One of the striking facts about franchising is that 45% of all franchise systems have less than 25 locations and over the last 6 years these systems account for only 3.6% of all franchised outlets opened. These statistics mean that you face a tough challenge. In order to overcome the challenge, you must develop your franchise strategically and it’s not just about having a competitive advantage.
According to our recent Facts and Figures: Does the State of the Franchisor HQ Make a Difference in Success? there is little evidence to conclude that regional differences between franchisor headquarter (HQ) locations have a material impact on the success of a franchise system. This is a positive result for you as this indicates that a franchise system’s success is not impacted by regional HQ locations.
Here is a proposed development strategy for you:
Support and work with your franchisees so they can succeed. It’s the franchisees that ultimately sell your franchise. Based on my experience and after working with many clients, I know for certain that that the development of a new franchise program must include a cohesive plan for selling franchises. Just because you build it, doesn’t mean that people will come and invest.
When reviewing an FDD make sure you review to the number of franchisee terminations, new franchise units and the number of outlets opened at year end.