If growing the franchise quickly, trumps other goals, such as developing successful franchisees, tweaking operations, picking prime locations or building a solid customer base, company operations can turn bad in a hurry.
Growing franchise businesses too fast is an easy way to kill off a good concept.
Boston Market is a good example. The company, formerly Boston Chicken, grew from 20 stores in the late 1980s to more than 900 franchises by 1998.
The franchisor decided that building stand alone stores was the way it wanted to grow, the stand alone stores couldn't sell enough food to pay the bills and repay their loans.
The chain filed for Chapter 11 bankruptcy, bought back nearly all of the franchises and closed almost 200 stores in 1998, before getting eaten up by McDonald's in 2000.
The root of the problem was the company became so obsessed with growth that it overlooked principles of good business like grooming good franchisees and managers while building solid relations in the community.
If a franchisee is not making money at a single outlet, chances are pretty good that they are not going to make a lot of money at multiple locations.
It's not uncommon for franchise businesses to get overly ambitious in their franchising plans, especially since many franchisors are attracted to franchising because they want to grow faster than their own capital allows. Franchising allows businesses to use OPM (other peoples money) and therefore limit their risk but not necessarily the risk of the franchisees.
Rapid expansion doesn't always mean success when it comes to franchise businesses - To learn more about this author, visit Jim Coen's Website.
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Jim Coen
(Visit Jim's Website)
With 25 years of franchise, marketing, and
entrepreneurial experience, and the owner
of Franchise Perfection, Jim Coen, brings
key skills to franchise consulting for
those interested in buying a franchise
business opportunity.
At Franchise Perfection we serve as
franchise consultants and advisers,
“matching you with the perfect business”.
Visit: www.franchiseperfection.com/ind
ex.htm
For over 20 years Jim worked with Super
Coups. which is a MA based direct mail
franchise that delivers money saving
coupons from local businesses to your
mailbox. His responsibilities at Super
Coups included: franchise marketing,
franchise training, sales management,
regional sales, and director of Franchise
Development.
Prior to Super Coups Jim successfully
marketed franchises in the New England
area for Uniglobe Travel Northeast a
travel franchise, Merry Maids a maid
cleaning franchise, & Emack & Bolio an Ice
Cream franchise.
Jim recently was the host of a popular
radio show called “Let’s Talk Franchising”
that aired on WBIX 1060 in Boston.
Jim currently serves on the Board of
Directors of the New England Franchise
Association (NEFA) www.nefranchis
e.org
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Let's Talk Franchising! - I have learned franchising from the ground up. I’ve been a franchisee for a bad franchisor. I’ve worked for good franchisors and I’ve worked for marginal franchisors. I’ve helped many franchisees succeed.
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Jim Coen's
Complete
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