by John Francis

Franchisors: 3 Benefits of Setting up a Board for Strategic Growth

Jun 25, 2019 9:02:00 AM Franchise Planning, Franchisors

For the last few years, we’ve all seen more private equity money coming into franchise brands that are trying to grow, I think generally it's a good thing, for many reasons. Having the ambition to grow with private equity comes first, and then having the capacity to grow with private equity is critical, and knowing the difference can be a challenge. I think private equity, given the right approach, can really be powerful for a good franchise brand that's ready for it, and I suggest a solid working board is an important part of that organizational readiness.

I've seen private equity deals go very well and I’ve seen private equity deals fail miserably.

I think the difference driving the outcome to success or failure in a lot of these cases is the organization having true capacity - just because you think you can, doesn't mean you should. Many believe they have the money to do it, the people and drive to do it and everything examined looks good on paper...

But something’s missing...

Among things often missing and really needed are more and better leadership, and true organizational readiness or capacity to execute those ambitious plans. What's missing is a realistic plan, clear expectations and any meaningful accountability along the way. Often the only accountability is seen with natural consequences of failure (someone getting fired, or worse, the firm going bankrupt).

How about planned accountability?

If you're going to pursue private equity for growth, let's talk about setting up a board in advance, to give yourself a better chance, spend a few bucks and get it right. An advisory board should be put in place before the PE deal is pursued, because the PE firm will do it if you didn’t already. Better to have yours in place in advance. to drive the real opportunity, keep the focus, look for and deal with issues before they cause problems, and hold everyone accountable along the way, not just at the end. The board is there to help you see the big picture, and to oversee the strategies and budgets, and more. The board is the place to develop and utilize an authority matrix or decision-making process, and provide guidance when things go wrong and help make the decisions of how to respond. A board takes time to function and add value, does not happen overnight.

Three key benefits of setting up a board for this type of strategic growth are:

1. Preparation

If you want to increase your chances of success, put strong advisors in place and let the board get functioning in advance. A board can prepare you for PE or acquisitions, and keep you from making expensive or fatal mistakes, can help you see opportunities as pivot points when the unexpected happens, and more. You will be better prepared by having the added capacity to plan, manage and execute more thoroughly and consistently with a working board in place.

2. Resource Allocation

The resource allocation flexes as an organization moves through a PE or acquisition process, and any overreacting or under-reacting can be dangerous. Sometimes you need a double down strategy, or worse you’re hit with litigation. Whatever the surprises are, (there will be surprises) you want to respond in a timely manner with the appropriate resources and decisions. A board can help think ahead and gain valuable inputs and perspectives to help determine appropriate resource re-allocations along the way.

3. Remember Your Why

Ask the board to ask the “why” questions, and then ask the board to remind you of those answers when things get difficult. This can help you keep your original motivation clear and true, the board can help keep perspective as the process unfolds over time.

This is what private equity firms want to see, a company that is not entirely based on the founder or owner. They want to see an organization that has more than ambition, rather true capacity. Having a solid board in place in advance creates structure beyond and around the founder or CEO, and demonstrates better capacity, and ensures decisions are not just based on ego or ambition. Use a board to gain real capacity, in advance of that ambition turning into unprepared action.

If you’d like to learn more and talk about how your company can have and utilize a board for your business, please reach out and let’s have a confidential conversation. To set up a no-obligation call, please fill out the form below. 

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John Francis

Written by John Francis

About the Franchise Expert


John Francis is an enthusiastic, engaging, and entertaining public speaker because he speaks from experience and he speaks from the heart. Franchising is in his blood, and his parents were true pioneers in the industry, turning their family haircutting business into a 1,000-salon franchise empire. He has been a franchisee and a franchisor, and has a deep understanding of the issues both face. Book John to speak at your event, and you and your franchisees will learn how to look at your business in new, positive, and profitable ways.

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