By Eric Parker and Keratilwe Matsapola

Starting a Business and Franchise

When someone starts a business one of their main objectives is usually growth. This is true for franchising too. Franchisors spend a lot of time perfecting and/or optimising their concept, investing large capital in developing their franchise package and developing the right infrastructure to support prospective Franchisees. After ensuring that all these components are in place, they get excited because through franchising their brand can now reach an even bigger customer network! Like anyone building their business from scratch this is validation that you have done something right and things are going well. So why would anyone choose not to reap the rewards of a promising franchise network as soon as possible?

Franchise Enquiries

The next step is that the franchise network starts receiving enquiries from potential franchisees, and this leads to the process of people purchasing your franchise offering at a rapid rate without you remembering the golden rule of quantity over quality. “It is much better to have a few quality franchisees than many problematic franchisees.”

What we mean by this is that rather than having 50 Franchisees, have 10 good Franchisees that have multiple stores. The issue with having many problematic Franchisees and not having a well-managed growth strategy is that it can lead the franchise network to implode in the blink of an eye. A remarkable success story ends before it can begin to flourish.

What is Quick Growth?

What we consider to be quick growth is if a new Franchisor opens more than 6 outlets per annum. If you have quick growth, you might be making some of the following basic mistakes i.e.:

  1. The Franchisee selection is not structured – when you start the recruitment process of selecting your Franchisees it is important that you have a structured process in place. This will ensure that you find the ideal Franchisees, with the relevant experience and characteristics, aligned with the brand culture and vision.
  2. The training and support are not up to par – often the first Franchisees are neglected over time when the network has grown too quickly and the support from the Franchisor generally starts to lack, the new franchises don’t get the necessary training or get trained in a shorter space of time, sometimes leaving them to feel like they got thrown in the deep end or left to fend on their own.
  3. Not selecting the right sites – placing a franchise in the right location is particularly important. This is how you leverage off targeting the right customer and getting the needed feet in the store to be a profitable business.
  4. Insufficient support infrastructure – the correct resources to support the growth and franchisees are not in place to effectively support the network for new and existing Franchisees in the network.

Let us Fast Track Into The Future

Now let us go-ahead to four years in the future and you now have between 40 to 50 franchise outlets.

We strongly believe that a Franchisor will have some of if not all the following issues:

  1. Reduced attention on operations
  2. More emphasis on new stores than existing stores
  3. Some ‘not suitable’ franchisees
  4. Some franchisees not doing as well as projected
  5. Not all franchisees conform to the operations and procedures manual
  6. Inadequate site selection
  7. Insufficient Infrastructure

Promote Sustainable Growth

While growth is great and high aspirations can drive success, growth must be managed sustainably. Growing too fast is dangerous for any business and can be troublesome for franchises.

The real key to successful growth for any franchise network is selecting the right franchisees. Take the necessary time to recruit the right franchisees that will fit in well with the company culture. Having a team working towards a similar goal, with adequate infrastructure and strong systems in place, you are guaranteed that the franchise will not topple over.

When you have a smaller franchise network, you can keep a closer eye on your Franchisees. You can provide targeted support to the right people at the right time and have a closer connection to each Franchisee. This can get diluted or even lost if you rapidly expand. To cope with the demands of the growth, you will more than likely need to hire added support staff, who will also probably need to recruit additional assistants quickly.

The Franchisor and Franchisee would both be required to recruit the right people to do the job and be able to fit into the company culture. It takes one bad franchisee to cause problems for the credibility of the entire brand, affecting the whole network. We have all heard the saying “one rotten apple can spoil the whole barrel.”

Overcoming these issues may seem like a daunting task, however ensuring that Franchisees receive sufficient training to help them succeed and similarly, those struggling should be able to access targeted support. A high-quality support network is not only good for profits but also for franchisee morale so, as you grow, make sure the correct support is put in place as a priority.

In Conclusion

Growth is good, but time must be taken to ensure it is carried out steadily, ensuring that each step is carefully given the required attention so that both parties end up in a win-win situation. The franchise business model should evolve and be scaled with care and at each stage, you must ensure you understand the responsibilities, repercussions, and benefits. The key to success is careful planning.

Franchising Plus