How to Know Your Franchise Brand is Ready to Grow

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If you’re a business owner thinking about franchising your concept or the owner of a small franchise looking to grow, you’ve likely already started looking into whether your system, as it stands, can handle the transition. But it takes more than just signing on the dotted line to ensure your small business can meet the demands of scale. Here are the four most important factors that can make or break your brand’s transition to nationwide franchise growth.

1. You’re Uniquely Positioned in Your Segment

If your brand has any chance at the big-time growth you’re hoping for, you’ve got to be delivering an experience that no other concept can match. Whether you’re innovating the fast-casual industry with a new approach to tech integration in your labor force, or reframing international supply chains to offer bold new ingredients, your concept has to create market demand through some unique advantage over the rest of your industry.

Often, this can look like a concept whose established such a specific niche in the broader industry category that it’s created a segment all its own. If you’re an outlier, you’re a leader, and that helps make your concept more desirable to today’s diverse consumers.

2. You’ve Got Airtight Operations

A basic rule of thumb that no growing company can evade is that growth affects every aspect of a business – even the bad stuff. If your operational model is too complex to replicate, or if your suppliers can’t keep up with demand, scaling up could jeopardize the integrity of your product and, by extension, jeopardize your brand. Any hole in your system will grow with the system.

To avoid growing pains, streamline your operations. Plan on limiting your range of products, cutting out middlemen in your supply chain, eliminating any unnecessary steps between your sources and your customers. Look at your unit-level economics – ensure your bottom line and average unit volume are consistent, find the smallest and most efficient space to house your concept and capitalize on it. Lock operations down before considering larger-scale growth.

3. You’re in the Scale Sweet Spot

A good way to know you’re ready for national-level growth is if your concept has been shown to work on the regional level. If your system is at 5-20 units and generating a healthy profit at the unit level, it means your brand already has a reasonable following and has been able to create and sustain demand and profit. That looks good when you’re thinking about accelerating growth. Private equity firms usually overlook brands of this size in favor of companies with a systemwide EBITDA upwards of $5 – $20 million. But some franchise industry experts know exactly what it takes to bring a brand from that pivot point to full-scale growth.

4. You’ve Got a Growth-Ready Culture

One of the most important factors in the growth of any business is its willingness to grow and dedication to the changes growth will bring. If there’s a culture disparity between company leaders, unit operators and unit-level employees, growing the company can turn into more of a nightmare than a dream come true. But, by aligning the interests of everyone at every level of the brand and ensuring every part of the company is working toward the same, unifying goal, growth can come more easily and naturally.

Still not sure? Find out whether your brand is poised for pivotal growth.

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