Starting a Gonzales Chain as a Master Franchisee

Getting Franchisees - the Dutch reference

For a Franchisor in a country it's important that the Franchise concept attracts sufficient Franchisees within the budgeted timeframe. The Dutch reference on this point:

• Franchise year 1: 3 outlets open.
• Franchise year 2: 14 outlets open.
• Franchise year 3: 28 outlets open.
• Franchise year 4: 37 outlets open.
• Franchise year 5: 43 outlets open.

This track record made Gonzales one of the fastest growing concepts in the Netherlands, and the 2nd restaurant chain in the Netherlands, both in terms of outlets. Almost on a daily basis, potential Franchisees interested in starting a new Gonzales or taking over an existing one, send their online application forms to the Dutch Franchisor. It's important to realize that, in this period (2000-2004), the Dutch Franchisor has been responsible for the execution of all three Franchisor’s core activities, while the Master Franchisee only has to take care of two of them.

Less back office hassle - focus at the front!

The main activities of the Franchisor consist of:

1. Franchise Expansion: increasing group turnover by the amount of restaurants, turnover per restaurant, marketing-fee expenditure, cooperation and synergy;
2. Franchise Management: performance control through coaching & training, control, consulting & communication, and supplier contract management;
3. Concept & Service Management: supporting the concept with R&D, and the central services: call centre, GMS, marketing design.

While the Dutch Franchisor had to take care of all 3 activities, the Master Franchisee can focus on just the Franchise Expansion and Franchise Management in his area. The Concept & Service Management the Franchisor has to provide his Franchisees with, is largely part of the services the Master Franchisee purchases from the Master Franchisor. A rollout equal to or even better than the Netherlands should therefore be attainable.

Lower fixed costs - earlier break even

As stated earlier, the Master Franchisee needn’t be occupied with setting up and managing the central services, because of the fact that the Concept & Service Management is provided by the Master Franchisor.
This is a significant economic advantage, since the fixed costs of such a service organization are almost as high when servicing 3 Franchisees or when servicing 20 Franchisees.

As a consequence of this, the fixed costs of the Franchisor’s company are much lower when being a Gonzales Master Franchisee. Therefore, the break-even point of the Master Franchisee is at 12 to 15 average Franchisees, while the Dutch Franchisor had to deal with a break-even point of 25 to 30 Franchisees. Hence, the payback period for the Master Franchisee can be relatively short and profitability relatively high, given a right execution of the concept/manual(s) and given a rollout pace comparable to the Dutch one.  

High level of services to the Franchisees

Despite of the fact that the Master Franchisee needn’t setup and manage a central services organization, the Master Franchisee can still maintain a high level of central services to his Franchisees, because of the Master Franchisor’s services. The Master Franchisee’s organization can therefore be very lean and mean and mostly mobile.

This high level of services is important for the Franchisor (Master Franchisee) in positioning Gonzales in the potential Franchisee’s singled out set of franchise concepts and possibilities.

Fully equipped by the Gonzales Management System

Every day and in doing his daily business, the Master Franchisee rejoices in the advantages of the Gonzales Management System. This online system provides quick and detailed management information regarding the Franchisees, which is a critical point of success in our opinion, especially in the restaurant sector. Furthermore, the system is also an efficient tool for online internal communication and provides several tools for quality management and direct marketing. Underneath the left hand button “supporting services”, we elaborate a little bit further on this Gonzales Management System.

The “non digital” part of the Gonzales Management System concerns the training and education program for the Master Franchisee. Goal of this program is to equip the Master Franchisee with the necessary skills, know how, tips and tricks,  before he starts his recruitment activities on the franchise market. Underneath the left hand button “supporting services”, we elaborate a little bit further on this Master Training and Education Program.