10 Steps to Making Your Franchise the Next McDonald's

Steps 6-10

6. Select the Right Franchisees.
Great franchise systems have great franchisees. Even the best franchise concept will fail if its franchisees are not capable of running a profitable business and delivering a positive experience to their customers. Selecting quality franchisees is most critical as you're seeking to gain traction in the market. Financial capability is clearly a critical component to success, but other characteristics are equally important.

Franchisees must possess a passion for the brand they are representing, have the ability to lead their operations team and be willing to filter their own personal interests through those of the entire franchise system. An excellent franchisee will realize that profits can only be maximized if their interests are aligned with those of both the franchisor and other franchisees in the system.

7. Make Controlling Quality "Job One."
Once you have found your franchisees, one of the most challenging aspects of hyper-growth is controlling quality. But to maintain your value proposition at the consumer level, protecting brand standards must be at the top of your priority list.

If you're opening a handful of franchises over the course of a year, you can often maintain quality without a heroic effort. But the faster you choose to grow, the more important it is for you to develop the systems and tools necessary to ensure the consumer receives a consistent experience. That means start-of-the-art operations manuals, training programs and perhaps training videos. Moreover, that means a commitment on the part of management to inculcate these standards within the organization-and the intestinal fortitude to make the tough calls when those standards are not upheld.

8. Capital Makes the World Go Round.
Of course, the best laid plans of mice and men, often go awry, especially if you don't have the capital to implement them. While franchising is a low-cost way of growing a business, it is certainly not a "no cost" means of expansion.

You need to secure adequate capital to fund your initial legal and development costs, which, for an aggressive growth plan, will likely be north of six figures.

Beyond the basic startup costs, you need to fund a budget for franchise marketing. On average, you can expect to spend between $5,000 and $7,000 on marketing for each franchise you desire to sell.

Likewise, you need to staff an organization capable of aggressive growth. That certainly means hiring people to staff your franchise sales department and people to maintain quality-field representatives and trainers.

There is no worse mistake than taking a 9-foot leap across a 10-foot ditch. That means you must start by understanding your capital needs and then ensure this capital is available to you.

9. Bring in the "A Team."
Speaking of which, one of the most important aspects of any business is the development of the team responsible for growing it. Chances are, if you have built a successful concept and are about to franchise it aggressively, you'll need an entirely new set of skills to make the transition from operator to franchisor.

Regardless of the business you plan to franchise, as a franchisor, you will now be in the business of selling and supporting franchisees. And if it is your goal to expand aggressively, you will almost certainly be stepping outside of your comfort zone.

The easiest way to overcome this challenge is to bring in an experienced team. But where to start? Often, the best route is to use a management recruiter who specializes in finding proven franchise talent.

10. Erect Barriers to Entry, and Plan for Change.
Lastly, you must anticipate and adapt to changes in the competitive landscape over time. When McDonald's first started franchising, it had a much more limited menu. It did not have Big Macs, Filet o Fish or salads. It did not have Ronald McDonald. It did not have drive-thru windows. But it continued to adapt and thrive.

The more successful your company is, the more certain you can be that knockoffs will follow you into both the consumer and franchise marketplace. You must anticipate these newcomers and do everything you can early in the process to erect barriers to entry, to adapt to the new marketplace and to stay one step ahead of the competition.

Establishing barriers to entry can be as simple as being first to market and establishing a dominant brand position. Or it can be as complex as obtaining a business process patent. It can be a recipe, a product or an attitude. But if you have an undifferentiated product or service with low barriers to entry, your business will quickly become commoditized. And if this happens, you will have a difficult time maintaining a leadership position-let alone the kind of growth that will help you achieve industry prominence.

Finally, as an aspiring mega-franchisor, you must remember that even McDonald's did not become McDonald's overnight. They did it by overcoming their competitors day after day, year after year, and continuing to evolve to meet the changing consumer-and franchise-marketplace.

Of course, there are a thousand hurdles to overcome on the road to success, but with the right planning and enough time, your company could be the business that everyone emulates years from now.

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Mark Siebert is the CEO of the iFranchise Group, a franchise consulting firm that has worked with 98 of the nation's top 200 franchisors. He can be reached at 708-957-2300 or at info@ifranchise.net.
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