Building your business into a franchise system will be one of the most important and expensive strategic moves you will make in the history of your business. Yet most new franchisors struggle to grow past 10 franchisees in their first 10 years of franchising.
You have a highly successful business. You are the local expert at whatever you do, whether it’s making burgers, mowing lawns or educating children with the best math program around. You have nailed your business concept and have made good money doing it. So good, in fact, that your customers and friends keep asking “when are you going to franchise?” and because you have successfully developed a profitable business concept, success in franchising will eventually follow, right?
So you make the leap to become a franchisor to scale your concept across the country and around the world. You build your operations manuals, your training program, and then you put it to the world. Aside from that one loyal customer or friend who makes the leap, no one else signs up. You add 1 or 2 new franchises per year but…your franchisees aren’t as successful as you were at the business, it is really hard to find new franchises that are willing to invest life savings into the business. And the franchises you do have just aren’t as successful as you are and they seem to always have problems with you. Oh, and they aren’t nearly as successful as you were at the business.
What happened? “I thought we were supposed to make more money when we franchises?” your spouse asks.
Franchising is a mistake that most make. you have successfully developed a profitable business concept, success in franchising will eventually follow, right? However, franchising is an extremely new and unique business model.
Welcome to franchising. You mastered the burger or lawn business (or whatever concept you have), but franchising is a whole new ball game. As it turns out, you now must master an entirely new business. As Malcolm Gladwell put it, you need to invest 10,000 hours to be an expert at anything. So now you need to invest this in franchising.
But that’s a long time. And you don’t have that long. Plus, the stress that you are under because your zees are underperforming is just too much to ensure for this long.
Luckily there is always a solution. A mentor of mine once said to me “JOHn, business isn’t that hard, you just need to go find someone who has been where you want to go, and find a way to get them on your team. Then you’ll leap frog so many of the problems that you would have had, you will accelerate your growth and most of all, you will save a ton of money and stress.”
The Importance of Franchise Consulting
And that is the value of a great, seasoned franchise consultant. Launching a new franchise system? Find a consultant who has built their own system and scaled successfully into the hundreds of franchise units. Need help with franchise sales? Find a consultant who has sold 100’s or 1000s’s of franchises.
The Benefits of Franchise Consulting
The first benefit is obvious – a great consultant will accelerate your learning so you avoid costly mistakes and help you get to where you want to go faster. So even though you will spend money to hire a franchise consultant, you will ultimately save far more money than you spend. And the right consultant will accelerate your growth, making you will also make more money faster. But let’s look at what this actually means by looking at a few specific examples that we see time after time, again and again.
A new franchisor’s early franchisees don’t perform as successfully as the franchisor did. Ok, this is the most common problem we see in franchising, and when this happens? The entire success of your system is at risk because you won’t sell many new franchises until your early partners start performing exceptionally well. And you will be under a massive amount of stress, all because you failed to realize one very important part of franchising. You see, you can’t train your partners in every single aspect of your business. You had years and years to master the business; your partners wont master the business in 6 months. So you need to really double down on the most important parts of your business that will enable success as early as possible. This is what a great franchise consultant will do. They will be experts at prioritizing and focusing your operations manuals, training programs and systems so that you train on the RIGHT things at the RIGHT time in a manner that your franchisees will actually learn and execute. Trust me, it is easier said than done!
A second problem we commonly see in start up franchisors is that their franchisee’s sales don’t grow as fast as needed. Why? Because their marketing and customer lead generation systems aren’t tried, true and tested. In fact, we find that most start up franchisors don’t have these systems developed. A great franchise consultant will have a ton of experience building marketing and lead generation systems in a variety of industries and have built 100’s of systems for franchisors. In fact, the best consultants will also be experts at brand and marketing, perhaps the two most fundamental and important systems a franchisor can provide to their franchisees.
And a third problem that virtually every franchisor struggles with? They simply don’t sell franchises fast enough, and hence don’t grow as fast as they would like to (or need to). Franchise sales for an emerging franchisor is the oxygen of their business; it pays the bills until there are enough franchisees paying enough royalties to pay the bills. But franchise sales is hard; like really hard. Why? Have you ever sold a product that costs in the 100’s of thousands of dollars? Have you ever sold a product where you ask the investor to invest their life savings into something that they have no idea how much money they will make or how long it will take to recoup their investment? And sign a 250 page agreement that they don’t understand, but what they do understand is very clear; their investment can be taken away from them if they misstep in a variety of situations. That’s a tough sell. Oh, and the hardest part? Actually finding these candidates in the first place. The right franchise consultant will be an expert in the above.
What to look for in a Franchise Consulting Firm
They have been there, done that. They have founded, built and scaled their own system into hundreds of successful franchise units. You see most consultants are VPs of bog franchise brands who have been laid off. And while they bring a host of great skills and systems and tools for running a large franchise system, a start-up franchisor requires a completely different set of tools and systems. As entrepreneurs we all know this: the only way to truly understand what we are going through is if we have been there ourselves.
Further to this, they built a wildly profitable system. Franchisor profitability is tricky. How do you balance scale with making money? Having a consultant who knows exactly what your scale model should look like is rare because most consultants haven’t “been there, done that.”
They are experts at selling franchises. Have they sold 100’s or 1000’s of franchises? Do not start a franchise system until you have this nailed down. Hire an expert onto your team on Day 1,or hire a consultant to show you the ropes. Your success depends on it.
They are experts at marketing and brand. This is ultimately what will differentiate your franchisees in a market where no one has ever heard of them before.
The experts actually do the work. Ah, the bait and switch. You get the heavy hitters on the sales calls, and then you hire the firm and…where did they go? Make sure you aren’t getting Junior associates helping you to launch your brand new franchise system.
Are they dialed into a large network of strategic suppliers? An often overlooked yet crucial part of franchising is aligning with the right suppliers. When you screw this up? Oh your franchisees sure aren’t happy with you.
Do they do the work or just tell you how to do the work? Are they just a consultant who may have great expertise but will only tell you what to do? Or do they get in there, coach you on becoming a great franchisor and roll up their sleeves and do the work? As a start up franchisor, you have way too much on your hands to do it all yourself. You need a consultant who will actually help you do the work vs pile on more work for you.
Do they have glowing Google reviews? Checking a firm’s reputation is key and you can do it online.