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FranchiseTalk: When It Comes to Speed of Expansion, You Need to Know What Is Urgent and What Is Important

When the urgency of expansion comes, entrepreneurs need to make sure they focus on what’s important
By Joselito Samson |

 

 

As the ASEAN community continues to integrate, borders are simultaneously opening for travel and business. With a population of more than 600 million and a robust economy, expansion opportunities are opening for brands and businesses.

 

 

What is urgent - Expansion

An entrepreneur states: “seize the opportunity as it presents itself." If you’re in the middle of growing your business, this mindset is correct because you must build your brand, and you must expand your store’s network to gain market share.

 

 

Speed of expansion is the main priority, and it’s vital to secure viable locations. Increasing store presence and brand awareness is crucial to a startup business, but there are always tradeoffs. The brand will gain market share if it executes the brand’s promise. The key is to consistently and regularly deliver the product/service in all locations.

 

 

What is important – Getting things right from the start

 

The urgency of expansion should not compromise your brand or quality and franchising has been a tool that forces brand owners and entrepreneurs to focus on what’s important as you expand.

 

When you start franchising your business, you must consider a new set of responsibilities. Businesses should not rush into franchising without considering the financial, operational and legal implications to their business including how these will affect the franchisee.

 

 

Getting your numbers right

Like any business endeavor, the franchisee’s three questions are:

 

1. How much is the franchise fee?

 

2. How much is the investment package?

 

3. What’s the ROI?

 

A key requirement in franchising is to ensure that both the franchisor and the franchisee are profitable. This will fundamentally determine the success of the franchise organization.

 

Developing an in-depth franchise business plan ensures that your numbers are right. This involves planning and strategizing the speed and extent of expansion, the applicable business structure and determining where your revenue streams will come from.

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Getting your house in order

Clear-cut operational parameters should be developed, documented, communicated (thru training), executed, tested, evaluated, adjusted (if, need be) and audited regularly. In short, “winging it” will not work.

 

Whether you grow your brand organically (company-owned stores) or through other means of expansion, crafting and implementing an operating system will always be a necessity because your customer will expect consistency on all locations. If you go to any McDonald’s store in the world (except India) and order a regular hamburger, you will get the same sandwich every time.

 

 

Dotting the I’s and crossing the t’s

If your financials are right and your operations systems are in place, then the next step is to focus on your franchise agreement.

 

It is essential that your franchise agreement clearly stipulate the following:

 

- Brand execution and protection

- Responsibilities of both franchisor and franchisee

- Fees and required purchases

- Territorial restrictions

- Exit clauses

 

 

Having the best-crafted franchise agreement, operating system and franchise business does not guarantee instant success. The franchisor must provide continuing value, manage expectations and provide an open communication line.

 

 

The most efficient franchise is the one built on a mutually beneficial relationship and it achieves not only the goals of the franchisor to expand its business but also the franchisee’s goal of profitably operating the franchisor’s brand.

 

 

***** 

 

Francorp is the world’s leader in franchising. Take a free franchisability test (http://francorp.com.ph/are-you-franchisable/) and learn whether your business is ready to grow through franchising. For more information on franchising, contact Francorp Philippines at (02) 638-3149, (+63917) 835.55.30, email info@francorp.com.ph, or visit francorp.com.ph

 

 

Lito Samson is the AVP for Consulting of Francorp Philippines and is a Certified Franchise Executive with over 15 years of experience in fast food operations from McDonald’s, Burger Machine, Carl’s Jr. and Jollibee. He is a certified Serv Safe Executive and is one of the country’s top speakers on franchising and has given talks in various local and international conferences and trade shows. 

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