The Franchise Lifecycle – Lexology

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Every successful franchise network started with a small business, but how exactly do you go from a small business to a large, successful and mature network? The short answer is with hard work; the longer answer is that you have to have a strategy that also includes reinventing yourself as a franchisor at every stage. Right here, Natalia Chvarts breaks down the stages of the franchise life cycle, from infancy to retirement.

Childhood

When you start out as a new franchisor, you will likely have a limited budget and limited resources. While when recruiting your first franchisees you should ideally have the operations manual and all your systems and documents in place, the reality is that this is rarely the case. Often, when most franchisors begin their journey, processes and systems are in their infancy or development, your manual may still be in draft or unfinished, and your budget may not have reached a franchise agreement. .

Plus, at this point, you’re probably still personally operating a pilot or two!

At this point, you will need to become very good at prioritizing, delegating, asking for help, and perhaps, most importantly, especially in these early stages, finding the right people to support you. A huge advantage of franchising is that it is a very supportive and friendly industry, built on a culture of shared experiences and best practices.

If your time and resources are limited, focus on:

  • Talk/explore the British Franchise Association (BFA). Even if you’re not ready to become a member yet, the association has many helpful resources, events, and webinars that you may be able to access.
  • The legalities – although it may be tempting to “save” money by attempting a DIY job under a franchise agreement, downloading one online or asking a non-specialist to make your franchise agreement for you, it will probably cost you a lot more in the long run. So while this may seem like a win, it’s probably a false economy and while no one likes spending money on lawyers, investing in your franchise agreement will be money well spent. . If you get one document upfront, it should be the franchise agreement.
  • Franchise Consultants – although there is a cost to their services, what you are paying for is their knowledge, experience and connections. Of course, you’ll need to choose the right consultant to work with your business, but the value the right consultant can bring will make the difference between crawling and running.

Finally, if at times you feel pressured to enroll as many franchisees as possible, resist and aim to prioritize quality over quantity.

The teenager

At this point, you’ll have a few franchisees and a pipeline of new hires on board. You may be hosting your first annual conference and your network is growing well with your confidence.

While it is wise to continue to focus on recruiting franchisees, it is equally important to start planning for the future. You, as a franchisor, will also need to invest in your own team, in the support and training you provide to your franchisees, in the further development of your systems and in updating your manuals and other documents. You also need to be prepared for the emotional journey you are about to embark on – your franchisees will be on a journey and their journey will be different from yours. This is the step to build solid foundations for what is yet to come.

During this stage, you may encounter “firsts” – the first closing of a franchise, the first termination, the first legal battle. Whatever the ‘first’, remember it’s only the first – the important thing is to learn from each experience, reflect and make adjustments and improvements. It’s a good time to test your systems – is your mapping and territory size correct? Are your communication channels effective? How do you measure the mood of your network?

This is the growth planning stage.

Adulthood

Most mature franchisors will spend most of their time at this stage. This step is really about effective communication and management of your network. As your network grows, your franchisees will be at different stages of their individual journeys and you will see groups forming. Just like children, some franchisees can be more demanding than others. As a franchisor, it’s important to strike a balance between listening and, most importantly, hearing what your franchisees are saying and not fidgeting or responding to those who are shouting the loudest.

At this point, performance management will be important. If you have a large number of underperforming franchisees, your well-performing franchisees might get upset if you do nothing. Your franchisees will challenge you so be prepared.

You will need to put processes in place to manage renewals and manage franchisee resales and exits. Effective resale management is essential in a healthy and mature network.

It is a step of added value. What more can you do as a franchisor to make your systems more efficient? Can the network benefit from your purchasing power? Are you able to start developing national contracts? Of course, it’s not all up to you – inventions and developments are very likely to happen at the franchisee level, but it will be up to you as the franchisor to facilitate the sharing of best practices and ideas. Now is the time to create a collaborative network, promote peer support, and encourage growth and development.

Retirement

Where is it? At this point, some franchisors may be looking to exit and others to expand. It may be time to start exploring new horizons abroad. The beauty is that you’ll have plenty of operational and emotional experience to understand the franchise journey. You will be well equipped to face the management of a network. The trick at this point is not to assume that the trip to the new target country will be the same as the trip you took “home”.

Take the time to do your research, and like you did in the very beginning, make sure you start a pilot project, surround yourself with the right people, and take expert advice. In these exciting times, your attention may well drift away from your existing market and network, but don’t forget about them – they will always need your attention!

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