You’ve started a single-unit business and it’s going really well. You have a good team, the business is easy to manage and you feel like you have the secret sauce to branch out and start expanding into additional locations as a franchise system.
But are you really ready? And will the success of your small business translate into a successful franchise organization?
Let’s be clear: there are a ton of opportunities in franchising and it can be a great model when (and if) the business is ready. But, there are typically more than 500 new systems that go online each year and only a fraction of those make it past 20 units.
The ones who do, are committed to it - and ready for both the hard work and challenges they’ll encounter throughout their journey to develop as a franchise brand.
When it goes right, it can go really right - growth and success come after time and hard work. But when it goes wrong, it can get personal and ugly. You can avoid that by better understanding what starting and building a franchise system takes.
Here is what it takes to be ready.
#1: A Pattern of Success
I like to say that the success of a few units is not enough. The first unit's success is an accident, the second unit's success may be a coincidence, but the third unit's success is now a pattern. It takes three of anything to see a pattern. If you’re successfully running 3+ units, you have a pattern of success and are ready to think about franchising. It’s at this point that you’ve built up enough experience and have the basic training systems, marketing, financials, technology, etc. to hold it all together.
You’re more ready to franchise when you’re not experimenting and have had the experience of starting a model business unit three or more times - practice on yourself, not your first franchisees.
#2: You Understand the Business of Franchising
Franchising is a business in itself. So while you may now be an experienced restaurant, pet sitting or salon owner, you haven’t yet become an expert in franchising. Once you decide to take your business to this level, you’ll have business requirements that you didn’t have before - things like setting up a new entity that is subject to Federal and State regulations. There will be bigger financial commitments, legal issues and business filings that will not only take time to set up, but they’ll take money, as well. You have to make sure you have plenty of both - and are ready for the commitments that are coming.
#3: You’re Ready to Learn
Nobody knows it all, especially when they’re just getting started. What’s important, is that you realize that you have a lot to learn about starting a franchise system and are eager to learn, innovate and evolve as time goes on. As your brand grows, and you bring more talented people on board, things will change - and you need to recognize and be open to that change. Be ready to communicate openly with your franchisees and listen to their ideas. The more stores or units you open up in different markets, the more you’ll learn what ideas work well for your business - and which don’t. By evolving to meet and responding to the needs of your franchisees, you’ll give your franchise system a greater chance of success.
#4: You’re Ready to Help Others Be Successful
Before you’re ready to franchise, you need to figure out how to help others be successful using your model. It takes a mindset shift! When you sell a franchise unit, the franchisee is making a very big financial commitment - perhaps one of the biggest financial commitments they’ve ever made. There’s an element of risk involved - and you need to be ready as the franchisor to provide as much help and support to them as possible. It’s your responsibility to make sure they have all of the tools and resources they’ll need to succeed. As a franchisor, you are now in the business of making your franchisees successful.
Franchising is not for the weak or timid. It requires solid listening skills, as well as the ability to have hard conversations. Now that you’re thinking about expanding beyond a few units, the business becomes less about you - and more about the success of EVERYONE involved in the organization.
It also takes time and patience. Very few franchise systems experience great success in their first few years. In fact, some of the most successful franchise systems today took 10-20 years to achieve the levels of success their owners envisioned at the start.
Those who do give it a go, will find that they’re greeted by a close-knit community of franchising professionals who are genuinely supportive and eager to help. If you want to talk and network with other franchise executives, founders and professionals, you’ll find that many are very willing to help - myself included.
If you’re considering taking the leap into starting a franchise system, please give me a call! I’d be happy to talk through it with you and offer my 30+ years experience and perspective. `