Tweet

Handling Explosive Growth

Written by: John Power

Article Overview: It is possible for a franchise system to grow so quickly that it gets out of control. Here are some thoughts about a reasonsable growth curve.

Handling Explosive Growth

Most franchisors would like to have to deal with the problem of explosive growth, i.e. selling hundreds of franchises in the first few years, but this can be a problem.

If the franchise system grows so rapidly that methods, procedures and support cannot keep up, a franchisor can end up with franchisees that are unsuccessful, and very unhappy.

There have been franchise chains that grew so quickly that the franchisor was unable to provide the support needed by new franchisees, including approving locations. You may have read of some of these chains in the business media. Some such franchisors reached a position where they had sold hundreds, or even thousands, of franchises, that were not yet open.

It may seem that they should have been able to keep up with the growth. However, as sales increase, so does overhead, and if a franchisor is not careful, it is possible to reach a point where the franchise fees have gone into overhead, and taken out as profits, leaving insufficient funding to support new franchisees before and after opening.

So, what is a manageable growth curve? Many successful franchisors sell about 5-10 franchises in the first year, and then build their system from that point. We believe it is important to develop a base of successful franchisees, and have the systems in place to support them, before “exploding” the franchise system by adding hundreds of new franchisees each year.

More information can be found at:  www.biltmorefranchise.com

 

Related Articles
  Shipping and handling
  Handling Objections in Four Simple Steps (Really)
  The Entrepreneurial "Perfect Storm"
  Massive Growth: How Will You Handle It? Part 1
  Call Handling - What Steps An Answering Service Goes Through To Handle Your Calls

Article Tags: business media, explosive growth, first few years, franchise chains, franchise fees, franchise system, franchises, franchisor, franchisors, growth curve, nbsp, profits, successful franchisees



Related Forum Posts
Hiring the best people for the job - One of the hardest things I had to do as an entrepreneur was to give up control over a project to someone else. Currently, I am having a professional design my website for me. Sure I can do it myself, or hire someone to do it how I tell them, but what would I learn? Handling the technological side of the business is not my strong suit, so i had to find someone who knew more about the subject than I did and also has done what I want to do before. It has been a learning experience, and the great thing about it is it frees me up to do what I do best in my business, and letting someone else do what they do best. I have been brought up with the mindset that [i:vazquuoz]if you want it done right you [/i:vazquuoz][i:vazquuoz]have to do it yourself[/i:vazquuoz]. I am slowly but surely weening myself away from that mindset and learning how to delegate more effectively. Now I am extremely selective on who I hire, and my goal is to surround myself around people who are smarter than myself in their area of expertise.
Re: need pricing help please - I agree that allowing customers to choose digital or physical product delivery is a good idea. If you are handling large volumes of orders then outsourcing the process is an excellent idea. Handling physical orders yourself is a demanding occupation, as I know from experience, but on the other hand, if you are doing it on a small scale it also gives you some good opportunities to personalize your service with hand written compliment notes and so forth. Also, you can learn a lot from your customers if you deal with them through every part of the sales process. Once sales volume picks up, outsource the operation - you'll probably save money as well as time. DH
It's not easy - Evan, It's not easy to franchise a business! Franchising requires a strong business model, significant capital resources, and very talented people to be successful. There are over 3000 franchise opportunities out there, most (80%) don't have the three criteria I listed above. The biggest benefit to using franchising to grow your business is that you bring in someone else's capital and human resource. What you are giving up is control in operating that business. I have seen successful companies get in trouble attempting to franchise their business, franchising requires a different skill set than simply operating units. Growth would have been much easier if they had just opened their own units and sought grown from within.
Different Hats - CEO Sales & Marketing & Leadership Development Company Strategic Vision 10 Alliances & Growth Strategies 10 Hiring & Managing People 8 Mentoring 8-9 Strategic Planning for Clients 10 Execution of Marketing Campaigns 9-10 (i have great people who do the nitty gritty) Financial Management 9 Bookkeeping 3 (outsourced as I really hate the fine details like GST0 Administrative Follow Up 6-7 (again have great staff) Writing & Publishing 9 (getting better all the time!) Speaking 10 (so I have been told) Self Promotion 9-10 Web development & Promotion 6-7 (learning more and have brought on players who are 10+) Babysitting Employees (1 - wont do it, that's why I work so hard to hire and motivate the people I have) Great topic Kevin!! Jude
Sports is queen! - About four years ago I started a webzine called The Thunder Child, devoted to science fiction and fantasy in all media. Growth was verrrrrrrrrrrrry slow at first, but has gradually picked up so that now I'm making a respectable income from my amazon.com and google adsense. (Well, from adsense, anyway. Amazon is a drop in the bucket compared to what adsense brings in.) Last year I put together a website showcasing the Tennessee Lady Vols (who won the NCAA championships last year), and just two weeks ago I put together a small website for Jacoby Ellsbury, a rookie outfielder for the Boston Red Sox - called a "phenom" and already very popular. The Lady Vols site has about 20 pages...the Ellsbury site has 5. Compared with The Thunder Child that, started out with about 20, and is now at about 1,000 and growing. Well, the hits on those two sports sites are more than three times what the hits on my Thunder Child site was during the first year of its existence. Since I've been a sports fan all my life, I reaaaaally wish that I'd started a sports webzine four years ago instead of this sci fi one, because I think my income now would be treble what it is. No doubt about it, sports rules!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

BUILDING A HIGH PERFORMING TEAM

9 tips to increase ROI in PPC Campaigns

In the Year 2020 . . . Process

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.