Years ago, I invested in an after-school learning center franchise. During my years’ operating this franchise, I learned invaluable lessons about what not to do for long-term franchise success. This company’s product was solid, but you need more than just a good product for business success, especially when your network includes hard-charging, independent-minded entrepreneurs with their own ideas. As with most traditional franchise concepts, we had to take on a lot of upfront financial risk in terms of leasing commercial space, hiring after-school instructors, procuring tons of other supplies – all this in addition to the heavy initial franchise fees, legal fees, and more.
From all angles, my adventure with the after-school franchise business was an abject failure. This was my first experience with any sort of franchise system and while the business may not have succeeded, I walked away with the most practical business education anyone can get and it came from the best institute in the world – life experience. From this failure stemmed the idea for a business model that we had already proven successful. Learning the dos and don’ts from my experience as a franchisee, I leveraged the success of my primary business – ProposalHelper, a turnkey bid & proposal management firm, to create the industry’s first franchise – BidExecs Franchising.
I learned some invaluable lessons from my franchisee experience and am sharing some wisdom for CEOs and business owners who want to take their companies on the franchisor journey.
Refine and Use Your Proven Processes
If your firm cannot become a franchisor at any given time, then you are doing something wrong. A successful franchisor employs repeatable and defined processes every day, in every aspect of their business. Firm’s without those in place quickly lose their way and fumble through business, not manage success. Your franchisees need structure to survive. Armed with repeatable and proven strategies, they’re already primed for success. As the franchisor, your company’s responsibility is to create an organization of people (the franchisees) who can easily understand and are onboard with following your defined processes.
Create a Channel for Creative Thinking
Understand many of your franchisee owners will think outside the box and take risks. They might not be too different from you in that regard. However, within a franchisor structure you do not want people that break the boundaries of the system you have in place – for the greater good of the entire brand. The biggest mistake you can make as a franchisor is to shut out creative inputs from your franchisees. Design the business to build up your franchisees. Set the right tone from the start, invest in a culture of respect and action, but keep firm on the boundaries of your framework. Don’t let Joe operate his Memphis franchise differently than Mary’s in Knoxville. Keep them on the same track and encourage franchisees to communicate to help with idea development consistent operations. Have the management and legal structures to keep the core business intact.
At the same time, you need sound processes to let your franchisees contribute their ideas for improvement. Set a time-bound, measurable, feedback loop so your franchisees know where they stand. It should not be a black-hole of lost hope. Be ready and prepared to methodically adapt your model when presented with sound ideas, simply make it a part of the system.
Think Before You Franchise
The journey to becoming a franchisor can be stressful and will require you to break your business down and then build it back up, rethinking every part of your operations. Franchising is not the same as on-boarding a new employee. Ensure you have a strong foundation with the right team of franchise, legal, and financial advisors. Reach out to other franchisors to learn about their challenges and avoid the same pitfalls.
Another word of caution is to avoid talking prematurely market your franchise. Do not advertise it when you are not ready. You do not want to attract a great candidate who is eager to sign, and then ask them to wait 18 months until you are ready. That candidate is a lost opportunity, and even worse it can damage your brand’s perceived mismanagement.
Find the Right People
As your franchise business moves from idea to formal plan, turn your attention to finding the best people. Your Franchising plans and investment can all fall apart without the right people who can represent your brand in the right way. Consider what skills and personality traits you expect for your franchisees to have and remain consistent – do not lose faith and compromise on the quality of franchisees you bring into your network.
Too many franchisors want to expand their franchise base, thinking sheer volume equates to success. That’s shortsighted. The wrong people will hurt your franchise and your brand. With my company, we look for leaders, not employees. Our team searches for vested business owners with the right mindset who understood we were working together for mutual gain.
Learn from your mistakes. As your business grows and you see franchising as an opportunity, take stock of every misstep to improve your business. Becoming a franchisor can pay off handsomely, but only if you do it right and launch a franchise program when your business is running at its peak.