect on whether it was still hosting the franchise.

How should we carry out the next step?

1. talent crisis brings business risk.

It is not hard to imagine how many talents and skilled talents will be needed once the enterprise enters the rapid expansion period and the whole trusteeship operation.

If you send some new novice to hosting operations, how can you guarantee the profit of a single store?

Jingge Zhuang initially hoped to steadily develop talents through steady expansion.

And the unexpected upsurge of the alliance has allowed Jingge Zhuang headquarters to consider whether its talent training system can adapt to the future hosting strategy.

To allow franchisees to realize full trusteeship is not to set up a cage.

What's more, some foreign franchisees often deliberately insert their own people in the shop, squeeze out the trusteeship team members, interfere with the daily business activities, and if the business performance is not good and the project ultimately fails, the franchisee will put the responsibility entirely on the allies.

2. the trusteeship team is reluctant to go abroad for a long time, and the wage cost is soaring.

The trusteeship team employees have been living in Beijing for a long time, and most of them hope to make further progress in Beijing in the future.

Hosting a foreign franchised store requires a long stay. Many people are unwilling to accept it.

Because the trusteeship team pays salaries according to the wage level in Beijing, plus various subsidies, the monthly salary is far more than that of the local same level.

Take the Zhengzhou franchise as an example, after the change of the trusteeship contract, the overall wage of the middle-level jobs increased by 40%.

Compared with the profits that have not been excavated before, these extra expenses can still be borne, and once the enterprises enter the mature period, these costs will become a huge expenditure.

Although the hosting team pays wages by headquarters, the wool comes out on sheep.

3. it is easy to cause financial disputes and be magnified.

The trusteeship team is fully in charge of franchisees. Inevitably, they often deal with money, buy some things, do some propaganda, even put on TV advertisements, etc., "walking along the river" is always considered "wet shoes" by franchisees. Besides, headquarters does not guarantee that every employee is absolutely clean.

Once a staff member of a trusteeship store "wet shoes", it will be immediately pmitted to all the trustee franchisees.

This financial suspicion has been magnified by franchisees, and other management matters have also been suspected.

4. improve the quality of the hosting team, especially the store manager.

After hosting a franchised store, the hosting team began to face the situation of "two mother-in-law".

Although the trusteeship team is directly headed by the head office, you can't directly ignore his presence in the people's shop.

It is good to have an open-minded and good communication. Once you encounter that kind of quality that you are not good at and you like, you can manage a team to drink a pot. The manager has to spend a lot of energy and time to communicate with franchisees.

For example, the Jingdian Tianjin store hosting team, based on the requirements of the headquarters, made great efforts to temporarily unprofitable new products, but was boycotted by the franchisees.

Finally, the store manager had to spend a lot of energy on explanation work.

Therefore, for the hosting team, in addition to having a wealth of job experience and skills, there must be enough patience and communication skills as well as strong psychological endurance.

It's easy to say, but in practice, many trusteeship members often complain.

5., it is difficult to renew the contract, even when it happens.

After signing up for the contract, the franchisee pays the advertising fund and the equity fund annually. At the end of the year, the franchisee still has to sell a certain proportion of profit to headquarters.

For a long time, franchisees are naturally unwilling.

As a result, some franchisees began to play the idea of trusteeship team, so that the trust team's high salary, after all, this part of the wage expenditure and franchisees pay a lot less than the various costs.

This is a phenomenon: most of the foreign franchisees choose not to renew their contracts after the expiration of the franchise, while the trusteeship team is also being picked up.

Of the 5 foreign franchisees expiring at the end of 2008, 3 did not renew their contracts. Even in Beijing's local franchisees under the headquarters of the headquarters, 1 stores did not renew their contracts, and 2 middle managers were also removed.

The Shenzhen franchisee mentioned above is even more ridiculous, not only does it not renew contracts, but also set up a mountain top to become a direct competitor of Jingge Zhuang.

6., we can not make full use of local resources of franchisees.

In addition to the funds of franchisees, a great convenience of franchising system is to quickly open the market with the help of franchisees in local contacts, media and other invisible resources.

But after hosting the franchise, joining has become a simple financial financing.

Because they do not participate in the actual management, franchisees do not know what resources they can make use of and how to make use of them, which virtually increases the operating costs of single stores, such as taxes.

7., interest is bundled loosely, cost consciousness and responsibility consciousness decline.

In the typical franchise mode, although there are many problems mentioned above, it is undeniable that the franchisee's sense of cost and sense of responsibility is very strong.

Under the mode of trusteeship, the trusteeship team is just a professional manager.

Especially when the trusteeship time is long, it may show management weakness and imperceptibly thin cost consciousness.

Another change

Continue trusteeship?

What about the above problems?

Change course?

How?

After repeated deliberation, jingjingzhuang decided that in the Beijing market, it would continue to seize the share in the form of trusteeship, while in the foreign market, it changed to a regional direct concession mode which was mainly based on the prefecture level city, which was operated by the franchisee itself, and the headquarters only provided assistance and support.

Beijing's return to direct camp

Enterprises to join, mainly through the franchisee's money and other hidden resources.

For the Jingge Zhuang Beijing market in the middle of 2009, neither is lacking: after many years of development, Jingge Zhuang has accumulated rich resources in the Beijing area, such as government relations, store stores, and the same industry talents. It has certain scale advantages and considerable brand awareness in Beijing, plus a single shop with strong profitability. It is very convenient for management. Jingge Zhuang has absolute control over franchisees.

Therefore, in August of this year, Jingge Zhuang announced that it would no longer develop franchised stores in Beijing, and that the existing hosting stores should gradually shift to direct business as far as possible.

In the words of Lee boss, he said that when he trusteeship, he was mainly short of money. Now that he wants money and money and someone else, why do I give up the business of collecting money to others?

Foreign affiliate: from single store trusteeship to regional direct concession

1. the so-called regional direct concession of prefecture level cities, namely, a prefecture level city, allows only one franchisee to open a shop; the franchisee can only open 1 direct outlets or open 2 or more direct stores, but he can not develop junior franchisees.

Li boss thinks: chain restaurant brand, including McDonald's and KFC, it is very difficult to achieve the same taste of all the stores in the country. Therefore, the taste of Beijing restaurants and Shanghai restaurants can be slightly different, but the taste of restaurants in Beijing must be exactly the same. Otherwise, the brand will be greatly reduced.

2., increase the threshold of accession and carefully select franchisees.

Today, Jingge Zhuang and a few years ago, the brand name is higher, the system is more perfect, and the potential franchisees who can be selected have improved significantly in quantity and quality.

Strict checks, in order to lay a good foundation for later cooperation.

3. a special training school should be set up to solve the problem of talent shortage fundamentally.

At the same time, by improving the training system of enterprises, employees of all franchisees must be trained and completed.

4., intensify supervision and reward and punishment.

With the improvement of the enterprise supervision department and the gradual strength of its own brand, Jingge Zhuang expanded the supervision department and asked the supervisor to reward and punish the franchisees strictly according to the headquarters rules when they emphasized the role of "guidance".

Are you suitable for hosting?

Jingge Zhuang used 7 years to complete a cycle from direct camp to trusteeship and then to "direct camp + regional joining" standard alliance mode.

Among them, hosting is only a pitional form of enterprise development.

So, which industries or enterprises are suitable for hosting?

1. enterprises with strong talents training ability.

Anyone who adopts the mode of trusteeship to join the company is faced with the problem of talent first.

If you do not have a strong ability to train talents, hosting a franchise is like binding yourself.

2. companies wishing to expand steadily.

First, in the early stage of enterprise development, talent demand is relatively relaxed. The headquarters can adopt the way of trusteeship to join in, so as to better guarantee the success rate of franchised stores. Two, after the enterprise has developed to a certain stage, it does not blindly expand at high speed, and this kind of enterprise can still achieve the rolling development by means of trusteeship.

3. high dependence on talent, but short training or recruitment difficulties.

Especially in some industries which are mainly service oriented rather than product oriented, such as foot care industry, the adoption of trusteeship can effectively guarantee the quality of service and standardization of the system.

Of course, this goes back to the first two points: there are enough talents, or we can resist loneliness and gradually expand steadily.

4. single store investment is relatively large, the management is more complex industries.

For example, five star hotels and so on.

Of course, companies or industries that are suitable for hosting are far more than that.

In other words, chain enterprises that meet the above requirements may not necessarily have to be trustee.

Any pattern that suits you is the best.