A few weeks ago we discussed a few of the top ways that franchisees can fail - most of which come down to not staying connected and following the franchise model. Today, we’re going to dive into a few of the key ways that franchisors can fail and hurt the future success of their business, as well as their franchisees.
#1: They Forget About Their Franchisees
Sometimes when franchisors get so wrapped up in the growth of their organization, they forget what business they’re really in. True, they may be operating a system of restaurants, but they aren’t only in the restaurant business - they’re also in the business of franchising.
When franchisors get too wrapped up in themselves and their own success, they’re doomed. In franchising, the focus really needs to be on the success and growth of the franchisees. When that’s the focus, everyone wins.
#2: They Don’t Build for Scale
When franchisors are just starting out and the organization is small, their people will all be generalists. You might have (for example) a real estate guy who also does franchise sales, or one person doing training and marketing - everyone wears a lot of hats. But as the business grows, and the structure starts to change, you can (and should) start hiring specialists and professionals with more experience: a training person, marketing person and real estate person, for example.
As the structure of the organization begins to grow and change, it takes different people to support that change. A lot of times franchisors are hesitant to make that transition, which can lead to missed opportunities for the brand. It’s a process that takes real leadership!
#3: They Grow too Fast
When franchisors get busy, sell out a large number of contracts and get too aggressive on growth, they can lose track of the brand’s overall success. And if structured improperly, they don’t have the net revenue from those new sales to pay for the growth and support that’s needed…that’s a real problem that can creep up later, after the sales are done and committed.
To avoid growing too fast, brands should focus on managed and balanced growth, and careful consideration of the economics of any relationships involved in the sales process. Sometimes this means making some changes to get back into balance - it’s never easy! These issues can be difficult to see within the brand, which is typically where I come in. Sometimes all it takes is a fresh look and some objectivity to get things back into balance so that you can see what’s coming, before it shows up as a surprise to deal with.
If you’re a franchisor that has made one of the mistakes above - or is just looking for an objective eye to help your organization grow - I can help. Please reach out and we’ll schedule a time to talk. Thanks!
