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Franchisors and Franchisees Need to Grow at the Right Pace

Written on July 22nd, 2008 by Joseph in Franchise Industry.

Growth is very important in the franchise industry whether you are a franchisor or a franchisee. Both of them know that and hence, try their best to develop their business. But many times they misjudge the pace of growth. Maintaining a balanced pace is essential in any industry. If you grow slowly, whether as a franchisor or as a franchisee, you will miss out on a good scope of expansion. On the other hand, if the pace is too fast, then you can end up with a situation where your resources are inadequate to maintain the chain.

For someone offering franchise business for sale, a steady pace ensures a number of things. It will help him to attract franchisees, if numbers of open units regularly open. The people looking forward to buy a franchise will interpret it as a symbol of profitability of the concept. Moreover, you will get great discounts from suppliers and manufactures, if you have a large number of units open. But take only that many new franchisees that you can train and provide adequate support. If you take too many new franchisees and then fail to keep your part of the deal, then that pace will be a disaster rather than a blessing!

Similarly, franchisees will also want to expand their operations when they find success with one. Today, the thrust of the franchise world is towards multi-unit franchisees. So, when you are starting a franchise, you will be offered lowered franchise fee, if you take up additional units that you have to open within a certain time-period. It may look tempting, but go for it only when you have enough resources. Running a franchise business till it starts paying for itself needs a good amount of money. So, if you spend the money in opening a new unit when your first unit is facing economic crunch, then it’s not a real progress. Hence, keep such a pace, which is easy on your pocket and other resources.