Not so fast! A franchise founder offers tips for responsible franchise growth.
By Harriet Mills
When a franchised business really begins to hit its stride, it can be tempting to expand rapidly – strike while the iron is hot, as the saying goes. But focusing on the big picture and planning for responsible growth are the best ways to ensure the long-term success of the business.
A solid growth plan starts with strong management and requires strategic long-term and short-term thinking with challenging, but achievable, objectives. Growing too fast, without taking the time to make sure only the best candidates join the business hurts the brand and potentially damages all the franchisees who’ve worked so hard to establish themselves in their respective markets.
A plan to grow a franchised business responsibly should include not only an achievable goal for total number of new locations, but also consider where those franchises will be and focus on markets with promising growth opportunities. Good leads will always come from markets where the business already has a strong presence.
Although this may seem like a smart, easy way to increase the number of franchises, it also creates a new set of challenges in terms of where that location can open and how long it may take to find the right real estate. A forward-thinking franchisor will seek a balance between bolstering the business’ presence in established markets and strategically expanding into new territories that represent viable opportunities to succeed.
Awarding, Not Selling
Knowing when to say no to an opportunity for growth is difficult, but it’s a skill a master franchisor must learn in order to grow the business responsibly. Sometimes it’s the best choice for both the overall business and the individual entrepreneurs who have helped grow the franchise to this point. It can be helpful to view the process as awarding a license instead of selling one.
To ensure only the strongest leads become part of the business, it’s important to develop a set of criteria based on a thorough understanding of the common characteristics shared by the most successful franchisees. Those criteria can be a vital tool for evaluating new leads.
Just as vital to the selection process is the practice of setting up in-person meetings between potential franchisees and the brand’s full senior leadership team. This allows the key stakeholders to get a feel for the candidate and allows both sides to ask the important questions that ensure the candidate shares the company’s passion for its business.
This type of thorough evaluation is essential to ensure the focus remains on quality expansion instead of quantity. Being selective allows a brand to focus attention and resources on supporting the franchisees the greatest opportunity succeed, and to maintain the high standards that have enabled the company’s growth to date.
Know Your Locations
While partnering with the right people is the top priority for responsible growth, choosing the right locations is also pivotal to the continued success of a franchise. It’s important to be well versed in the real estate climate of your target markets. Whether you’re growing your footprint in an established market or awarding your first franchise in a new market, a thorough understanding of the local property trends allows you to adapt your plan to take advantage of favorable conditions.
For a franchise that caters to young professionals, it pays to look at locations near thriving an up-and-coming business district or adjacent to revitalized downtown areas. If the business is geared toward families, keeping an eye on growth in the housing market allows the business to identify locations convenient for its target consumer.
By understanding the challenges and potential traps a growing franchise can encounter, a strong management team will be prepared to make decisions that not only lead to responsible growth, but also to maintain the high level of success that enabled that growth in the first place. Taking the time to bring the right people into the business in the best locations allows for a natural pace that maintains the brand’s momentum without overextending its support capabilities. Careful management, a strategic understanding of franchisees’ needs and thorough vetting of real estate enable the business to meet its immediate expansion goals and position the franchise to continue sustainable, long-term growth.
Harriet Mills is the founder and CEO of Wine & Design. Leaving her corporate job, Mills launched Wine & Design to build a career that provided the flexibility needed to maintain a healthy work/life balance and a fun, family-focused atmosphere that left plenty of room to be a successful entrepreneur and mom.