Specsavers take an innovative approach to their franchise model, joint venturing with franchisees, much like top Vietnamese franchise, Pho24.
Through the Specsavers and Pho24 franchise models the franchisor co-invests with the franchisees, providing head office (back office and marketing) support, while the ‘joint venture partner’ (aka franchisee) is responsible for the day-to-day operations.
In the Specsavers case the partner receives all profit, with royalties set at 19 percent of monthly turnover – much higher than the average royalties identified in the Franchising Australia surveys
(Although the average royalty is 6 percent, royalties range up to 35 percent and around 40 percent of franchisors charge a monthly flat fee rather than a percentage royalty).
Motivation to adopt joint venture franchise model
Pho24 franchisor Dr Ly Qui Trung didn’t have the human capital to extend his business so looked to franchise to grow the business. (Usually it’s financial restraints on growth which lead to franchising).
In order to maintain some control over franchisee operations Dr Trung decided to co-invest with his franchisees.
Dr Trung feels maintaining control is important as all the Pho24 franchisees in Vietnam are experienced businessmen who hold a number of different brands, with the franchise being just one of their businesses.
By co-investing Dr Trung’s franchisee partners have to listen to him.
Pros and cons of various franchise models
I’m interested in investigating the varying franchise models further to reveal the pros and cons of each, and which are likely to be more successful.
It would be interesting to hear your thoughts as franchisor or franchisee on the Specsavers/Pho24 franchise model approach. Do you think it would work in your franchise? What do you think the advantages/disadvantages would be?
Please provide your comments below.