Taking on a Pilot franchise…
What does it mean for a franchise to be in the Pilot phase?
A franchise is a product – the product being the right and the wherewithal to operate a version of the franchisor’s business in a given territory. Like any other product,, a franchise needs to be fully tested before it can go on sale as a proven product.
In the world of franchising that means that the franchisor has to be able to show that someone other than them can successfully run a copy of their business, without needing extensive support.
The franchising term for doing this is called ‘Piloting’ or ‘running a Pilot’.
Being in the Pilot does not necessarily mean that the business itself is unproven (although this is something you should check carefully).
The franchisor may well have run a very successful business for years. What is being tested in a Pilot is the manuals, training and infrastructure that will enable someone else to be successful in the same business in a different location.
Piloting a franchise is a bit like beta-testing software – the product works, all the functionality is there, but there will be bugs and glitches that need ironing out. Like a beta tester, the Pilot franchise owner’s job is to tell the franchisor about those glitches so they can be fixed.
Buying a Pilot franchise can be a very good low-cost route to running your own successful business.
Read more on being a Pilot franchisee in our forum.
Another piece of jargon you may come across is the "franchise trial".
Strictly speaking this isn't the same as a pilot. As indicated earlier, a pilot is meant to be the final stage of testing out that a franchise works with an initial set of franchisees who know that they are being used as guinea pigs.
But what do you do if the franchise isn't fully developed but there are people champing at the bit to take it on? The sensible and ethical thing to do is to run a trial.
A trial is typically a stage of experimentation and testing to work out what actually works and then to document it and make it part of the proposed franchise package.
Provided those taking on the challenge know what they are letting themselves in for and realise that they are not buying a complete tried, tested and proven franchise this can work out well. Normally, the franchisor offers an unbeatable deal to the tial franchisees and the individuals have a chance to influence the shape of the franchise.
If you are buying a "pilot" franchise make sure it isn't merely a trial and also check very carefully the terms under which you are taking it on - and especially what happens when the trial comes to a successful (or unsuccessful) end.