There is a common problem I often see in franchising: You launch a franchise system after building a successful business in your specific industry, you get a few locations launched — all sold to people from your personal network — and then the franchise sales stall. 

You aren’t selling franchise locations fast enough. The franchises you do sell don’t grow as fast as you think they should or could. Your royalties barely make a dent in your costs. You don’t have enough money to continue marketing to sell more locations and you find yourself on a path where it will take over 10 years to reach 25 franchise units. 

I’ve written a lot about the low success rate of franchise expansion. Did you know that 60 per cent of franchisors never sell a single location in their first two years of franchising?

 My team and I have expanded the previous franchise brand we worked with to hundreds of units in under ten years. We’ve also been instrumental in the start-up and growth of some of the fastest-growing franchise brands in the country. We reflected on why we grew and scaled so quickly and investigated why some emerging brands scaled well while most don’t.

 From this reflection, we uncovered specific franchising habits that were overwhelmingly present in successful franchises. The four habits presented below were part of our Science of Scale, ‘The 10 Habits of Top Performing Systems’ the Franchise GrowthLab presented at the Canadian Franchise Association’s 2023 National Convention in Niagara Falls, Ontario. If you are interested in learning more about the ‘The 10 Habits of Top Performing Systems’ and how your franchise business executes the 10 must-have habits, please email us at info@franchisegrowthlab.com to set up a call.

Habit 1: Core Purpose, Core Values, and the Envisioned Future are “Alive” in the Organization

 This is where you must start if you want to build a scalable, successful franchise brand that feels like more than ‘just another job’ for you and if you still want to love franchising after selling one, five, 20, or 100 franchise locations.

 To create a culture that will thrive in the long term, a successful franchise business must have a clear core purpose, a maximum of three core values (trust me, no one will remember more than three), and an envisioned future that is alive and, most importantly, energizes the organization. These core ideologies, which usually capture the founder’s story, vision, and purpose, must be bold, clear, and excite all employees and customers. With past franchise brands we have built, we developed these core ideologies through focused strategic planning sessions and best-in-class recognition systems, always based on storytelling, that celebrated our core values and purpose down the franchisee employee level. We made celebrating core values the energetic and emotional apex of our annual conferences, and these core value awards were always my favourite part of the conference! Delivering this first habit will create a strong brand and culture with values and trust at the gravitational center of the business. Most importantly, it also helped me LOVE franchising through all the ups and downs of building a business for the long term.

Habit 2: Your Brand Shines & You Are a Marketing Master 

This habit is vital! You must nail your marketing out of the gate to grow your franchise and scale your operations quickly. Marketing is also something most emerging franchisors rarely get right. 

In our experience evaluating and coaching hundreds of start-up franchisors, the odd founder is a branding genius, but unfortunately, most aren’t. If you are going to franchise, you need to look like a 100-unit brand even when you only have one.

 I can’t tell you how many brands I see that simply don’t look professional. And if you don’t look like a sophisticated brand (even when you aren’t yet actually a sophisticated brand), you will face two big challenges: 

You will have a much more difficult time selling franchises. Your franchisees will have a harder time getting traction in their local market where no one is familiar with your brand.

 I learned my personal lesson in this when we expanded our own system from Canada into the U.S. We had dominated our category and the competition in Canada in terms of size, revenues, and number of franchises, so we thought it would be the same in the U.S. How wrong I was! Competing with 4,000 franchise competitors and many direct competitors whom all did the same thing in our space was eye-opening. After a few years of momentous growth in Canada, suddenly, we were having trouble selling locations in the U.S. 

What did I do? I spent most of my time figuring out how to differentiate our brand in the American marketplace. How to look different, how to sound different, and how to provide a different service from the rest of our competitors. Several months later, we had it: a completely refreshed brand. And guess what? In no time, we were once again selling franchises. We heard, “I’m choosing your franchise because of how refreshing you are in a sea of ‘sameness’”. We went on to sell 40 franchises per year, year over year, which was the perfect growth speed for our system at the time.

 Another benefit of having a brand that shines, combined with well-executed marketing, is your franchisees will be more successful in the short term, from day one, and in the long term. With a brand that stands out, you can build a detailed, new location ‘launch plan’ for your new franchise locations that will ensure your franchisee has customers on day one and will achieve break even and beyond on a pre-planned date. You can leverage your brand fund to drive leads to your entire system, including new franchise locations, so your new, recently trained franchisees can focus on local marketing initiatives and converting leads to customers. 

A sophisticated looking brand will cut through a noisy market. It will stand out and help differentiate your business, even when no one knows who you are. To become a national force, you need to nail your brand!

Habit 3: Franchise Sales is a Machine

 Another system that most emerging franchisors do not understand is how to sell franchises. Very few franchisors have mastered the art and science of franchise sales, but if you want to scale your franchise system, you must become an expert in franchise sales as fast as you possibly can. 

Early in our franchising journey, I had a franchise sales mentor, and the first thing he told me was that franchise sales are one of the most complex sales you can make. For example, you are no longer selling a $100- or $500-dollar service, instead, you are selling a $150,000 product: a franchise location. That’s a huge difference. Do you know how to sell a $150,000 product? Chances are, you don’t. 

Next, realize that you are asking a prospective franchisee to:

 • Commit their life savings and go into debt to invest in something they have very little visibility into. Prospects don’t really know how much money they are going to make and how long it will take for them to get to profitability. 

• Sign a daunting 243-page legal document that a) they don’t understand and b) the parts they do understand make it very clear that if they break the rules in any way, you will take their invested life savings away from them.

 • Commit more of their time than they are currently spending on their job and sign on for 7 or 10 years, which is longer than the duration of most marriages. 

On top of that, you need to find someone to choose your company and commit to all of this over the other 4,000 brands that are also trying to get them to buy a location. Now that is a hard sale! 

Once I understood this, it all made sense! I had an epiphany: Franchise sales aren’t about getting someone through the process as fast as possible. Instead, franchise sales is about making someone feel comfortable and safe by building relationships and trust. We like to say we are ‘awarding’ locations versus ‘selling’ locations because we are trusting the franchisee to deliver our brand at an exceptional level. In fact, when you can turn the franchise sale process on its head, where the franchise prospect has to sell you on why they should become a franchisee…now that is a world-class process. It is also important that franchise sales not rely on one person’s charisma or list of contacts. A trust-building franchise sales process requires everyone, including existing franchisees, to be ‘all-in’ and part of the ‘awarding’ process. Trust is the holy grail of franchise sales, and it takes time. Your franchise sales process must reflect the time needed to build relationships, trust, and clarity.

Habit 4: Your Onboarding Process Better Be Locked and Loaded 

We think we must train our franchisees in every detail to a “T.” We expect new franchisees to know everything before they launch their location. So, we firehose them with all the information we can possibly squeeze into pre-launch training sessions. We teach them everything we have ever learned about building and running this business. 

What happens? New franchisees get overwhelmed. They don’t focus on the important things, and they miss stuff that is vital to you and to the health of their location. And then they don’t perform to expectations. We see this pattern repeatedly. 

One important learning from years spent doing this and not getting it right: The faster your franchisees succeed; the easier and more fun franchising becomes — for you and for them. It is as simple as that.

 If you want your franchisees to perform and execute from day one, then you need to put a lot of work into crafting your franchisee onboarding system. 

The first thing you must get right with onboarding? You need to train new franchisees on only the key things that matter in the early days of running their business. We spend a lot of time with our new franchisor clients getting them to answer this important question, “What are the five things your franchisee must know how to deliver and execute to be successful?”

 We then build operational systems and training to ensure the ‘Top 5’ must-have systems are clearly understood throughout the franchise organization, especially down to the franchisee employee level. We also build training to support the ‘Magic Number’ or the leading indicator that we know with absolute confidence will drive a franchise partner to break even and beyond. We are big fans of in-person training, especially during a well-planned and delivered new franchise training week but virtual training should also be rolled out to all franchisees and their employees.

Conclusion

Of course, the four habits we’ve discussed here aren’t the only systems new franchisors need to get right. But they will help accelerate your growth and chance of success. Just as importantly, investing the time and energy into these habits will help bring back the fun and purpose in your business and franchising, just like it did for me at my previous companies. You can beat the odds by harnessing these franchising habits and the remaining six habits that are part of the ‘The 10 Habits of Top Performing Systems’ the Franchise GrowthLab presented at Convention. Our team is available for a free call to help you assess where you are with these habits and to discuss potential solutions. If you are interested in learning more about these ‘10 Must Have Habits’ and how your franchise scores on these best practices, email us at info@franchisegrowthlab.com and we will set up a call with you! 

ABOUT THE AUTHOR

John DeHart is the co-founder of multiple franchise brands that have grown to hundreds of units across three countries. After exiting both of his brands, he launched the Franchise GrowthLab (https://franchisegrowthlab.com/) to help emerging franchisors scale and still love franchising. He has won numerous awards, including being named Ernst & Young’s Entrepreneur of the Year in 2006 and 2016, and John is the Past Chair of the Canadian Franchise Association.