- Franchising your small business can be a great way to expand without investing large amounts of capital or entering unfamiliar markets.
- Franchising should be done carefully, using a solid business plan, with carefully selected franchise owners and tight controls.
- Keeping franchisees moving in the same direction and motivated can be challenging but is essential to the success of your growing business.
The price of success often includes investing in growth to open more locations and get into larger markets. One possible way to do this is to turn your small business into a franchising opportunity.
"A good product or service and a concept that a lot of people are interested in will lead to a successful franchise," said Eric Newman, former executive vice president of Bojangles' Famous Chicken 'n Biscuits chain. "Once you find a model that can be reasonably executed, you can do a lot with it."
Business News Daily spoke with successful franchise leaders about their tips for achieving rapid franchise expansion. [Want to turn your startup into a franchise? Here's how to do it.]
Expand your home base.
Before you try to open franchises outside your immediate area, build up your share of the market you're already in, said Newman. If you fully penetrate your home market first, you can gradually grow your base and expand outward.
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Allow for organic growth.
Accepting large sums of investment capital to build more locations may seem like an attractive way to expand your business, but Newman warned that this artificial growth could hurt you in the long run. Build up your brand and reputation, and let your business grow organically, even if it takes a little longer at first.
Perfect your business model.
Newman advised using your early franchise locations to test out and perfect your concept. Do you have a great product with wide appeal? Is your business scalable and economically feasible? Will it work in other locations? The success or failure of each individual location can help you answer those questions and figure out what needs to be tweaked to guarantee future success.
Make it easy for the franchisee to succeed.
There are some important steps you can take to provide the foundation for success for your franchisees. Small business experts say that the following essential elements are key:
- Business plan. Make sure the franchisee knows what he or she is getting into and what to expect. This includes the business concept, competitive strategy, geographic/location strategy and the marketing strategy.
- Standard operation procedures manual. Make it an easy-to-follow, step-by-step operating manual. You have the plans in your head, now put them on paper so someone else knows how to do what you already know.
- Marketing materials. These are used to support the business plan and branding strategy.
- Necessary legal documents. These include franchise contracts, licenses and registrations.
Continue to evolve.
Rob Price, president and CEO of School of Rock, noted that the most successful franchise concepts work hard to keep the business model fresh to "fully capture the imagination of their outstanding owners." This includes evolving both your consumer offerings and your marketing, technology and operating model, Price said.
"Franchises must have a robust business model to perform well and be a formidable competitor in their given industry," added Steve Jackson, CEO of Hungry Howie's. "Successful chains start with a stout business model, [then] continue with growth of the right scale in ideal locations to reach peak market saturation."
Just as with hiring employees, choosing franchisees can have a huge impact on the success or failure of your small business. It is harder to manage franchise owners, because they have invested their own money, and want to run their own show. So choosing wisely is key, according to franchise consultants like Sherry McNeil, president of the Canadian Franchise Association. She suggests making sure that your franchisee candidates have a passion for your business, the necessary financial and business savvy to do the job and that you are confident that they will maintain your high standards. Likewise, Pip Wilkins of the British Franchise Association recommends that you look for fearless, innovative franchisees who can multi-task.
Stay in touch.
Franchise expert Ed Texeira notes the importance of staying in close touch with your franchisee, even after the initial familiarization period. It is crucial that owner/visionaries are connected to the ongoing activities of their franchisees and stay apprised of their progress. In this way, the franchisor can help support the growth of the brand and contribute to the success of the overall organization as well as the franchisee network.
Treat franchisees as your most important customer.
Remember that your franchise owners have "skin in the game," and you need them as much as they need you, if not more. Cheryl Bachelder inherited a rocky relationship with the company franchisees when she became CEO of Popeyes Louisiana Kitchen, and she determined to treat the franchise owners as the most important customers the company had. With determination, and time, she was able to restore the lost confidence of the franchisee network, and both corporation and franchise owners profited from the partnership she fostered.