Most new franchisors spend a tremendous amount of time, money and energy on how to sign up the greatest number of franchisees in the shortest amount of time. Everyone wants to get into high gear right out of the gate. Starvation is one of the biggest fears and motivators for a new franchisor who has just spent months or even years and perhaps well over $100,000 to launch their franchise system. By Tom Spadea
Most new franchisors spend a tremendous amount of time, money and energy on how to sign up the greatest number of franchisees in the shortest amount of time. Everyone wants to get into high gear right out of the gate. Starvation is one of the biggest fears and motivators for a new franchisor who has just spent months or even years and perhaps well over $100,000 to launch their franchise system. After all, shouldn’t you judge your success and failure based on the number of customers you sign up? Maybe, but maybe not.
Franchising is not like other businesses. You are not just “selling” your business model. You are recruiting entrepreneurs into your ecosystem. They are wearing your team colors and representing all that you stand for. Your goal is to have them promote your brand with new customers who have no idea who you are. You need to teach them, coach them and ensure that they have what it takes. The key question to ask yourself before you sign them up is if you have the time, energy, resources and skills to help them in a way to drive strong openings and continued success. If they struggle, you will struggle. If they struggle because you didn’t have time for them, it will be your fault.
Have you considered how many new franchisees you “should” sell per year? How many can you comfortably open without spreading yourself too thin? We have seen just as many brands die of indigestion as from starvation. In fact, indigestion is a far more painful way to fail as each franchisee you are not able to service causes pain and problems impacting your ability to service others and you get into a death spiral of being completely reactionary to the next upset franchisee.
Overindulgence in franchise sales without a plan on how to properly open, train and service new units is an avoidable problem. The franchisor must have discipline on the front end and be patient by only saying yes to new deals if they know they can support them. It’s a very hard problem to solve once the overindulgence has taken place. I have seen great brands disintegrate and the founders lose control because they got carried away with early successes in franchise sales. The good news is, you are in complete control. Don’t let someone else’s FOMO (fear of missing out) destroy your march toward generational wealth. If they can’t wait until you are ready, they probably aren’t a good match.
Tom Spadea
Tom Spadea is a franchise attorney and founding partner of Spadea Lignana, one of the nation’s premier franchise law firms, representing over 300 brands worldwide, from emerging concepts to elite brands that are household names. Spadea is a Certified Franchise Executive, speaker, author and key adviser to many high-level executives and entrepreneurs in franchising. spadealaw.com, tspadea@spadealaw.com