franchising aspects Oct, 17 2011

Never accelerate biz expansion beyond control

If you a successful business owner looking for expansion of your brand, then do not you hurry up at all. Follow slow and steady wins the race trend to make it big to the entrepreneurial world. Recklessness for rapid success surely leads to franchise failu

By Abha Garyali
Sub Editor
Never accelerate biz expansion beyond control

Expansion of a successful business venture is a significant step for any business owner. Having established his business venture successfully an entrepreneur aspires to spread the wings by expanding his business far and wide. However expansion does not always mean success in fact only a lucky few reach the pinnacle of success. A business can not become big till the time it is not expanded across country and across the world. Franchising has emerged as the best way to expand the brand over the years. Though some people believe that franchising brings dilution to the brand, but franchising is the easiest and fastest way for expansion with little investment from owners end.

Sometimes even established and successful business ventures fail during expansion. In case the franchisor does not put in personal attention to each and every franchised outlet there are chances of brand dilution. The franchisees can maintain the standard of the original brand in a better way as compared to store managers in case of company owned outlets. At the same time franchising may also prove disastrous if the franchisor announces huge expansion plans very frequently expands the brand without even considering the results of the existing franchisees.

Franchising: the best foot forward

Franchising concept has its advantages for both the franchisor as well as his franchisees. It helps franchisors in spreading out in various cities and offers franchisees a better stage for jumping into entrepreneurship. Sharing her personal experience of brand’s success via franchising Shahnaz Husain, Chairperson and MD, Shahnaz Husain Group says; “Franchising has been at the core of the success of the Shahnaz Husain brand. In fact, the fast paced expansion is due to the franchise system. Initially, our franchise system was not a consciously conceived idea or decision, but later we realised that it offered distinct advantages in terms of business expansion.” In certain cases it has been noticed that some business owners with a successful venture may not go on to become successful franchisors. One of the major reasons for their failure can be their urgency to expand in a short span of time. Many franchisors expand their outlets in distant places where they can not even guide the franchisees and keep a watchful eye. According to Donald Boroian, Chairperson and CEO, Francorp, USA; “Initially the franchisor should never open 10 outlets simultaneously even through franchising.”

The franchisor needs to establish brand identity and recognition before extending the business to distant locations.

Acceleration leads to miss-happenings

Expanding rapidly through franchising can be compared to driving a Mercedes car rashly. However good the car is, it would have an accident if the driver drives too fast. Similarly franchising, which is the best way of expansion would surely fail if franchisor opens many outlets simultaneously. Few reasons for it are as given below:

Less groundwork by franchisor: Before establishing a franchise outlet it is of utmost importance that the franchisor does his research on the feasibility of the product or service at that location. Sometimes in a hurry to expand, franchisors may open outlets at non feasible locations.

Lack of attention by franchisor: Another prominent factor leading to failure can be franchisor’s inability to keep an eye on the franchised outlets at far away locations. He may not be able to keep tabs of what his franchisees are doing. As the franchisor has to take care of his original outlet, he may not have much time to visit all his franchisees. In this regard Husain says; “Expanding to distant locations in the initial stages is more difficult, in terms of keeping in touch with the franchisee’s business and ensuring that it is maintaining the expected standard and that the execution is in keeping with the business model.”

Wrong selection of franchisees: Franchisees being the backbone of any franchise business needs to be selected carefully. In their rush for expansion, franchisors may select inefficient franchisees who can cause downfall for his business. Franchisors needs to scrutinise each and every aspiring franchisee to see whether he can do justice to the brand or not.

Lack of training and support: Opening many outlets simultaneously makes it difficult to provide sufficient training and support to all franchisees and staff. It will be difficult to provide assistance in site selection, project management, layout and interiors, marketing and all standard operating procedures.

All of the above factors can surely bring a doom for any successful business.

Therefore the best way for starting and safeguarding the franchise way is by opening a pilot franchise.

Pilot franchise

Any experienced business owner would surely agree that before going for full fledged franchise system it is always better to start with a pilot franchisee. Starting slow by gauging initial success of the pilot franchise can be the best option for long term success in franchising.

To conclude it can be said that being too fast with franchise expansion can bring disastrous effects for the franchisor. Therefore, a popular saying should be kept in mind ‘Slow and steady wins the race.’

Related: A blueprint reveals it all

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