Founders: When Is the Right Time To Franchise - and How Do You Know?
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Founders: When Is the Right Time To Franchise - and How Do You Know?

Founders: When Is the Right Time To Franchise - and How Do You Know?

Founders spend years establishing their brands, building trust among customers, and turning a profit over time. While many have the ultimate goal of growing their company's footprint through physical expansion, the truth is that it can be challenging to own and operate multiple locations all on your own. This is where franchising can become a valuable growth strategy for business owners, offering the opportunity to methodically spread their brand message and mission by partnering with entrepreneurs who want to go into business for themselves, but not by themselves.

While it can be tempting to hurry your company's growth through franchising, it's critical to be strategic in the process. You've spent so much time building your company's reputation, so you don't want to compromise the integrity of your brand by moving too quickly. My family's company, Huntington Learning Center, began franchising in 1985, 8 years after our founders (my parents) launched the company. By this time, we had 18 centers throughout New York, New Jersey, and Pennsylvania, a strong and motivated team, and systems and procedures that worked. It was the right time to start franchising.

If you're thinking about franchising, a critical first step is to get perspective from legal counsel. Franchising is a regulated industry and there are specialized law firms that focus specifically on franchising. It is essential that you, as a founder, consult such an attorney to understand how to best move forward as a franchisor. Once you've consulted with counsel and decided that franchising is the best path for your company, there are several important factors to assess.

You can employ resources such as market research, customer data, franchising consultants, and of course, franchise attorneys, to answer two main questions:

  1. Is it the right time to franchise?
  2. Which markets best position my company for growth and success?

To get a grasp on both of these questions, run through the following franchise "checklist" - and be prepared to have solid answers before taking the next steps toward franchising.

When is the right time to start franchising?

  • How turnkey are my operations?
  • Do I have a team in place to provide support for prospective franchisees?
  • Do I have the systems and processes in place that create a cohesive "system"?
  • Is there a proof of concept?

How do you decide where to franchise?

Every company has limited resources, so you want to make sure you are focused on growing in an area where your plan for expansion and your target markets make sense. This is where market and competitive research come into play. Many companies handle this step of the process internally, but there also are firms you can hire to help you navigate this area if your internal team needs assistance, or you'd like an outside opinion.

Market research

At Huntington, when we're looking at growing within a current market or expanding to a new one, we take a number of considerations into account. For example:

  • Are there many potential customers in that area? For Huntington, this means looking at how many potential students are in the area.
  • What is the average age of individuals living in the area? Are they parents? Is there a high concentration of children who may grow to become students of ours down the line?
  • What is the average household income in an area? We consider this relative to the costs of our services to determine whether our pricing model fits with the typical resident's income bracket.
  • Finally, we review the laws and regulations related to franchising and education services as they pertain to the specific city or region. These can vary from state to state.

Competition research

Next, we conduct competitive research within the market. The goal is to determine the following:

  • Does your company have any competitors operating in the area and, if so, which ones?
  • How many locations do competitors have? What services do they offer? Does your company provide something that the competitors don't?
  • If your competitors do have a presence, how are their businesses doing? Are they closing locations, expanding, or staying steady?

Once you've done your market and competitive research, gut check yourself to see where you as the franchisor see the greatest opportunity for your business. If you decide you're ready to move forward and begin franchising, you can begin the next phase: putting together a marketing campaign to attract potential franchisors, and assemble your sales and leadership team to support those efforts. Happy franchising!

 Anne Huntington is president of Huntington Learning Center, the nation's leading tutoring and test prep provider with approximately 300 locations across the country. She leads the company's franchise development efforts, oversees the marketing and IT departments, and organizes and executes programs, partnerships, and initiatives that help the company achieve its longstanding mission to give every student the best education possible. As the second generation of Huntington family leadership, she serves as the voice of the company, directing its digital transformation, strategic vision, and people and procedures.

Published: January 20th, 2020

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