Family transfer of a franchise network: the basic rules

Familieoverdracht van een franchisenetwerk: de basisregels

Today, 2 out of 3 franchise network founders are still at the helm of their brands. Family transmission is a solution, if and only if it is anticipated and legitimized. Explanations.

A subject as taboo as inheritance

Passing on your “baby”: this is the moral obligation faced by all franchise network founders, who embody their brand and brand name to the point, all too often, of being and/or feeling irreplaceable.

“The transfer of a franchise network remains a taboo subject, just like inheritance in a family. All franchisors are kidding themselves when they think they have the time to prepare for this inevitable transition, and that their teams will be able to manage the sudden demise of the franchisee, should it occur, as well as the current state of operations. And yet, talking about handing down a business helps to forge convictions and anticipate this sensitive situation,” explains Olivier Mignot, Franchise Management partner.

While some entrepreneurs set up a franchise with the aim of reselling it, succession to the head of the network, through children or family, must be organized within certain constraints.

“In France, business leaders are afraid of betraying the moral contract binding them to their children, by not entrusting them with their business. Unlike in the United States, for example, where a good portion of the fortune is regularly donated to charity. Similarly, the founder of a company generally gives preference to the eldest son or daughter, because of our patriarchal culture, whereas the younger son or daughter may have more qualities,” stresses Olivier Mignot.

Every franchise brand must be able to outgrow its founder, who at some point reaches the limits of his skills.

“At Franchise Management, we believe that there is a moral “contract” and that a company “belongs” to its employees, customers and suppliers, and not just to its manager. This is particularly true in a franchise network,” explains Olivier Mignot.

A breath of fresh air, a different vision, like a new owner

The company’s longevity remains the key to its transfer.

“The new owner needs to bring a fresh approach, a different outlook, a different vision, something that complements what has already been achieved. Hence the need to avoid thinking in terms of succession on a job-by-job basis. For example, by imagining children at the head of services and looking for the woman or man capable of ensuring the long-term growth of the franchise network. If need be, this can be done by bringing in financial resources, such as an investment fund”, notes Olivier Mignot.

While the founder-manager of a network must know how to free his children from the obligation to take over, which can represent a heavy burden, he must prepare them for the takeover if they wish to perpetuate the family business.

“As part of a project, we draw up intermediate courses of study for the prospective child, such as acculturation in one of the company’s departments, or even within a franchised outlet, or going to work abroad for a year, or taking a long course of further training, depending on the skills gaps identified. In this way, he or she will no longer appear as ‘Daddy’s boy or girl’”, suggests Olivier Mignot.

On the other hand, while know-how is easier to correct, the “savoir-être” dimension, essential to any franchisor, is not easily acquired.

“Then there’s the possibility of adding a person with a network culture to the child or family member, to compensate and balance out this deficiency,” explains Olivier Mignot.

5-year plan… and a 50% increase in sales

After a twenty-year career in industry, with a commercial and marketing sensibility and an international approach, Olivier Mermuys, wine enthusiast and son-in-law of Michel Bourel (founder of Cavavin in 1985), contributed for a long time to his father-in-law’s reflections before taking over.

“When I arrived, the teams knew me from the many openings and national conventions of the network. Until then, I’d only been involved in proofreading the brand’s brochures for Franchise Expo Paris. It immediately appealed to me to work around wine and the associated emotions, which are closer to my sensibility than industrial products, and on a shorter customer circuit, moving from B to B to C to approaching the end consumer through the franchisee”, explains Olivier Mermuys, today Cavavin’s General Manager.

In 2016, he joined the company as Operations and International Director.

“One of my father-in-law’s long-standing partners, a non-operational managing director, agreed to sell his shares. To take up the torch, I worked on several areas of acceleration to bring a project, a vision. For example, I’ve developed our international business without taking France’s clothes off, notably by obtaining financing from the BPI, and generating 20% of the brand’s sales from scratch by setting up in a dozen countries.

The 5-year plan presented in 2016, by constantly explaining the strategy to franchisees at national conventions, has led to a 50% increase in the franchisor’s sales,” stresses Olivier Mermuys, who was legitimized by this renewal to become the network’s new owner.

Purchase of a vineyard closes the loop for the seller

“The transfer took place within the framework of a Dutreil pact, enabling part of the value of the shares sold to be exempted from tax. I lead and manage the network, with the aim of growing the collective. Almost all our Franchisor employees have changed jobs and moved on. My father-in-law, who remains the main shareholder, is no longer involved in the day-to-day running of the company.

We arbitrate strategy choices together through our holding company. We’re lucky enough to be different but complementary, always listening to each other. When it comes to decision-making, Michel’s almost 40-year history as guarantor of the network’s know-how and fundamentals provides at least a hint of a solution, if not the solution itself. For my part, I bring to the table a viewpoint shaped by my encounters with different cultures in some fifty countries, visited in my previous professional life. We sometimes manage not to talk about work when we see each other in private…

For Michel, the acquisition of a Saint-Emilion vineyard has now come full circle. He produces his own wine to please his customers, and this site will become a training center for the brand,” concludes Olivier Mermuys.

Seasoned through training and practice

Originally, she wanted to become a surveyor, or even an interior decorator, as her father was a landscape gardener. And didn’t necessarily want to work with him.

Twenty years later, Pauline Moquet co-manages the Daniel Moquet sign vos allées network (and its fencing and garden spin-off concepts), with her father and sister Camille. The strategy is shared with the rest of the family, Catherine the mother and the girls’ husbands. They meet once a year for a “Family Seminar”, as it is called by its protagonists.

“At the age of 21, I began my professional career by becoming the network’s first franchisee, in the area to the south of the département where our pilot site was located. My start-up enabled my father to use me as an example to sell the franchise to prospective franchisees.

These ten years have given me legitimacy for the future. We structured the model together: my father on the technical side, and both of us on the business and management side. A new franchisee has to start out with three employees, and then manage a dozen or so employees at cruising speed.

My mother always worked with my father. When Camille took over the administrative and financial management of the network after studying to be a chartered accountant, I was in charge of development for our brand,” explains Pauline Moquet, General Manager of the Daniel Moquet Signe Vos Allées franchise network.

Pauline Moquet then also manages franchisee training, using her acquired skills. She learns about communication and marketing by creating tools for the network. “We’ve also honed our skills through training courses run by the Fédération Française de la Franchise,” she points out.

Family spirit in the brand’s DNA

In 2018, she takes over the management of the network. “Today, the three of us co-manage the network, each with a well-defined scope of work and complementary skills, according to the rules of entrepreneurial association: my sister is CFO, my father is in charge of technical matters, although at 69 he is more involved in strategy, and I am in charge of communications and sales.

The private mixes with the professional: it’s a passion for all of us to be entrepreneurs. Family spirit is in our DNA, and our husbands are also franchisees. In the network, a single family owns around ten branches, and many of our franchisees are expanding with their children or cousins,” concludes Pauline Moquet.

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