Skip to Content

Franchisors Should Balance Franchise Development with Sales Growth

Published on March 24, 2022

Share Tweet Share

When developing an emerging franchise system, franchisors typically focus most of their attention on adding new franchise locations which is understandable. The danger with this practice is that new franchisees need to get a good start during their first ninety days. Not having an aggressive ramp-up program for new franchisees can lead to financial and operational problems six to nine months later.

New franchisors consider the sale of new franchises an important prerequisite for future success. However, in addition to the need to add new franchise locations, franchisors should also focus attention on growing individual franchise sales. The best time to introduce this strategy can vary depending upon the complexity of the franchise program. For some franchisors it could be at 25 units for others, 50 units. Typically, mature franchisors (those with 100+ locations) recognize the importance of a dual strategy, while emerging franchisors may not.

It’s important that franchisors sell new franchises since initial franchise fees provides revenues and new franchise locations can increase market share and branding. However, franchisors must be careful to direct attention to existing franchises, so they can grow their business and succeed. Emerging franchisors should avoid the tendency of selling a franchise and training the franchisee without strong sales building programs.

Increasing unit franchise sales provides key benefits:

  1. Increase franchisee profitability.
  2. A positive sales building strategy will enhance franchise relations.
  3. Add financial balance to generating franchise revenues rather than relying upon initial franchise fees.
  4. Focusing attention on increasing franchisee sales will assist in the sale of new franchises by enhancing franchisee validation.
  5. Both the franchisor and its franchisees will benefit from a balanced strategy of franchisee and sales growth.

Suggestions for increasing unit franchise revenues:

  1. Establish a marketing committee to include select franchisees and utilize the group to conduct select competitive analysis
  2. Evaluate the effectiveness of the existing website with the objective of generating more customer traffic
  3. Solicit suggestions for new products, promotions and/or services from franchisees via the Marketing Committee.
  4. Identify pilot locations for new products/services to measure results and establish credibility.
  5. Utilize sales contests and other incentives to generate system wide interest
  6. Have a theme, slogan or other vehicle to create awareness and enthusiasm for new products/services
  7. Develop a three-month marketing plan for new franchisee sales growth.

The sale of new franchises is a necessary objective for franchisors. However, it’s important to balance this goal by growing new franchise sales. This is a critical strategy for emerging franchisors.


About the Author: Ed Teixeira
Ed Teixeira is a recognized franchise expert with over 40 years’ experience in the franchise industry. He has served as a corporate executive for franchise firms in the retail, manufacturing, healthcare and technology industries and was a franchisee of a multi-million-dollar home healthcare franchise. Ed and Richard Chan are the authors of a new textbook, Franchising Strategies: The Entrepreneurs Guide to Success, to be published on July 1st by Routledge on July 1st. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country and has spoken at a number of venues including the International Franchise Expo and Chinese Franchise Association in Shanghai, China. Over the course of his career, Ed has been involved with over 1,000 franchise locations and launched franchise concepts from existing business models. Ed can be contacted at [email protected].

Thinking about buying a franchise?
Not sure how much can you afford?

Fill out our Franchise Affordability Calculator