Creating a Franchise Development Strategy That Succeeds

Creating a Franchise Development Strategy That Succeeds

Some of the world’s most iconic brands McDonald’s, Subway, KFC became household names by franchising. Establishing a franchise business is popular the U.S. has over 750,000 franchises alone.

A franchise development strategy is a fast way to strategically establish market share and increase revenue for your business. The owner of the brand, the franchisor, grants franchisees the right to develop and operate an extension of the business in one or more locations in return for franchise fees and royalties.

Female business owner talking on the phone at desk

Franchising offers the chance to grow a brand by inviting others into the system,
allowing the brand to grow without putting the entire burden and cost of expansion on the original founder. While this system could seem like it helps business owners to simply sit back and collect fees, it’s never that easy.

There’s a lot of planning and paperwork, and a lot of questions.

Franchises require detailed planning, like any business venture. Here are some things you’ll want to keep in mind if you’re designing a franchise development strategy for your business.

Research a franchise plan

It is essential to have a business plan in place from the beginning. Successful franchisors don’t just know how to franchise, they also know when to franchise, and when to seek help from a professional franchise development manager.

Here are a few steps to get started:

1. Test for scalability. The business needs to operate following easily reproducible formulas that can be replicated by franchisees around the world. Ray Kroc turned McDonald’s into an empire after realizing that he had a reliable make-ahead model for most foods.

2. Judge unit-level economics. How much revenue can the franchisee expect to make in six months? In a year? What is the resale value of a franchise? Franchisors will need to develop realistic financial projections about future growth to ensure that each location delivers as expected.

3. Develop an FDD. Financial details are reported in the government-mandated franchise disclosure document (FDD), which is a legal disclosure document filed in every state the franchise plans to grow into. An FDD typically outlines initial investments, franchising fees, protocols for operating the business, and more. The operating manual is the guide by which to run the franchise location. Franchises can be sold in single units or through multi-unit deals. The FDD must cover that, too.

4. Establish a training and support system. A training program and support network nurtures franchisees through various stages of a business launch. Typically franchises set up a one or two-week long training program at the headquarters followed by training onsite.

5. Find the right franchisee, and the right location. Franchise development also involves finding the right franchisee by evaluating financials as well as determining if there’s a culture match. Typically franchisors will host a Discovery Day in which both the franchisee and the franchisor evaluate a potential business fit.

Consider a franchise development manager

Franchisors sometimes recruit a franchise development manager, who essentially acts as a broker finding the right candidate for the franchise business. A franchise development manager might be a great asset in guiding you through the steps necessary for franchise development, in the short and long term. While it is possible to succeed without a franchise development manager, an experienced one can make a critical difference.

Group of professionals sitting at a table writing a franchise development strategy

A franchise manager can help lay the operational and financial foundations for what growth should look like. They can represent your franchise, make sales, generate leads, lead branded marketing efforts, and be the voice of the franchise on the field. For example, franchise development managers are adept at lead generation to funnel the right franchisees for your business and at using online strategies to channel leads in the prospecting and sales process.

Moving a franchise development strategy forward

As the franchise business grows, not only can you to research a franchise plan and expect to employ a team of franchise development managers. Franchises also need to find the right location for setting up and growing new business — a task they take up with the potential franchisee. No matter how the franchise eventually scales, it often needs portable storage solutions to meet changing inventory needs.

Smiling business owner standing inside franchised food service business

From burgeoning retailers to growing restaurant chains, your franchise will need flexible solutions to hold important business goods and equipment. Portable storage solutions, such as PODS commercial shipping containers, help businesses in need of extra space as they grow during expansion phases for new locations that include construction and building renovations.

Whether or not a concept is the next McDonald’s, there’s much value in evaluating a business for franchise development as a reliable growth avenue. Learn more about our solutions for small to medium-sized businesses that may need support during the franchise development process.

Discover Moving & Storage Solutions For Your Business

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