Launching a new franchise: The ups and downs

The launch of a new franchise unit is a big moment for the entire franchise organization. If the franchise unit is launched properly, it will be on the path of accelerated growth. If on the other hand, the launch is left to chance, the franchise unit will flounder for a long time.

The first 180 days of the launch are the most critical in determining the growth trajectory of the franchise unit. The common objective for both the franchisor and the franchisee should be to achieve, as a minimum, operational break-even and depending on the business model, even profitability during this period.

In this initial crucial period, while the franchisee has the ultimate responsibility to take the learning provided by the franchisor and practice it, this simple equation is obscured by emotions and feelings resulting from starting a new business.

The biggest emotion to deal with is fear. It is natural for many franchisees to have fear when beginning a new venture. Fear in terms of success or failure of the venture. There is a small portion of new franchisees who experience extreme fear and become totally petrified. They will find every excuse not to perform the functions they must as franchisees. Instead they will devote endless amounts of time doing meaningless tasks that can be performed efficiently by any member of their team instead of focusing on franchise critical functions.

Franchisee emotions and feeling
These feeling and emotions to starting a new venture emerge because in many cases a new franchisee is likely to be new to the franchisor’s business, new to the industry and in many cases new to business ownership. They may lack basic skills necessary to run a small business, where they are in charge of all aspects of the operation. In specific:

1. They may not have the experience to manage the types of employees required by the franchisor’s business
2. They may not have any experience building teams
3. They may not have experience juggling multiple tasks required in a small business
4. They may not have the experience dealing with operations
5. They may not have experience dealing with customers

As a result of these missing skills, new franchisees experience emotions that are detrimental to their own business.

It is natural, whenever people are put in a new situation, there is bound to be initial anxiety and trepidation in their ability to handle the ‘new’. This anxiety can manifest itself in two ways. Neither situation is good:

1. Become dependent on the franchisor support team, not wanting them to leave, making every excuse possible to delay their departure at initial opening
2. ‘Faking’ their confidence and their ability to handle the new situation. This ‘over confidence’ can become dangerous as it may negatively impact the customer experience

Actions by franchisee
It is ultimately the franchisee’s responsibility to create a successful situation with the tools and systems provided by the franchisor. The franchisee must clearly understand that the actions taken in the launch period will have long-lasting impacts on the growth trajectory of their business. If they are focused on bringing in business and following the plan laid out by the franchisor, they will likely be on a high growth plan. On the other hand, if they waste this launch period making excuses and hiding behind their fears, they will be on the path to flounder for a long period of time.

Here are some practical pointers for a franchisee to stay on the right track of success:

1. Refrain from re-inventing the wheel—don’t try and change the franchise system
2. Leave your past on the curb—you past experience may be helpful but don’t bring it up until you have a successful franchise business
3. Understand, believe and follow the plan—your job is to enthusiastically execute the plan laid out by the franchisor
4. Respect the brand—anything you do that negatively affects the brand is sure to hurt your business and the business of other franchisees
5. Deliver ‘WOW’ service to create loyal customers—your business can only grow if customers receive a great experience that prompts them to keep on coming back and telling others about the business
6. Aggressively acquire and retain customers—keep focused on aggressively growing the customer base while ensuring that your existing customers don’t leave
7. Build the right team—in order for the business to scale, a dedicated team of people with the right skills and right attitude is essential
8. Watch the metrics—know the important numbers in your business and watch them
9. Benefit from the power of the franchise—participate and collaborate. You will gain more from the franchise system when you participate actively
10. Associate with winners—life is too short, be with people that want to win and succeed

Actions by the franchisor
While the franchisee must do their part, it is in the best interest of the franchisor to get the franchise unit off to a great start. For this the franchisor must:

1. Cut the umbilical cord quickly. Spending more time at a new franchisee location does not make their performance any better
2. Provide solid training for the franchisee
3. Provide solid training for employees of the franchisee
4. Have operational staff on hand for a short time during opening
5. Have a strong launch marketing plan to generate sales for the new location
6. Ensure good business disciplines are taught, practiced and adhered to from the very beginning
7. Have senior management communicate frequently with the franchisee to review progress and provide encouragement
8. Have support staff be available for the franchisee
9. Help the franchisee create victories for the business early in the business so they begin to feel and experience success, whereby removing much of the initial anxiety and fear

Final thoughts
For a new franchise, early victories go a long way in alleviating fear, creating confidence and ensuring that the customer experience is delivered with a ‘WOW’. Once new customers enjoy their experience at the business, they set the foundation for success.

Equally important to ensuring that all operational systems are operating perfectly is to ensure that there is a dedicated focus to increasing sales. When sales come in, franchisees feel better as they see success in their business and here both the franchisor and franchisee must work in tandem to create momentum and accelerated growth.

The initial 180 days of the launch are key to establishing the right disciplines and the right focus so that the franchise unit is poised for accelerated growth and success.