Starting a business and achieving financial success with it is difficult enough to do and admirable.

Thoughtfully taking that business model success of yours through the compliance rigors to franchise it is hard to do, making the leap to franchisor is even harder and for some a bridge too far given that according franchising insiders 200-300 franchisors launch their franchising efforts each year only to quit their franchising 2-5 years in.

Here are the gaps that if you aren’t working on filling you should be…

  1. Is your franchise business model investment worthy?

To recruit the best franchise owners your business model has demonstrate that it makes money for franchisees so look at your Item 7 Initial Investment in your FDD and compare it like a smart franchise buyer would to your Item 19 Financial Performance Representation and calculate the cash on cash return on investment.

If your franchise business model doesn’t work for a franchise owner ROI fix it straightaway.

2. Are you well capitalized to recruit a franchise owners?

Lead generation and advancing qualified prospective franchise owners through the franchise ownership process is expensive to do and there is no magical way to get around this.

Estimate your cost per franchise sale – CPFS, create a budget based on how many you plan to sell each year and yes that is hard to do your 1st year out of the box, many emerging franchisors have yet to do this and others have just given up & quit.

After you do this important exercise you may need to raise more money to ensure you can effectively recruit franchise owners that you want as franchisees and who will be the foundation for your franchise brand’s successful, durable and enduring growth.

3. Do you have a plan on learning how to become a franchisor? 

Yes you are a successful business owner at what you have done in creating your underlying business model that you are now selling to franchise buyers, but can you say you are accomplished, skilled and practiced at being a franchisor, likely not unless you have done this before.

You can fix that by learning it over time and that’s very hard to do, you can hire someone with the experience to lead your franchisor company for you or you can rent expertise from people who have done it before in order to accomplish this important piece of your franchisor business platform.

You must pick your learning path to franchisor stages of proficiency and you must never stop learning.

4. Does your franchisor team have the operational, sales and development talent you need?

Typically startup and emerging franchisors promote the team members they have or find people they already know in their business circles to take on important roles in selling franchises, finding real estate or defining territories, onboarding, training & supporting franchisees or they are doing most of these functions themselves and these quick & convenient solutions to these functional demands are recipes for failure.

Strategically getting the franchising talent in place for operational, sales and development is vital for a franchisor and its franchise system so having the strategic plan and funding to do this is challenging since you are investment spending your capital before you are realizing sufficient franchise fee & royalty revenue to cover your G&A expenses and there is no templated fix for this that you can just plug in and play with.

Not easy but you must bravely go back to your business plan, rework the plan and don’t fret that you are doing a complete overhaul to it in order match it with your requisite talent requirements and with your growth plan.

And like in exercise number 3 you may need to raise more capital to do this.

Make it your priority and start working on filling these franchisor gaps since the sooner you do the sooner you will enjoy improving results from your franchising efforts.

If you need a hand with filling your franchisor gaps get experienced people to help you.

PS In the event you conclude you need more capital there are more options we could consider with you to solve that problem.

Drop us line if you want to chat about your franchising and how to improve what you are doing.

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