Starting a franchise can be a highly effective growth strategy for many companies, but success in franchising is not guaranteed. There are common pitfalls or “landmines” that emerging franchise brands must avoid to thrive. From ensuring that franchising is the right strategy for your organization to managing ongoing support for franchisees, a thoughtful, comprehensive approach is essential.
Is It the Right Growth Strategy for Your Organization?
The first thing to consider is whether franchising is truly the right path. Franchising works best for brands with proven business models that can be replicated and operated by independent owners with the right support. However, not every concept is built for franchising. Consider pros and cons of all growth strategies such as debt, private equity, and self-funding as well as franchising.
Does It Check the Right Boxes?
For a franchise to succeed, the brand needs to check several key boxes. These include having a clear, differentiated brand identity, strong unit-level economics, and a solid operational infrastructure. It’s essential that you create a system where franchisees can replicate your success. This means having clear processes, training programs, and support systems in place before launching the franchise.
Is the Leadership Team Fully Committed to Being a Franchisor?
Franchising is a long-term commitment. The leadership team must be fully on board and understand the level of dedication required to transition from operating company-owned units to supporting franchisees. This shift can be challenging, as it requires a different mindset and skill set. Leaders must be prepared to focus on the success of their franchisees as a top priority, as franchisee success is ultimately what drives the brand’s growth.
Keys to Building a Franchise System the Right Way
Building a successful franchise system requires a strategic and disciplined approach. Begin with a thorough understanding of the legal and financial requirements as well as operational, marketing and other infrastructure components required to build and operate a successful franchise system.
Having the Right Strategy and Team to Recruit the Right Franchisees and Develop the Brand
One of the most critical aspects of franchising is finding the right franchisees. It’s tempting to sell as many franchises as possible, but long-term success comes from selecting franchisees who align with your brand’s vision and values. Having a solid recruitment strategy is essential, as is putting together a team of experts who can help develop and support franchisees. Make sure the franchise development team is well-versed in the brand and understands the type of franchisees that will be most successful.
The Mission-Critical Commitment to Managing and Supporting Franchisees
Once franchisees are on board, the relationship doesn’t end there. Supporting franchisees is a mission-critical commitment. This includes providing ongoing training, marketing support, and regular communication to ensure franchisees feel equipped to succeed. Building a strong franchisee support system is key to creating long-lasting relationships that will help both the franchisee and the brand grow together.
Conclusion
While franchising can be a fantastic and highly effective growth vehicle, becoming a successful franchisor requires careful planning, commitment, and the right strategy. Building a solid system infrastructure, selecting the right franchisees, and providing the right kind of continuous support, emerging franchise brands can avoid common landmines and set themselves up for long-term success.