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Franchise Development - 5 Year Success Plan

Franchise Success: Plan to Succeed

If you have made the decision to franchise your business or if you've recently launched a new franchise system, then now is the time to formulate and implement a plan to succeed.

Too often, start-up and emerging franchisors make the mistake of entering the franchise world without the right planning and strategy. Just franchising your business - issuing your FDD, developing your operations manual, and preparing franchise sales media - is not enough. You need a 5 year plan and strategy to succeed.

Think long term and season and grow your emerging franchise system. You need a plan and...below we have one for you!

Franchise Success: Mistakes to Avoid

The biggest mistake that start-up franchisors make is that they view the process of franchising their business as the goal. In reality, it's just the starting point. Many times, this mistake is not the fault of the franchisor but, rather, the consultants and advisors that they rely on like franchise development consultants. Remember, some consultants out there make money on selling people on the concept of franchising without really explaining what it takes to succeed.

The end result is that so many start-up franchisors end up suffering from franchise fatigue. The first few years don't turn out the way they expected, they waste capital, get discouraged, and never gain real traction. In fact, there are even some franchise consultants and advisors that make a living by offering inexpensive franchise sales solutions. Many times these “solutions” amount to nothing other than false hope and wasted time.

The good that you can succeed and win big at just need the right plan and mindset.

Franchise Success: 5 Year Plan

To win at franchising you must view your first 5 years as the start-up phase of your new franchise system. During this 5 year period, focus on a number of milestones. Focus on initial planning and issuing your FDD in year 1. Focus on accelerated growth strategies and private equity discussions in year 5. It's not an exact science and so while the timing could be off, the key is to understand each stage of growth and to have a plan.

Year 1 - Launch and Season Your New Franchise

In year 1, you'll be working with your franchise lawyers and development team to develop your new franchise system. Primarily, this will mean preparing your Franchise Disclosure Document (FDD) and building all of the underpinnings for what will need to be a competitive franchise offering.

Critical tasks include benchmarking competitors, developing a transparent Item 19, and building your franchise brand story. Within this first year, after you've issued your FDD, it will be time to focus on strategic franchise sales that, typically, will be targeted on the organic reach of your brand.

Another important step in your year 1 strategy will be to season your franchise offering. Develop digital and third-party media that tells a compelling story about your brand and how your franchise can transform the lives of your franchisees.

Your year 1 franchise development milestones should include:

  • Develop and issue your FDD.
  • Develop a budget.
  • Develop a compelling brand story that answers the "why you," "why now" questions that franchisee candidates will have.
  • Position your brand story and develop digital media and third party PR to tell your story.
  • Build a franchise sales landing page with video and media that speaks to your franchisee candidates. Demonstrates how an investment in your brand may transform their lives.
  • Enter the franchise world. Attend IFA conferences and join networking and professional development groups like Franchise Growth Mastermind.
  • Start exploring how to work with franchise brokers and broker organizations.
  • Sell a limited number of franchises to well qualified and well capitalized franchisees.

Years 2 to 3 - Build Your Support, Unit Level Economics and Validation

The second and third years are critical to the future of your franchise system. If your first 5 to 10 franchisees are well supported, achieve good unit level economics (they make good money and ROI), and validate your brand (they praise you when contacted by potential franchise buyers) then your franchise system will grow.

What follows next should be broker interest. Consider that brokers want to see the numbers and hear about the existing franchisee satisfaction and validation.

Franchise Development Milestones for Years 4 and 5 should include:

  • Supporting the development, opening, and operations of new franchisees.
  • Assisting franchisees with budgeting, planning, and monitoring their unit level economics.
  • Focusing on key performance metrics that improve the profitability of your franchisees and will build great Item 19 financial performance representations in your future FDD.
  • Supplementing your brand story, digital, and media with the success and life stories of your franchisees.
  • Building deeper relationships with franchise brokers including broker discovery days, broker conferences, and digital media specific for brokers and why trusting your brand can be one of the best decisions for them and their franchisee candidates.
  • Launching targeted social media and digital franchise sales marketing campaigns that feature your franchise brand story.
  • Supporting your franchisees!

Years 4 to 5 - Accelerate and Grow

These are the acceleration years. If you've set the right foundation in years 1 to 4, now is the time to grow.

In franchising growing from 0 franchisee units to 50 is much harder than growing from 50 units to 100. Momentum is key and these are the years to leverage your momentum and growth.

During this period you should be building toward accelerated franchise sales growth through diversity of marketing channels that include franchise brokers, paid digital media, organic SEO, and PR. Your franchise system should be building toward royalty sufficiency and valuations that start attracting private equity investments for reinvestment in your system and next level growth.

Franchise Development Milestones for Years 4 and 5 should include:

  • Accelerated franchise sales growth leveraging a compelling Item 19 metrics, franchisee validation, broker sales, digital media, and franchise PR.
  • Cash flow positivity, where your franchise system becomes royalty sufficiency with great projected franchise deal value measured over the life of your franchise agreements.
  • Continued focus on franchisee support, unit level economics, and validation.
  • Interest from private equity for system reinvestment and staging the next level of growth - 100+ units.

If you're looking to franchise your business or if you feel that your brand is not gaining the traction that it deserves, give us a call at (800) 976-4904, click the button below, or live chat with us. Our legal + franchise development team can help plus we have some amazing free resources that we'd be glad to share.

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