Part of the Series Winning Strategies for Franchising Your Business
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Franchising Your Business: Begin with the End in Mind
Published in: Guides
Franchising Your Business: Build a Rock-Solid FDD and Legal Foundation
Published in: Guides
Franchising Your Business: Competitively Position Your FDD
Published in: Guides
(Currently Reading) Franchising Your Business: Adopting the Right Growth Mindset
Published in: Guides
Franchising Your Business:
Adopt the Right Growth Mindset
Winning strategy #4 is to adopt the right growth mindset and understand what it takes to grow and build a thriving franchise system.
Franchise success requires a long-term strategy and an understanding of how franchise systems grow. As you develop your franchise growth strategy, you must adopt a mindset focused on the following factors and fundamentals that influence franchise success:
- Focus on unit-level economics
- Earn franchisee validation
- Develop a unique brand position
- Constantly improve your systems
- Quantify your long-term vision and wins
Focus on Unit-Level Economics
When it comes to growth, unit-level economics are a critical factor in the franchise sales process. Having the ability to show prospective franchisees a verifiable record of successful franchisees at the unit level can change the game for franchisors – especially when it comes to working with franchise brokers in the future. Because of that, startup franchisors need to have a mindset centered on developing processes that support healthy unit-level economics from the start.
Begin with Item 19 in mind
The financial disclosures included in Item 19 of your Franchise Disclosure Document can make or break the growth of your franchise system. As a startup franchisor, it’s likely that you won’t be starting with existing franchisees. As you sell franchises and grow your system over time, though, it’s important to maintain a mindset focused on making sure your FDD’s future Item 19 financial representations are compelling to franchisee candidates and brokers.
Recruit qualified franchisees
A critical component for developing a compelling Item 19 is building a franchise system of successful, profitable franchisees that can validate your system to franchisee candidates in the future. To make that happen, focus on attracting well-qualified franchisees to your brand through marketing strategies that target well-capitalized franchisee candidates who align with your brand’s values and share your growth-oriented mindset.
Earn Franchisee Validation
When it comes to selling franchises, franchisee validation is everything. As a startup franchisor, your new system probably doesn’t have existing franchisees to validate your business to franchisee candidates during the discovery process. Because of that, you’ll need to develop a sales strategy focused on you and your brand’s potential when selling your first franchise opportunities.
Lean into your founder’s story
In the absence of existing franchisees, it can be a good idea to center your sales process around your founder’s story, brand story and your franchise’s potential. Tell prospective franchisees why you started your business, how it’s transformed your life, and how buying a franchise could help them achieve their own business and lifestyle goals.
As franchise broker Lisa Welko once said, nobody wants to buy a franchise – they want to buy a business. By adopting a mindset that recognizes prospective franchisees as aspiring business owners, you’ll be able to communicate the benefits and opportunities your brand offers to entrepreneurs.
Provide training and support
In the franchise world, the success of a franchise system rests on the success of its individual franchisees – but that doesn’t mean franchisors are off the hook. As a new franchisor, it’s critical to develop a mindset focused on providing franchisees with proper training and ongoing support. By providing franchisees with the right resources to succeed at the unit level, you’ll simultaneously support the growth and success of the franchise system overall.
Develop a Unique Brand Position
Taking the time to define your brand’s identity is critical when you’re just starting out in franchising. By knowing what your company stands for – and being able to communicate those values to others – you’ll be more likely to attract like-minded individuals and qualified franchisees that align with your vision and goals.
As a startup franchisor, working with the right management team is just as important as working with the right franchisees. When assembling your team, focus on recruiting management that is committed to your brand’s values and vision. It’s also important that they’re focused on controlled growth and contributing to the company’s culture in positive ways.
Your brand’s values are the moral compass that guides your franchise’s overall behavior – from your brand story to customer service to your decision-making process as a business, your values should form the foundation of your business. As a new franchisor, being able to articulate those values to brokers and prospective franchisees is critical for attracting the right people as your system grows. Because of that, it’s a good idea to develop a mindset of making sure every aspect of your business aligns with your brand’s values as early as possible.
As a new franchisor, establishing a clear vision for your brand – that is, your company’s trajectory and plans for the future – are key to supporting its growth. When you’re just starting out in franchising, it’s a smart idea to develop a five-year success plan to map out the goals you plan to achieve as a franchise founder. This includes launching and seasoning your new franchise during the first two years, improving unit-level economics, support and validation during your second and third years, and accelerating growth during the fourth and fifth years.
Your brand’s culture is defined by its interactions with the world. Early on, new franchisors need to establish their brand’s culture by setting an example for others in the franchise. How should people expect your brand to behave or represent itself? Do your business decisions and customer interactions align with your values and vision? How do your employees interact with customers – and each other? By taking the time to define your brand’s culture, you’ll be able to identify who is a good fit for your franchise – and who isn’t.
Constantly Improve Your Systems
Getting into a growth mindset that prioritizes strong, reliable processes is critical for startup franchisors. Beyond making your sales and other systems more efficient, having consistent processes also gives your brand an air of professionalism – something that can make or break your sales outcomes as you interact with franchise brokers and franchisee candidates in the future.
Respond to franchisee inquiries the right way
One of the most important processes new franchisors can develop early on is their franchise sales process. By responding to inquiries from prospective franchisees and offering opportunities in a professional, timely, and consistent manner, you can ensure that your brand exudes professionalism and communicates its value effectively.
Qualify franchisee candidates
As a new franchisor, selecting qualified franchisees is critical to the success of your new business. A key part of making sure you’re working with the right people involves listening to the needs of interested prospective franchisees. During your initial conversations with candidates, remember to ask about their goals – why are they interested in buying a business from you? Develop a mindset that prioritizes taking a genuine interest in the people you’re working with while making sure that everyone’s goals are aligned.
As a startup franchisor, what your business looks like five years from now will be very different from how it looks today. When developing a growth mindset, prioritize continuous improvement. Take stock regularly of what works and what doesn’t, and make changes accordingly. Don’t be afraid to make mistakes along the way – they’re an opportunity to grow and improve.
Quantify Your Long-Term Vision and Wins
As a new franchisor, it’s important to remember that success takes time. Winning at franchising doesn’t happen overnight – in fact, it often takes years to achieve. Because of that, it’s a good idea to focus on organic growth, recruiting and onboarding qualified franchisee candidates, and making improvements to your systems and processes during your first couple of years in business.
By understanding the value of incremental wins for your franchise, you’ll be able to support franchisees and develop compelling unit-level economics over time – creating a solid foundation for sustainable expansion over the long term.
If you’re ready to take your franchise to the next level, we’re here to help. Contact us to learn more about the services we offer for franchisors at every step of their franchising journey.