Does Franchise Growth Indicate a Successful Franchise?
Does Franchise Growth Indicate a Successful Franchise?
How can you learn if a franchise system is sound? In the franchise book, The Educated Franchisee we believe in sharing knowledge. A little franchise education can be helpful in this area.
One important measure is the system’s pace of franchise growth.
Too Fast: Rapid franchise growth may seem like a good thing at first but it is possible for a system to grow too fast. It is important to make sure the franchisor has the people and systems in place to thoroughly address your training and on-going support. For example, if a system of 50 franchisees adds 30 additional franchisees in a year, the pace of franchise growth may be too speedy.
Too Slow: If franchise growth is stagnant there could also be a problem. Why isn’t the franchise attracting new people? Perhaps there are problems with the business model - problems that make it difficult for existing franchisees to succeed. When potential franchisees make ‘validation calls’ they may hear about problems and decide to look elsewhere for a business. Or maybe the franchisor doesn’t have the right staff and has to limit franchise development. Either way, a deficiency of new franchisees could be a sign of an unsound franchise organization.
Just Right: Steady franchise growth over time is an indicator of good management and a healthy system. One way to gauge steady franchise growth is to determine the rate at which the franchise grew each year both in absolute and percent terms. To get this data for the past three years you can look in the Franchise Disclosure Document below Item 20 - the List of Outlets. All the information you want concerning franchise growth will be there for you in a clear, facile to understand format.
Rule of Thumb for Most Franchises
As a rule of thumb for medium-sized franchisors, the number of franchisees added each year should be between 10% and 35% of the total number of franchisees. For instance, a company with 100 franchisees ought to own the infrastructure to bring up to 35 new franchisees in the next year.
Rule of Thumb for Large and Small Franchises
This formula doesn’t work for very large or very small companies, however, so when looking at behemoth or boutique franchise systems consider the ratio of operational support personnel compared to new franchisees. A ratio of one support person for every 10-20 new franchisees assures you that new franchisees are likely getting the training and back up they need to succeed.
Talk to Franchisees
But don’t assume! It is critical that you talk to existing franchisees. Find out about the training they received initially and what they receive in terms of on-going support. Do they find the staff to be knowledgeable? Responsive? Does the franchisee feel comfortable calling on them for help? Give careful attention to the information you find out from new franchisees. Your experience will most closely reflect theirs.
Meet the Support Staff
Typically, a serious franchise investigation ends with a visit to the franchisor’s headquarters to get final questions answered and meet the staff face-to-face. Spend extra time with the support staff. Make sure you are comfortable with their experience, skill set, style, and ability to communicate, since you will want to work easily with them and rely on their advice on an on-going basis.
There are many things to think about when researching a franchise business that will meet your needs, but it doesn’t matter how much you like the business if the franchisor isn’t viable. Collect the franchise information you need and be convinced the system you select is growing and has a large number of fulfilled franchisees. Franchise development is a fundamental part of your due diligence. Only a sound franchise opportunity can sustain your long-term growth and success.
Does Franchise Growth Indicate a Successful Franchise - To learn more about this author, visit Rick Bisio's Website.
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There are many elements to analyze when selecting the right franchise opportunity. Not only do you need the franchise to be a good fit for you - you also need to identify a franchisor that will be around for a long time.
How can you learn if a franchise system is sound? In the franchise book, The Educated Franchisee we believe in sharing knowledge. A little franchise education can be helpful in this area.
One important measure is the system’s pace of franchise growth.
Too Fast: Rapid franchise growth may seem like a good thing at first but it is possible for a system to grow too fast. It is important to make sure the franchisor has the people and systems in place to thoroughly address your training and on-going support. For example, if a system of 50 franchisees adds 30 additional franchisees in a year, the pace of franchise growth may be too speedy.
Too Slow: If franchise growth is stagnant there could also be a problem. Why isn’t the franchise attracting new people? Perhaps there are problems with the business model - problems that make it difficult for existing franchisees to succeed. When potential franchisees make ‘validation calls’ they may hear about problems and decide to look elsewhere for a business. Or maybe the franchisor doesn’t have the right staff and has to limit franchise development. Either way, a deficiency of new franchisees could be a sign of an unsound franchise organization.
Just Right: Steady franchise growth over time is an indicator of good management and a healthy system. One way to gauge steady franchise growth is to determine the rate at which the franchise grew each year both in absolute and percent terms. To get this data for the past three years you can look in the Franchise Disclosure Document below Item 20 - the List of Outlets. All the information you want concerning franchise growth will be there for you in a clear, facile to understand format.
Rule of Thumb for Most Franchises
As a rule of thumb for medium-sized franchisors, the number of franchisees added each year should be between 10% and 35% of the total number of franchisees. For instance, a company with 100 franchisees ought to own the infrastructure to bring up to 35 new franchisees in the next year.
Rule of Thumb for Large and Small Franchises
This formula doesn’t work for very large or very small companies, however, so when looking at behemoth or boutique franchise systems consider the ratio of operational support personnel compared to new franchisees. A ratio of one support person for every 10-20 new franchisees assures you that new franchisees are likely getting the training and back up they need to succeed.
Talk to Franchisees
But don’t assume! It is critical that you talk to existing franchisees. Find out about the training they received initially and what they receive in terms of on-going support. Do they find the staff to be knowledgeable? Responsive? Does the franchisee feel comfortable calling on them for help? Give careful attention to the information you find out from new franchisees. Your experience will most closely reflect theirs.
Meet the Support Staff
Typically, a serious franchise investigation ends with a visit to the franchisor’s headquarters to get final questions answered and meet the staff face-to-face. Spend extra time with the support staff. Make sure you are comfortable with their experience, skill set, style, and ability to communicate, since you will want to work easily with them and rely on their advice on an on-going basis.
There are many things to think about when researching a franchise business that will meet your needs, but it doesn’t matter how much you like the business if the franchisor isn’t viable. Collect the franchise information you need and be convinced the system you select is growing and has a large number of fulfilled franchisees. Franchise development is a fundamental part of your due diligence. Only a sound franchise opportunity can sustain your long-term growth and success.
Does Franchise Growth Indicate a Successful Franchise - To learn more about this author, visit Rick Bisio's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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