The answer to the last question is – ‘a leading, constantly improving, responsible, technologically and managerially highly competent business in its field’. This was one of the answers formulated during the business discussion by Robertas Dargis, the outgoing President of the Lithuanian Confederation of Industrialists, along with Dalius Misiūnas, Rector of ISM University of Management and Economics, Evaldas Kinderis, General Manager of ‘Švaros Broliai’, and Ignas Pranskevičius, Executive Director of ‘Švaros Broliai’.
Experts agree that becoming a franchisor is one of the fastest ways to develop a business and an effective way to attract investment. However, despite having many successful brands, Lithuania cannot yet boast of many examples of franchising success.
Successful examples show the maturity of Lithuanian businesses
‘Švaros broliai’ recently announced that in the months of March–July it had concluded four franchising transactions, by which it transferred the management of tunnel car washes in Vilnius to the franchisees. The completion of three of these transactions was not hindered by the quarantine-related restrictions in force at that time.
Evaldas Kinderis, one of the founders of this company, revealed during the discussion that the company’s path to the franchise business model was long but consistent. ‘We started looking into it back in 2005, but the technology of car washes at that time was still very much based on the constantly rising cost of human labour, so it was not very promising for the franchise model. After many searches, we found the most suitable model in the ‘Mecca of tunnel car washes’ – the United States of America. We did not try to invent something completely new, as it would have taken ten more years. Instead, we took a proven and successful model and applied it to be just as successful in Lithuania’, said Evaldas Kinderis.
Robertas Dargis noted that successful examples also show the maturity of Lithuanian businesses. According to him, a large number of Lithuanian businesses are already developed, tested by crises, so now we can already talk about the sale of the management model.
‘What we do need, however, is for universities to develop the creators of a finished product that could be offered to the market. Besides engineers and marketing professionals, the country also needs professionals who would be able to create a product and sell it in the international market. Everything starts at school, as it has to inspire the students to dream and to create. The same then applies to universities’, emphasised Robertas Dargis.
He is convinced that there is enough potential for breakthroughs in Lithuania and that this point in time is a particularly favourable time for that, thanks to the money allocated by the European Union support programmes to the sectors affected by Covid-19.
According to Dalius Misiūnas, Lithuanians know how to be extremely creative in the pursuit of efficiency, and the franchise model is one of the most effective ways to attract investment whilst at the same time ensuring further business development and the progression of efficiency.
‘Our entrepreneurs are sometimes able to use foreign experience to overtake the standard and set a new level of efficiency. Franchising is a very good platform for the expansion of Lithuanian businesses, especially abroad. This is one of the cases where a technologically developed scheme can be totally trusted by foreign entrepreneurs as well’, said the Rector of ISM University.
Leadership and partnership as key components for success
So what are the key ingredients to a successful franchise model? According to Robertas Dargis, the model itself forces its owner to always be at the very forefront of the business.
‘One of the most important factors determining the success of a franchise is a deep knowledge of technology, and not only in the home market, but around the world. The second factor is an extremely accurate and purposeful management that is very well thought-through. The third is trust in the partner, because even one failed product can cast a shadow over others. Without these things, it would probably be difficult to expect success’, noted Robertas Dargis.
The importance of partnership was also emphasised by Ignas Pranskevičius when assessing whether Lithuanians are ready to buy franchises. He noted that at this stage, it is very important to the company who has become the buyer of the franchise: they are all top executives and lawyers who have given valuable advice to the franchisor itself.
‘In our case, we sold car washes that had been operating for 1–2.5 years, which had their own flows and the history of their growth, and so it was possible to calculate the business perspective very realistically and to understand what was being bought. However, it took us almost two years to fully prepare to become a franchisor, during which we invested heavily in our finance and development team, and in partners with whom we developed a legal model and eventually reached the most suitable product for our business.’
‘Tunnel car washes are similar to a large robot or a small factory – they work without stopping, they have many parts to them, and it is necessary to constantly maintain them, innovate, look for solutions and optimise processes. In other words, it is not as simple a model as retail, so the work that is required is not calculated in months but in years. We also discussed many important questions with the franchisees during the negotiations: wordings, clauses in the contracts, etc.’, revealed Ignas Pranskevičius.
According to Dalius Misiūnas, the aspect of leadership is also important in franchising, because after becoming a franchisor, the business has to take care not only of its own success, but also the success of other entrepreneurs, therefore the responsibility only increases.
Ignas Pranskevičius said that leadership was especially needed in the last stage of concluding franchise transactions, which coincided with the introduction of quarantine throughout the country and the high level of uncertainty about the future.
‘There have been challenges in ensuring that neither financiers nor franchisees leave, but at least today we can say that we already have a model that has been tested in a crisis. If during such a situation we were able to complete the sales of this model and not be late, it shows even greater opportunities for us in the future’, assures Ignas Pranskevičius.
You can learn more about the franchise model by clicking this link.
‘Švaros broliai’ is the largest specialised car washing and cleaning network in Lithuania, and has already been providing comprehensive cleaning services for two decades. The company operates a network of self-service car washes, cleaning centres and highly advanced tunnel car washes in five Lithuanian cities.
Leave the interpreting to us! Translated by Pasaulio spalvos
