Why You Might Want to Franchise Earlier Than You Think

 

Why You Might Want to Franchise Earlier Than You Think

By: Lamont Johnson

The Art Department

The franchise industry is big and seemingly getting bigger every year.  The International Franchise Association (IFA) estimates there are in excess of 3,500 franchise brands on the market in the U.S. alone and each year since the economic recovery the number of new franchises increases steadily as more people turn to small business ownership and franchising.  Some businesses just overlook the option of franchise development assuming that there is a timeline they must meet in order to consider the franchise expansion concept.  The reality is that some great businesses have franchised their model very early in the timeline of the brand and performed exceptionally well.  The average brand that franchises their business has around 3 years of track record and an average of just under two units in operation.  There is no rule to this as to whether a business needs a certain amount of time or locations in operation to consider franchising, most people just assume this.  In several cases, a brand franchising early in its development has helped the company capture market share in emerging markets, leverage the influx of capital to develop the brand further and really carried the vision forward of the young company.

One firm, Franchise Marketing Systems launched by Christopher Conner, helps businesses franchise a business model and go through the franchise development process.  Conner has spent 15 years working in the franchise development field primarily with first-time franchisors who utilize franchising as a distribution channel to share their vision with new markets and new investors.  During this time, most franchise marketing firms has amazing experiences working with some of the most innovative, creative and forward-thinking entrepreneurs out there in the world.  Part of their work is helping entrepreneurs decide whether to franchise their business and evaluate the prospect of what franchising could do for their business.

“Since 2002, I would estimate I’ve met with well in excess of 3,000 companies who have presented their ideas and vision for the business and questioned whether franchising could be effective for their model,” says Conner.

One thing to learn is that you just can’t assume who will have mind-blowing success in franchising and who won’t.  There certainly are traits in a business that help indicate success such as good branding, solid differentiators, excellent marketing systems to support strong unit level validation all are factors that help drive a successful franchise model.  Also, great operating systems and structure, processes and streamlined operating models all make concepts more duplicable.  There are some companies that just don’t have the basics like a profitable prototype they can show to potential franchisees or a business model with any proof of concept shouldn’t be franchising.  Some companies, such as Mosquito Terminators, normally wouldn’t strike you as being a brand that was any more amazing than another successful service business looking to grow.  The model is territory based pest control services with two operating locations having been in business for several months.  But Conner took them onboard, because “the numbers were good, the owners were incredible businessmen who understood marketing and the market was expanding, but I never would have guessed we would franchise the business and sell 210 franchises in just over two years.” They went on to sell the business and in what seemed like a blur, Mosquito Terminators went from two locations to two hundred overnight and became a buyout target for a larger pest control company who purchased the business from the founders.  Restoration 1 was a similar scenario with a good business model, only 3 months of operating history, a strong entrepreneur at the helm and a market that was growing quickly.  The business was franchised in 2010 and by 2017 has almost 200 locations in operation providing water, fire and mold restoration services around the world.  BungoBox was another brand who worked with Franchise Marketing Systems in 2009 and had only months of operating history, but with the right market characteristics and excitement around being “green”, 37 franchise locations were opened in the first two years of business.

My point in all of this is that franchising can indeed make sense for the right business, the right business owner in the right market at the right time.  These two previous examples, along with others, never would have scaled as quickly or efficiently as they did without franchising the business.  So what does this mean for a new entrepreneur or business owner who is looking at the idea of franchising?  First, one common trait found in most successful franchisors is a commitment and understanding for marketing and sales.  The companies that are good at franchising are good at marketing and selling.  They embrace the process and it shows in their recruitment efforts.  Second, the companies who have nailed the franchise model are good at looking “big picture” and not sweating the tiny details.  Entrepreneurs who are effective at scale delegate and address details as they go, the plan identifies opportunity and how to get there, but there is never an issue of perfection slowing down progress.  The Third aspect of what increases the likelihood of a homerun franchise is a market that is growing in demand and interest on the consumer side of the business.  People buy franchises because consumers are buying the products and services.  If your business is getting a lot of attention, the market is expanding and a competitor of yours just went on Shark Tank, you might want to be looking at franchising your business.  Identify those swings in the market and when yours is heading up, you need to look for ways to scale and capture as much of that momentum as possible.

For more information on Franchise Marketing Systems firm and their services, visit the corporate site:

https://www.fmsfranchise.com/services/franchise-development/