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Size matters! If you want to grow your franchise you need to be working as much on your business as in your business

Written by Sarah Kelly on Monday, 02 November 2020. Posted in Analysis

Success in franchising can be measured many ways; awards, profits, status, numbers of customers, number of units, number of products, brand preference, market share, the list is endless.

Size matters! If you want to grow your franchise you need to be working as much on your business as in your business

Success in franchising can be measured many ways; awards, profits, status, numbers of customers, number of units, number of products, brand preference, market share, the list is endless but generally a successful franchise business will be judged by a quantum, SIZE really does matter!

As a Franchisor, the more successfully growing franchisees you have, the greater the top line growth and the more ubiquitous your brand will be. Once the operational model is proven viable it is about maximising penetration, once you have conquered a country then you look to conquer the world, as the basic financial model is annuity, the more economic X Factor you have the greater your income and hopefully profits.  This is the push tension a Franchisor will always have, to replicate the model as many times as possible to maximise brand presence and drive sales and profits. 

As a franchisee, when you first get started it’s all about learning the model, training and opening your first unit. This a good focus, it’s important that all business owners understand how to operate the franchise model. In the early days it is all about learning the ropes, achieving break even as quickly as possible and starting to draw a salary. In other words, working IN your business to understand it as much as you can.

Here in lies the rub, the silent understanding in franchising is you are operating someone else’s business idea which allows you to be an individual business owner, however emotionally most franchisees fall in love with the business as if it is their own creation. Investing time, money, sweat and tears and often a franchisee becomes synonymous with the brand and business in their local area.

The real beauty of franchising is the appeal of building an asset, developing business equity that you can one day sell on, in order to maximise this equity after 5, 10, 15 or 20 years plus, it again depends on multiples and quantum. To achieve this, you have to switch from working IN the business to working ON the business, a shift from working in the micro to having a strategic vision on the macro. To start to open multi units or take on new territories.

For the Franchisee this means ‘letting go of the baby’ they created! 

This can become one of the greatest barriers to growth, having an emotional attachment to what you nurtured and the ability to pass it on to someone else to operate whilst you take on the new unit can cause anxiety and fear. I have often heard, “I cannot  open another unit as no one will be able to operate this business like me”, the answer to that is “that is true, as no one will be the same as you but, they will be a great development that enables you to focus on your next accomplishment.”

As a franchisor trying to drive growth, acquiring new franchisees are definitely the life blood to expansion but, growth from within your current franchise community is so important, more satisfying and quite frankly more efficient. 

It’s therefore vital to remember that you need to support franchisees through every aspect of the life cycle, not just at the beginning and not just via the operational manual. The key here is to know that the choice to grow for a franchisee is more about helping them make an emotional mindset shift than a business imperative.

Franchisors establishing the idea of working ON the business as well as working IN the business from the beginning of the franchise journey will help iron out any resistance to the idea in the future. 

  1. Make sure the long-term vision for their business is understood from the beginning and check in every year with Annual Business Planning to see the progress towards this.
  2. Provide a coaching approach to the relationship, identify emotional pinch points along the way and make interventions to help support growth
  3. Share other franchisee success stories and road maps to how they have taken the shift form single unit to multi-unit and how you can support that journey

Instilling a cultural understanding that the franchisee success is the franchise networks success is the franchisor success will lead to a thriving ecosystem that helps build a virtuous cycle focussed on both daily operational success and long-term business growth for all.

About the Author

Sarah Kelly

Sarah Kelly

For the past 20 years, Sarah has led and transformed franchise businesses worldwide. She has helped bring Burger King back to Blighty, and has spearheaded the growth of the Harry Potter franchise with Warner Bros. More recently, she has worked with Stagecoach Performing Arts who have over 350 global franchisees. She currently works as a franchise executive consultant and coach.

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