In Emerging Franchisors: Keys for Growth (Part I), we explored some of the initial financial challenges franchisors face when they start the growth process. In this article, we will focus on the importance of proof of concept and franchisee validation to ensure brand growth.
Can the Concept Work in Multiple Markets?
Getting one business up and running successfully is a good start, but it provides little indication of whether the model will thrive as a franchise. Multiple locations in multiple and varied markets is a better indicator.
When you experience success in one market, look to grow in another market. This should prove that the brand model is not just successful because of the particular consumers in that area. Since you want to ensure the concept will be viable in other markets, you must study your current customer demographics.
Understand who your ideal customer base is and how they behave. This knowledge will prove invaluable as you identify future markets with consumers who match your qualifications and plan for franchise growth.
Once you know your concept works and is profitable in multiple markets and you get the word out about your brand’s success, you can begin the franchising process by documenting your standard operating procedures and creating the Franchise Disclosure Document, operations manuals and finding your first franchisees.
As you begin to open up franchised units, make sure to focus on franchisee validation. This is key to larger expansion efforts.
Validation Should Be Part of Growth Strategy
Even if you have a small number of franchisees in your budding franchise system, they are valuable assets when it comes to validating your franchise concept as a good investment – provided they are happy and seeing a healthy return on their investments.
It’s simple: Good reviews generate interest. Bad reviews turn people away. If your franchisees have good things to say about the profitability of the business, the ease of operations and you, the franchisor, entrepreneurs will take notice and show interest in your concept.
As a franchisor, you want to encourage potential franchisees to speak with your current franchisees. In fact, you should expect your franchise candidates to do their due diligence by reaching out to your franchise partners.
Your priority before this happens is to provide support and guidance to your franchisees so they are happy, healthy and profitable.
A large part of that is creating a strong support system that helps move franchisees toward the break-even point and beyond. When you provide that thorough training, efficient operations and effective marketing, newer franchisees feel more comfortable investing and older franchisees feel more comfortable relying on their franchisor and growing through additional units.
Consistent communication and a willingness to listen to ideas from franchisees speaks well for you as a franchisor.
The validation process does not have to be limited to curious franchise candidates speaking with current franchisees. You can spread the word of your franchisees’ success and happiness through public relations and content marketing in the form of press releases, blogs, and social media postings.
With 30 years of franchising experience and more than 800 franchise owners representing more than 1,200 locations for five brands, Winmark Franchise Partners can help you grow your brand through sound strategy and expert franchising advice. For more information, contact us here or at (844) 452-4600.