Did you know how important franchise development is for you when you are planning to franchise your business? Well, it is crucial, it also needs proper followup by a set of processes. This blog will give you more insights into the five important stages of the Franchise Development Process.
Five Crucial Stages Of Franchise Development Process Every Franchisor Should Know
New franchise owners may find it difficult to grow their business, but a clear path can help. Moreover, if a franchisor is ready, franchising can help create and grow a profitable business. Franchising can be exceptionally lucrative, both monetarily and in terms of career advancement. This is especially for those who are more incline to it.
However, not all businesses are good fits for franchising. Therefore business owners who struggle to deal with employees may also find dealing with franchisees to be an uphill battle.
Franchising can happen in two main ways. First, when a business owner actively seeks out expansion opportunities and finds franchising to be the best fit. Secondly, when he gets unsolicite offers to open franchises in other cities after receiving glowing reviews of their products or services.
Therefore, what are some ways that aspiring franchisors might better prepare themselves for the path that lies ahead?
Firstly, it is important to take into consideration the five primary stages of franchising a business. Moreover, this is also the start of the franchise development process.
#1: Investigate.
At this point, the business owner thinks about the market as a whole, the possibilities for their goods and services, and the various methods they might offer to customers.
Ask yourself,
- Do you think it would be more beneficial to offer things to clients directly online as opposed to opening stores throughout the country?
- How easy or difficult are the services that are going to be provided?
- Also, what alternative options are there for a client to get access to them?
In simple terms, this is a feasibility study, which indicates what is possible and feasible. Sparkleminds recommends businesses not to be attempt franchising unless there is a strong enough market demand to warrant the venture and ensure financial success for everyone in the process.
If this is not the case, the viability of the project will not be satisfied by whatever amount of feasibility.
#2: Confirmation and Reconfirmation
After doing the necessary research, a would-be franchisor should open a second, third, or even fourth location—at their own expense—to demonstrate that their business concept is viable beyond the confines of their first outlet.
Because the initial outlet might only be effective due to traits that are so specific to that region that they are not accessible anywhere else, the step of confirmation is crucial to provide proof of concept.
Moreover, it is also necessary to build processes, policies, and procedures during the confirmation stage to guarantee that all stores will operate uniformly. This will be an essential component of the brand’s core values and the overall consumer experience.
#3: Stage Of Preparations.
Developing systems, rules, and procedures is just the beginning of what the preparation stage entails. Even though this will postpone the start of franchising for a little while, it’s essential to make sure the new franchise gets off to a good start.
The company will now be set to allow for the registration of any intellectual property assets. This includes, trademarks, domain names, etc. However, this should preferably be accomplished before franchising is considered.
For franchisors and franchisees to readily detect if an outlet’s performance is falling short of needed minimum levels, it is necessary to build tracking mechanisms and key indicators of performance during this stage. Ideally, this degree of transparency will encompass complete openness regarding the profitability of particular outlets.
The development of the franchise offer takes place at this stage. Also, the refinement of the markets in consideration for outlet openings and the drafting of the franchise agreement. Moreover, this is best left to a lawyer with appropriate franchising expertise.
#4: Rate of Acceleration.
When the potential returns on investment from franchising are clear, would-be business owners start advertising for franchisees willing to put up their capital to launch new locations and put their work (utilising the methods offered by the franchisor) into running those locations.
Franchising allows for swift expansion. Moreover, this is something that company chains, which are to pay for their stores, simply cannot do.
The startup franchisor’s capacity to scale is dependent on its level of growth readiness, which is in turn affected by the demand for its goods or services in the market. The pace of acceleration is as a result.
A new franchisor will have established an ideal capacity for quick acceleration. This is if they construct scalable systems during the development phase to support 100 franchisees simultaneously.
#5. Pause and Reflect on your progress.
It is important for a business to take stock of its achievements and rein in its growth. This is after each period of rapid expansion.Although it may seem obvious, many startup franchisors fail to solidify their position. This is because they are too busy focusing on growth.
Franchisors need to assess their rules, procedures, and systems. After they have started taking on their first franchiseesto make sure they can handle adding 50, or further entrepreneurs in the future.
“Before pursuing additional growth, the franchisor should make sure that the current franchisees are happy, profitable, and dedicated to the brand. If franchisees are unhappy, unprofitable, and disengaged, the focus should be on fixing those issues.”
After you’ve nailed the consolidation stage, you can go back to the beginning and look for new markets to expand into. Then, you may follow these steps again to pursue even more growth.
So are you ready to prepare your franchise development process with our guidance? Reach out to us at Sparkleminds or drop a comment in the box below and we shall get back to help you with franchising right away.
