Franchising growth: Benefits of pulling in the reins

Mark Siebert

Date

Nov 01, 2016

Every year, new companies emerge that believe they have the perfect idea or product that could set the world on fire, and bet big on themselves to open hundreds of locations seemingly overnight. And while many companies may be running highly successful business concepts that are ripe for expansion, franchisors that achieve true hyper-growth are few and far between. Franchising allows companies to grow largely unconstrained by capital – and this “growth on steroids” can be dangerous.

Among the reasons – with more than 3,000 active franchise companies in the U.S., competition and complexity in today’s marketplace can be overwhelming. Of course, potential franchisors that have the proper strategies and tools can rapidly grow while leveraging the time and money provided by their franchisees, but then the question becomes – should they try to grow as rapidly as they possibly can? Or should they be purposefully conservative in their growth goals?

While every franchise system executive dreams of a rise to fame, fortune, and thousands of operating units, rapid growth brings significant risk when franchisors don’t have their ducks in a row from the start.

Arm yourself with the right tools

Too often, those that are entrepreneurial-minded adopt the “Ready … fire … aim” strategy. But, given the complexity involved in franchising, those that are successful adopt a number of common traits, including having a sound business strategy, well-written legal documents, thorough quality control systems, well-planned franchise marketing strategies, and a solid plan for franchise sales and support. Once these tools are in the proverbial belt, the franchisor is in better shape for sustained growth.

Develop the right plan

Business owners have likely heard that success doesn’t happen by accident. Cliché – sure, but abundantly true. Over time, the organizations that have the greatest success have relied upon a well-defined yet flexible plan. Although companies can be thrown off track at points, having a sound but adaptable plan is the common denominator for sustained prosperity.

Especially true in franchising, the planning process needs to account for the unique, relationship-based nature of the industry. With franchisor-franchisee agreements often spanning decades and multiple generations, a potential franchisor must understand both short and long-term objectives of their business and adjust their business planning accordingly. Knowing where you want to be not just in five years but in 20 years or more, or even planning around the possibility you may one day want to sell your beloved company – will help you develop a strategy to get your company to that end goal, whatever it may be.

Grow at the right rate – for your particular infrastructure

The reality – franchise business can conceivably grow as rapidly the market will bear, assuming the support of a robust franchise sales and marketing program. While maximized expansion might be an ideal scenario for some, too-rapid growth can often have adverse effects on both the franchisor and potential franchisees.

Over-aggressive awarding of franchises puts pressure on the franchisor to select candidates, often at the expense of vetting out qualified candidates properly. Selling a lot of franchises in a short period of time also increases the amount of support franchisors need to provide to those franchisees. And, of course, while a new franchisor is “learning on the job,” any mistake that is made in the process will be replicated over-and-over again in rapid succession – potentially endangering both the franchisor and its franchisees. With flawed preparations or insufficient resources, franchisees can and will suffer from a lack of support, lack of capital, or lack of growth opportunities – and decrease the likelihood of their success and their validation.

The point – grow at a rate that the organization allows, that ensures intelligent decisions are being made at every stage, and where each and every one of your franchisees will receive the support they need.

Make your own plan

There’s no silver-bullet for franchise growth, and no two organizations will have the exact same experience when it comes to how they do so. Got the next big idea? Great! But pull back on those reins, put a great plan in place, and fully support the growth of a successful franchise program before racing headlong out of the gate.

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Mark Siebert is CEO of the leading franchise consulting firm iFranchise Group. Reach him at 708.957.2300 or info@ifranchisegroup.com. His new book is “Franchise Your Business: The Guide to Employing the Greatest Growth Strategy Ever.”

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