The Franchise Lifecycle
Every successful franchise network started with one small business, but how exactly do you get from one small business to a large mature successful network? The short answer is with hard work; the longer answer is that you must have a strategy which also includes reinventing yourself as a franchisor at every stage. Here, Natalia Shvarts breaks down the stages of the franchising lifecycle from infancy to retirement.
When you first start as a new franchisor you will probably have a limited budget and limited resources. Whilst when you recruit 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 start out on their journey, the processes and systems will be in their infancy or in development, your manual may still be in draft or unfinished and your budget may not have stretched to a franchise agreement.
Plus, at this stage, you are probably still personally operating a pilot or two!
At this stage, you will need to get really good at prioritising, delegating, asking for help and perhaps, most importantly, especially in these early stages, finding the right people to support you. An enormous benefit of franchising is that it is a very supportive and friendly industry built on culture of shared experiences and best practice.
If your time and resources are limited, prioritise:
- Speaking/exploring the British Franchise Association (BFA). Even if you are not yet ready for membership, the association has many helpful resources, events, and webinars which you may be able to access.
- The legals – although it might be tempting to ’save’ money by attempting a DIY job at a franchise agreement, downloading one online or getting a non-specialist to do your franchise agreement for you, doing so will probably cost you a lot more in the long run. So, whilst it might feel like a win, it is likely to be false economy and whilst nobody enjoys spending money on lawyers, investing in your franchise agreement will be money well spent. If you get one document done right from the start it should be the franchise agreement.
- Franchise Consultants – although their services come at a cost, what you are paying for is their knowledge, experience, and connections. Of course, you will need to choose the right consultant to work with your business, but the value that the right consultant can bring will be the difference between crawling and running.
Finally, if at times you feel under pressure to sign up as many franchisees as you can, resist this and aim to choose quality over quantity.
At this stage, you will have a few franchisees and a pipeline of new recruits coming on board. You may be organising your first annual conference and your network is growing nicely along with your confidence.
Whilst it is sensible to continue to focus on franchisee recruitment, it is equally as important to start planning for the future. You, as the franchisor, will also need to invest in your own team, in the support and training that you provide to your franchisees, in continuing to develop your systems and keeping your manuals and other documents up to date. You should also prepare yourself for the emotional journey that you are about to embark on – your franchisees will be on a journey and their journey will be different from yours. This is the stage to build strong foundations for what is yet to come.
During this stage you may encounter the “firsts” – the first closure of a franchise, the first termination, the first legal battle. Whatever the “first” may be, remember that it is just the first – the important part is to learn from each experience, reflect and make adjustments and improvements. This is a good time to stress test your systems – is your territory mapping and territory size correct? Are your communication channels effective? How do you measure the mood of your network?
This is the Planning for Growth stage.
Most mature franchisors will spend most of their time in this stage. This stage is really all about effective communication and management of your network. As your network grows, your franchisees will be at different stages of their individual journey, and you will see groups forming. Just like children – some franchisees may be more demanding than others. As a franchisor, it is important to find a balance between listening, and most importantly, hearing what your franchisees are saying and not knee-jerking or responding to those who shout loudest.
At this stage performance management will be important. If you have a large number of franchisees who are not performing, your performing franchisees might get upset if you take no action. Your franchisees will challenge you so be ready.
You will need to have processes in place for managing renewals and managing resales and franchisee exits. Effective resale management is essential in a healthy mature network.
This is a stage for value add. What more can you do as a franchisor to make your systems more effective? Can the network benefit from your buying power? Are you in a position to start developing national contracts? Of course, it is not all down to you – inventions and developments are very likely to happen at franchisee level, but it will be up to you as a franchisor to facilitate the sharing of best practices and ideas. This is time for creating a collaborative network, promoting peer to peer support, and encouraging growth and development.
Or is it? At this stage some franchisors may be looking to exit, and others may be looking to expand. Perhaps, it is time to start exploring new horizons overseas. The beauty is that you will have plenty of both operational and emotional experience to understand the franchise journey. You will be well equipped to cope with managing a network. The trick at this stage is not to presume that the journey in the new target country will be the same as the journey you have been through “at home”.
Take time to do your research and just like you did at the very beginning, make sure that you run a pilot and surround yourself with the right people and take expert advice. At this exciting time, your focus may well shift away from your existing market and your existing network but don’t forget them – they will still need your attention!
By Natalia Shvarts