Tips on How to Responsibly Navigate a Growing Franchise

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What are three things new franchisees should be prepared to address in their first year of business?

By Jim DiRugeris

You will work very hard.

The ramp-up period is critical to success, so be prepared to be the first one in and the last one out.

You will lose staff.

Whether it is due to someone leaving or you having to terminate an employee, the faces you see on Day One will not all be the same a year later, and there is nothing wrong with that. We all try our best to staff the perfect team, and we all make mistakes, so if you identify a mistake, address it quickly.

You will feel a new sense of accomplishment.

For first-time business owners, you get to answer the question “What line of work are you in?” with “I own my own business,” and that is a great feeling. You will feel a new sense of accomplishment when you reach a certain milestone, hit a target number or achieve other goals you have set in the first year.

What are some common misconceptions about the franchising industry?

One common misconception revolves around the franchisee-franchisor relationship. The belief that franchisees are constantly being told what they can and cannot do is simply not true in most concepts. Rather, the relationship is a partnership where the franchisor provides a proven system to work within and allows for individual strengths and styles to implement the system.

For example, the Goddard School has implemented an online “franchisee idea box” wherein all franchisees can submit their own ideas on any aspect of the business. These ideas are reviewed first by an evaluation team. The team’s comments are then shared with the senior management team and a decision is made to move forward or not. In either case, we speak with the franchisee who submitted the idea to discuss the outcome. We have received many great suggestions that we now use in day-to-day business activities.

Another misconception is that other franchisees will see you as competition and not lend support or guidance. A franchise system that claims brand strength only got there by having a strong group of franchisees. Our franchisees take great pride in their business and remember what it was like when they first started and most are more than willing to lend a hand, share mistakes and help the brand grow with other successful franchisees.

The key for new franchisees is to make time to pick up the phone and introduce themselves or visit a few nearby locations. In our system, we have taken this a step further by instituting a mentor-protégé program. We partner new franchisees with experienced ones to help facilitate the transition in the early stages. All of our mentors are volunteers, highlighting the belief in the brand and the willingness to help.

Define responsible growth. How should companies go about selecting the right franchisees to grow a business?

Responsible growth begins with company leadership. If a mature franchise system has objectives to double location count year over year, it will be difficult to support reasonable growth because you will be forced to accept owners who may not be best for the brand. That undermines the existing owners who work very hard to establish their presence in a market.

Responsible growth means developing a plan, both short- and long-term, that has challenging but achievable objectives. This plan may include evaluation of lead count and where the leads are based. It may also include an evaluation of markets that present limited growth due to existing locations as well as markets that present greater growth opportunities. One commonality that franchise concepts have regardless of product offering is that we all get leads in strong, established markets. This creates the challenge of where a new location can open and how long it may take to find that location.

Responsible growth means making difficult decisions and few decisions are more difficult for a development team than saying “no” to a new license. If doing what is in the best interest of both the brand and owner is part of your culture however, saying “no” supports your plan for reasonable growth.

At The Goddard School Franchise, we don’t view it as selling a franchise, but as awarding a franchise. Part of our awarding process is finance-based, but we go beyond this in our review process. Recently, we introduced a Predictive Index Survey to the awarding process. We survey our existing franchisees to get a better look at what characteristics are common among our top-performing franchisees and now have the ability to match our findings with prospective franchisee characteristics. While we do not rely solely on the survey, it does give us additional information to review.

Another way that companies can ensure that they are getting to know future franchisees on a personal level is organizing a “Meet our Team” day. This in-person event allows prospective franchisees to meet with the extended leadership team and provides an excellent opportunity for questions and answers..

How does franchising in the education industry differ from other industries?

I do not believe there is a substantial difference. The majority of franchisees do not have prior experience in the industries they choose. They learn through proper training and support as well as following the system, and most concepts have some type of manager who is the subject matter expert.

In our system, each franchisee hires a degreed education director whose role is to work with the teachers and implement the educational material while the franchisee is responsible for daily business operations. However, no matter which franchise system you choose, there should be some level of passion for the industry you are about to invest in. Our franchisees all share a passion for childcare and early childhood education.

What types of individuals can benefit from opening a franchise?

Although it has been said before, it is true that opening a franchise is perfect for those who want to “be in business for themselves, not by themselves.”

Do you have any tips for navigating the process of opening and managing a franchise?

My first tip would be to get comfortable with making mistakes, especially during your search for real estate. Engaged owners in the education industry like to scout the area for their businesses, even if they have a local commercial broker looking on their behalf, but at times are reluctant to share their findings, perhaps due to their lack of understanding about what is and is not a viable location.

Drive around, write down phone numbers and addresses and send them to your assigned real estate manager. The manager will explain the pros and cons, you will learn what to look for and what to stay away from and it can be a fun way to spend an afternoon while helping you to feel more connected to the process.

Also, take advantage of relationships that the franchisor has developed in the construction industry. A good general contractor who has built multiple locations has already made a few mistakes and learned from them. While a franchisee should always explore multiple bids, don’t be too quick to pick the contractor who is offering the lowest cost. We all want the best deals but inexperience can cause changes in project costs as well as delays that can prevent you from opening on time.

Jim DiRugeris is vice president of Franchise Development for Goddard School. Find him at fransocial.franchise.org.