Franchise News

May 21, 2013

Expanding Outside the Bubble

Knowing when you’re ready and how to start is key to successfully growing your brand.

Every global brand had to start somewhere. For McDonald’s, it was in Des Plaines, Ill. For Dunkin’ Donuts, it was in Quincy, Mass. And for Subway, it was in Bridgeport, Conn. At some point, these companies decided to expand.

For new franchisors, the number of questions can seem endless. But where do they start? Do they open down the street? In the next town? Enter another state? What about suppliers and brand consistency? By breaking down the issues into pieces that are easier to swallow, it can be less daunting.

Know When You’re Ready
Whatever your business, there are probably a handful of key indicators that signal you’re ready to grow. A lot will have to do with your organization. Before making the leap toward expansion, make sure your brand identity is firmly in place. It’s much easier to change a logo, key messaging, store design, URLs and emails, among other things, for one location than it is for multiple ones. Yes, a company may go through major rebranding several times during its lifecycle – take the recent refreshed logo for Wendy’s – but even then a company must have many processes in place to make rollouts much smoother.

In addition, ensure that your business can support operations remotely, as well as locally. Can your organization do what it currently does for one or two locations near its corporate headquarters, and for a store in another state or across the country? Bach to Rock spent two years getting its operations in place for expansion before we knew that we could provide the support necessary to have a franchisee be successful.

Most importantly, ask yourself if the demand for your services is more than just regional. There are chains that are very content – flourishing in a specific region because the franchisors realize the chance of success is limited elsewhere. Not every brand will be a fit in every place.

Choose the Right Market
Once it is certain your business is ready to grow the brand, those involved need to understand in which markets the company can be successful. Research is critical. Our company had a strong understanding of our demographic profile and knew that we needed to have a certain income threshold within a three-to-five-mile radius of our school to see the types of results that we consider to equal success. We also know our brand performs best in a particular type of retail location (an end-cap location versus an interior unit) to minimize build-out costs. These are underlying fundamentals and with today’s technology, your business can really be successful anywhere geographically if your fundamentals are met.

The Chicken or the Egg
But ask yourself: Do I choose a market and search for a franchisee or wait for a franchisee in a market to raise his or her hand and develop there? It’s a valid chicken-or-egg question with a two-pronged response. First, choose several priority markets. Where does your organization ideally want to be? Then, leverage the influence of local media, networking groups or trade shows to plant the seed. Let them know your plans to expand in their market. We announced publicly our target markets and were able to prioritize where we wanted to open first based on responses from potential franchisees.

When Bach to Rock began franchising in 2011, we wanted to initially expand from our home base of Bethesda, Md. We identified New York and Philadelphia as two of our target markets and soon found franchisees who fit the profile we were looking for: passionate business people with the ability to think creatively and who had effective interpersonal skills.

Here’s a quick checklist to decide if you’re ready to expand outside the bubble.

  • Is your branding solid and consistent?
  • Are your operations replicable elsewhere?
  • Is the team in place to support locations outside of your immediate area?
  • Is the demand for your services more than just regional?
  • Has your business identified what makes its current locations successful?
  • What markets would be the best fit for your brand? Are your PR, marketing and social media tactics replicable elsewhere?
  • How creative are you willing to be to make this work?

Land the First Deal
Once your target markets are identified, attention will turn to signing that first deal. Try to create a funnel of prospects. Only a small percentage of leads ever turn into a franchisee and for a new franchise, it’s a lot lower than that. Landing the first franchise agreement – or any franchise agreement – is 90 percent interpersonal and 10 percent transactional. To buy into your concept, prospective franchisees have to buy into the people leading the brand.

Spread the Word
Once a franchise agreement is signed in a new market, what’s next? First, recall what helped build your brand locally in your hometown and decide how replicable those tactics are in another market. One of the most effective tactics is social media and internet marketing, which apply nationally, so they can be easily replicated in markets across the country. Also consider leveraging grassroots public relations efforts to build brand awareness via local media and get involved in the community. All the things your organization does to drive success locally will help it raise awareness for the brand elsewhere.

Be Creative
Franchising requires creativity to make it work. New franchisors are constantly fighting an uphill battle. For us, we actually let a franchisee hire one of our corporate employees to work as the site director of our first franchised school. It was perfect for us – someone who knew the brand and the operations and could implement our vision in the field – and perfect for our franchisee who would have someone “on the inside” on-site each day. It was a winning move for us. Initial franchisees in particular have to be successful for your brand to sell additional franchises. You must do everything possible to ensure their success.