The Pitfalls of Growing a Franchise Brand Too Fast

Growing your emerging franchise brand is good. After all, that is the beauty of the franchise model. But, it is possible to grow too quickly, which can have damaging effects.

Slow and steady may be prudent, but you’ll avoid the common pitfalls of franchises that grow too fast. Here are some of the troubles you may run into by getting ahead of yourself:

Lack of Support

You don’t want your brand to grow beyond the support you can provide. In addition to product or service consistency suffering, so much more can go wrong if your support system can’t keep up with the demands of your existing franchisees.

Female looking at her computer with questioning face

If you fail to provide adequate support for your existing franchisees because you’re too busy adding new franchisees, you can count on poor franchisee validation. Growth will slow significantly because your existing franchisees will tell franchise candidates, during their due diligence process, that corporate support is lacking and negatively impacting their businesses.

The Wrong People

As you grow, you will need to hire more people at the corporate management level. If your brand growth is too rapid, the chance of you making a hasty hiring decision increases. And you could end up bringing on board people who are inexperienced, not excited about your vision, don’t share your passion, do not fit with the company culture or myriad other ill-fitting characteristics. These types of hires can slow down franchise development and sour the support provided to franchisees. Just like lack of support, the wrong people at the top can hurt validation.

In your haste to grow the brand quickly, you may fail to thoroughly vet franchise candidates. When that happens, you risk bringing on franchisees who are not a good fit. The wrong franchisees can damage the brand or cause unnecessary trouble.

Suffering Customer Service

When emerging franchises grow too quickly, it’s not only the franchisees who suffer – it’s the customers, too:

  • If your support system is lacking, your franchisees will be unprepared.
  • When they’re not adequately equipped to educate and support their managers and staff, employees will be equally ill-suited to serve customers.
  • While you’re too busy growing fast, product innovation falls flat, too, and you’ll miss out on consumer trends that you would otherwise capitalize on.

Cracked computer screen with thumbs down icon

Your brand reputation among consumers will be damaged. Today, bed reputations travel fast thanks to social media and the plethora of sites where consumers can post negative reviews. This will also tarnish your reputation as a franchisor among entrepreneurs looking for franchise opportunities.

No Quality Control

Inconsistent or constantly poor quality products or services will drive customers away as quickly as poor customer service. Losing your grip on quality control is a very real possibility for franchises that grow too fast. Customers depend on franchise brands to provide consistency every time at every location. If it’s not there, they will end up purchasing the same product or service, provided with higher quality, from your competitor. Here, too, lack of quality control will end up damaging the brand.

Lose Track of Financials

As an emerging franchisor, you’re able to keep a close eye on revenue, expenditures, royalties and other financial matters. But, when you grow too fast, it’s easy to become distracted and lose focus on what comes in and what goes out.

Male with hands on his face sitting in front of a computer.

At the same time, establishing buying power for your franchise system is important to keep each location running with the products they need to operate. But, buying power does not come easily. It requires putting forth a lot of energy toward relationship-building. Those relationships and your buying power can get in trouble if you miss payments.

If you’re allowing franchisees to miss royalty payments or deliver an amount less than what’s stipulated in the franchise contract because your brand is growing too fast, then you compromise your ability to reach royalty self-sufficiency.

Winmark Franchise Partners, with 30 years of franchise experience and more than 800 franchise owners representing more than 1,200 locations for five brands, can help you develop a plan for sound and steady growth in order to avoid the mistakes that befall franchises that grow too fast. For more information, contact us here or at (844) 452-4600.

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