Why Franchisors Need to Plot Their Development Strategy with Caution
Before committing resources to future franchisee development franchisors need the right plan.
There is little doubt, that the lifeblood of a franchise system is the continued and sustained growth of new outlets. Although there are certain principles that franchisors should follow when designing their franchisee growth strategy, itís easy to depart from these principles. One of the key principles is that new franchisors should grow outward from their corporate location and resources.
The other component is to concentrate enough locations in a state or region to gain brand awareness. A scattering of franchise locations across a broad geographic area can dilute the ability of a franchise system to create brand awareness and capture meaningful market share.
A recent analysis by FranchiseGrade.com, indicated which states and regions offer more opportunities for certain franchise concepts than other states and regions. On the surface, it may appear that a number of states provide similar opportunities for franchise development. However, if one were to look deeper into the composition of franchisors in a state or group of states, the situation may not be the same as first appeared.
When a franchisor markets franchise opportunities and grants a franchise in the wrong state or market, the consequences can be severe, especially for a small or mid-sized franchisor. This includes wasting lead generation funds, having potential franchisee failures and hurting the franchise brand. The most effective way to avoid this painful experience is to utilize a credible and comprehensive strategy for identifying states or regions for development.
The next time a start-up or midsized franchisor considers a franchise development strategy, they should consider the consequences of making the wrong choices.
© 2015 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating
Officer, FranchiseGrade.com. He is a former
franchise executive and franchisee. He can be contacted at 631-246-5782 or