4 Pitfalls of Growing Your Franchise Too Fast

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Franchisors - the dangers of growing too fast

When you’re running a franchise, it’s only natural you want to get franchisees on board and scale up as quickly as possible. Sound familiar? Harbouring the ambition and drive to develop a business empire is no bad thing - but start growing your business too fast, and you might end up regretting your decision.

Franchising can help business owners expand their operations both nationally and internationally - but sustainable growth is dependent on carefully planned strategies. Getting ahead of yourself and rushing to appoint regional investors and collect franchise fees is likely to end in disaster. 

Although it can be frustrating to take things slowly, your considered approach will pay off in the long run. Before you know it, you’ll have a network of highly qualified brand ambassadors who are passionate about taking your company to the next level. Here, we explore the pitfalls of growing your business too fast, and how you can expand your brand sustainably. 

The 4 main pitfalls of growing your franchise too fast

1. Overtrading

Focusing purely on sales can result in overtrading, which, believe it or not, can be bad for business. When your only objective is growth, it’s easy to define your success by your number of new customers and incoming revenue. While this approach may help you achieve your sales targets in the short-term, it also makes it easy to neglect your infrastructure, operations and the key processes supporting growth. 

Expanding at a more manageable pace allows you to balance sales with the progression of your business model. Most franchises need a cash boost to expand, and many bosses encounter cash flow problems. If you take things slowly, you can fund and focus on wide-reaching marketing campaigns and develop your support systems. 

2. Weakening your franchisee network

Successful franchises invest a lot of time and effort making sure they appoint the right people to represent their brand as franchisees. Most franchise contracts last around five years, so once you sign an agreement, your new business partner is locked into their role for a significant amount of time. 

When you’re just starting out, you probably have the luxury of spending lots of time selecting a suitable candidate. In the early stages, you may also be able to share your expertise and knowledge with your business partners and focus on building a strong franchisor-franchisee relationship

But as your business network gets bigger, you may not have time to strengthen your recruitment and support systems in line with your growing franchise. You may even end up cutting corners to hire franchisees, which puts your whole brand and business model at risk.

In turn, existing franchisees may lose the trust and respect they had for you and choose not to renew their contract, forcing you to hire more new investors. Rather than rush through the recruitment process, take your time to find a business partner who reflects your brand and culture.  

3. Damaging your brand 

The success of a franchise network - or any company with multiple branches - relies on consistency. The quicker you grow your franchise, the less time you have to make sure existing franchisees have the tools and guidance they need to continue providing a consistently high-quality service. 

If, by growing your franchise too fast, you neglect your training scheme, fail to provide quality guidance and allow franchisees to stray from your model, you’ll lose your network uniformity. After a while, customers will become dissatisfied if your service doesn’t live up to their expectations, and your reputation and sales figures will suffer. 

Once your brand has been damaged, it’s hard to resolve the problem. While it might be fairly simple to regain consistency, it’s much more difficult to restore customers’ faith in the business. 

4. Neglecting company culture

Growing your franchise too fast can negatively impact company culture in two main ways. 

Firstly, you may end up hiring unsuitable franchisees who don’t reflect your business’s key values. When you want to expand your brand, it can be frustrating when you can’t find the perfect candidate; but it’s imperative you keep searching until the right person appears. 

Secondly, you could overlook company culture within the head office and franchise units you’ve already established. A great atmosphere doesn’t materialise overnight; bosses have to work hard to instil positive values and morale in their employees. And once you’ve established a great culture, you’ll need to continue working to maintain it over time. 

By taking things slowly, you’ll have time to focus on nurturing a great company culture

How to avoid growing your franchise too fast

Growth is exciting. It gives you the chance to generate more profit and push your limits as a business owner. But pursuing expansion as your only goal is risky; it’s important to keep your existing franchisees and brand values in mind too. Grow too fast, and you’ll probably be forced to make compromises along the way. 

Of course, no matter how quickly you execute your expansion plan, it can be easy to underestimate your responsibilities. But the best way to grow your business effectively and sustainably is to have a robust plan in place and invest your energy into making it work. Over time, you’ll come to understand the demands of franchise growth and learn how to tackle it efficiently. 

Learn more at Point Franchise 

If you’re ready to continue your learning journey, why not read our article on the many benefits of growing a franchise slowly

Here at Point Franchise, we support franchisors to develop their businesses effectively by providing handy resources and data-driven articles. You’ll find hundreds of useful franchise guides; just use the search box to find the information you’re after. 

You can also catch up on the latest developments to hit the franchising world on our news page. We update it daily, so you can always find out how franchises are performing across the globe.

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