For every solid strategy developed to achieve measured franchise growth, I’d say there are five times as many ill-advised ways to execute it. Franchisors pursuing new development heights must redirect their focus from the end goal of a sale to the process in place to get there — and in doing so, make sure they are avoiding these five common miscues that keep brands from executing on their growth goals.
1. Pursuing Expansion Without The Proper Systems And Processes In Place
One of the most common — and detrimental — mistakes I see brands make is setting out to sell franchises without the necessary infrastructure to support the franchisees they’re seeking to bring in.
Franchisors need a business that works for good things to happen on the growth front, meaning strong unit-level economics, for one, but also proof that the business model they’re looking to franchise is replicable on a large scale. It’s categorically the wrong approach to turn to franchising when sales are down, because the model isn’t a means of turning a business around; rather, the right time to franchise is when the overall business is trending upward.
Without the proper systems and processes in place, and the unit-level economics to support successful large-scale replication, a business isn’t in the position it needs to be for franchising to be a viable vehicle for growth.
2. Growing Too Fast By Selling Or Awarding Too Many Franchises Too Quickly
Rapid growth can actually be a bad thing when a franchisor’s support team and infrastructure isn’t built to support a heavy onset of new franchise owners. If an emerging brand is operating with a team of one or two people handling all duties on the corporate end, it doesn’t make sense to pursue 20 executed franchise agreements within the span of a few months.
Viewing the franchise sale as the end of the job isn’t beneficial to the franchisor or any of the new franchisees being brought into the system. Franchisees are entrepreneurs who chose the franchising route for a reason. They’re looking for support in dealing with real estate negotiations, site selection, hiring and more, and franchisors need the corporate team and infrastructure to help train and support franchisees properly so their business thrives.
Grow with intention through good, well-thought-out decisions. Too many brands have a haphazard growth strategy, which has the potential to doom any concept if a franchisor isn’t careful.
3. Growing Too Far Beyond Home Base Too Early On
If a brand based in New York grows to five successful units and elects to franchise its concept, California shouldn’t be its next stop. Beyond the lack of infrastructure in place to properly support product distribution and supply chain needs, an emerging brand making a cross-country jump will likely face an unfavorable uphill battle as it relates to brand recognition, site visits and franchisee support.
4. Implementing Changes Without Franchisee Collaboration Or Buy-In
Franchisors that treat their businesses like a dictatorship and rule with a “my way or the highway” attitude are doing themselves a disservice as far as understanding and idea generation are concerned.
A brand’s franchisees are its eyes and ears on the front lines and, as such, their opinions should hold value in that they are able to provide a level of nuanced feedback and perspective that isn’t accessible to anyone on the corporate team. More likely than not, an emerging brand doesn’t have the same infrastructure a huge corporation does to test ideas in a vacuum before implementing them, so it’s important to rely on franchisees for help in understanding what is working and what isn’t.
As an emerging brand grows, franchisee feedback is crucial, particularly because they’re often full of great ideas. Seek out feedback and encourage franchisees to engage, because their perspective could fuel a brand’s next LTO, systemwide process update or training program addition.
5. Poor Validation
Without strong validation, no franchise company can grow. Regardless of whether a brand is an emerging or established franchise concept, there’s no selling through poor validation, despite what much of the industry thinks.
Franchisees play an instrumental role in building a brand, so showing respect and speaking positively to and about them is crucial to making sure they’re doing the same about the franchise system to which they belong. If a brand is disparaging its franchisees in public or not honoring its commitments and obligations as a franchisor in any regard, franchisees won’t do their part in recruiting new franchisees into the system, making it impossible to grow.
Brands can’t lose sight of who helped get them to the position they currently occupy, because franchisees can just as quickly take that growth away in a single phone call with a prospect.