The Franchisor's Guide to Franchise Expansion

The only thing standing between you and outrageous success is continuous progress.

- Dan Waldschmidt

As a franchisor, there can be nothing better than getting to a point where potential business owners are lining up to be "awarded" the rights to become your franchisees. It's easier said than done. You must establish a thriving business before you get there.

Even if you have a sizeable franchise network, evaluating and recruiting the right business owners to become your franchisees is not easy. Therefore, if you want to streamline that process and grow your franchise network faster, keep reading this franchise expansion guide to gain insights.

Franchise Expansion: How to Begin?

Several factors come into play when expanding your franchise. Here is a step-by-step guide on how you can expand your business one franchise at a time.

Step 1: Evaluate Your Readiness for Expansion

Before you add a new franchisee to your network, it is critical to evaluate your business's readiness to do so. Here are some factors you need to consider:

• Can your current infrastructure (IT, manufacturing, distribution, and so on) support another franchise expansion?
• Do you have the capital to support the costs associated with the addition of a new franchisee?
• Does your existing workforce have the bandwidth to support (onboard and provide training) the addition of a new franchisee?
• Can your current management team handle another addition to your franchise?

If your answer was yes to all of the above questions, your enterprise is ready for yet more expansion. If the answer is no, consider holding on till you are better prepared for the expansion.

Pro Tip: Sometimes, it's better to leave certain aspects of business management to the experts. Consider hiring a franchise development specialist or consultant to help you through the process.

Step 2: Conduct a Market Analysis

There were a total of 806,000 franchise units across America in 2023. The number is expected to increase by another 15,000 by the end of 2024. Competition is abundant out there for every niche. The next step in the franchise expansion process is to explore the feasibility of expanding into a specific market or location. Here is how you go about it.

• Evaluate if the target market or location is large enough to sustain your new franchise.
• Understand the demographics and the psychographics of the location. Check if they fit your target customer profile.
• Identify the competition in the target location. Check if there is a possibility to exploit any gaps in their offerings to capitalize on and capture the market.
• Do your due diligence on the availability of suitable real estate. Further, evaluate factors such as lease rates, local operational costs, and local regulations that govern your niche.

If all your research suggests that this particular market/location is the right fit for your next franchisee, we move on to the next step of the process, i.e., attracting potential franchisees.

Step 3: Marketing your Franchise

This requires a two-pronged approach - marketing via online and offline channels. Online marketing channels can include:

• A dedicated "Become a Franchisee" or "Join our Franchise Network" section on your website. This section should highlight your brand's value proposition and the benefits of joining your franchise network, along with a broad overview of the training and support you provide to get them started.
• Use social media platforms such as Instagram, Facebook, and LinkedIn to highlight your brand, potential franchise opportunities, and success stories from existing franchisees. Creative platform-native content can help you reach the right audience and potentially gain viral momentum.
• Ad and email campaigns can enable you to hyper-target business owners who are actively looking for franchise opportunities online.

Pro Tip: Use lead magnets on your website to capture the contact information of business owners who show interest in your franchise network. Retarget them periodically with email marketing and ad campaigns.

Offline channels you can tap into include:

• Industry-specific trade shows/expos where you can set up a booth to market yourself and attract new leads.
• Business network events are another great forum for connecting with business owners who may be looking for investment opportunities.
• Advertise on print media - newspapers, franchisee journals, or magazines.

Step 4: Review and Evaluate Your Leads

After you begin receiving interest from potential business owners who are willing to become part of your franchise, evaluate them on parameters that matter to you. Some broad areas you should discuss with the business owner and explore:

• The business owner's values, story, and background
• Relevant expertise or experience in the industry
• Long term goals and aspirations (to help you assess their alignment with your brand and their level of commitment)
• Personal financial situation and hopes (will help assess their financial fitness - do they have the capital required to step up and sustain your franchisee)
• Leadership style and work ethic
• Their own plans and ideas for growing the franchisee's business

Pro Tip #1: Try to have an informal meet and greet beforehand. A casual setting can help you build a personal rapport with the person and better understand their vision and goals.

Pro Tip #2: Establish clear evaluation criteria beforehand. This can help streamline the process significantly.

Pro Tip #3: Not all potential leads will have the upfront capital required to start a franchisee. Some may need financial assistance, so partner with legitimate lenders who are familiar with your business model to help with raising the necessary capital.

Step 4: Close the Deal

At this point, you are at the most crucial part of the process - closing the deal. The following pointers should help you navigate this delicate phase of the process effectively:

• Have a well-crafted Franchise Disclosure Document (FDD) that outlines every aspect of the franchisee agreement. The most critical components here include the finances involved and your plan for how you intend to train and support the franchisee through the process. Transparency from the get-go can go a long way in establishing trust.
• Address any concerns the franchisee may have openly. You can go one step further, be proactive, and highlight a few key points that the lead may not be aware of. Doing so will demonstrate your commitment to their success as well.
• Once you two are on the same page, secure a verbal agreement. That said, ensure that you steer the franchisee toward a clear "next step." This could be inviting the franchisee to a potential discovery day to meet your team and better understand your brand and how you operate, or it could simply be a follow-up meeting to finalize the franchisee agreement.

The above steps should help you navigate the franchisee acquisition and closure process. Hopefully, your marketing and channel teams will bring you a host of potential leads that you can convert into franchise partners.

Pro Tip #1: Try to have an informal meet and greet beforehand. A casual setting can help you build a personal rapport with the person and better understand their vision and goals.

Pro Tip #1: Avoid generic pitches and tailor them to align with the lead's entrepreneurial aspirations. The informal meeting should help you gain valuable insights into them.

Wrapping up

Building a thriving franchise network is a marathon, not a sprint. Continuous progress is key. The steps outlined in this franchise expansion guide will help you establish a successful franchise, one franchisee at a time.

That said, as your franchise enterprise grows, so will the degree of complexity involved in managing it. While a crack team of franchise management experts can get the job done, picking the right software will raise their efficiency a few notches.

Hubler's Franchise Management software is perfect for brands that want to get more out of their franchisees. What's more, Hubler's retail software stack is perfect for managing a large footprint of stores, whether owned or franchised.