The First Three Franchisees
A truly exciting time for any franchisor is when they have their FDD done, their sales process documented, their broker relationships established, their marketing dollars deployed, and the process starts to work. You start moving people through the process. You’ve spotted several candidates that you think may cross the finish line. If that’s you, you’re about to make a few decisions that will likely shape the future of your brand. The first two or three franchisees you bring into the system can work as a springboard to growth. If, however, you award franchises to the wrong individuals at this stage, that can be the hardest mistake in franchising to recover from.
Why the First Three Franchisees Are Unique
When talking to franchise development professionals, you’ll often hear, “You can’t franchise an unproven concept. Nobody’s going to buy an unproven concept.” The point is valid. If you haven’t proven the model yourself, you should not be franchising.
Having said that, your first, second, and third franchisees, depending on how quickly you grow, are in fact buying into an unproven concept. You have proven that you can run your model. Whether you can support franchisees running it is still an open question.
As such, these folks are often a unique breed of franchisee. They need enough entrepreneurial confidence to invest early while still being willing to follow a model and system that someone else created.
They can often be strong personalities. Sometimes they can be a challenge to work with. What’s more, this is, by definition, your least experienced time as a franchisor.
Just reading that should make the potential pitfalls obvious. However, if handled correctly, your first three franchisees can set your brand on the path for long-term franchise success.
Relationships with Your First Franchisees
No matter how big you grow, you should try to maintain strong relationships with all franchisees. When you have two franchisees, however, that’s a lot easier to do. You’re going to know these folks well. Maintain those relationships. Make sure you invest in their business with your time. If you need to, with your dollars.
You have time to get granular. You’re the expert. If you’re not the expert in your business, you shouldn’t be franchising. But assuming you are, you have an unusual amount of time to spend with your first several franchisees. In fact, your first franchisee gets 100% of the time you spend supporting franchisees, by definition. Use that time to help make their business profitable and sustainable. Make sure they know that you’re invested in their success.
This Is Your Chance to Set Your Culture
If you grow successfully, your franchisees will eventually outnumber the people inside the franchisor organization. They will become a major driver of the culture surrounding the brand. It’s a mathematical certainty.
The first several franchisees will help shape that culture. Start planting the seeds from day one; do everything you can to instill the culture that you envision for your brand with these folks. At the same time, remember you don’t have a monopoly on good ideas; be open to input from your franchisees. As the system grows, acting on that input becomes harder. Take advantage of the natural malleability of an early-stage franchise and implement franchisee suggestions where they make sense.
The Danger in the First Three Franchisees
If you have a hundred franchisees in your system and ten are unhappy, that’s to be expected. If you have three and one is unhappy, that’s a problem.
Now you may be thinking to yourself, wait a minute, that’s not fair. If I just made one mistake, that’s not proof that my system isn’t good. You’re 100% right. It still means one-third of your franchisees at this moment are unhappy. That’s why taking care of these franchisees is one of the most important things you can do.
Consistency From Day One
I started out by telling you to pay special attention to these individuals, to listen to their feedback, and perhaps implement it. But you still need to be consistent from day one. Be consistent about brand standards, enforcement of your franchise agreement, collection of fees, and attendance at conferences. Anything that you intend to enforce later, enforce from day one. If you think, “I can let this slide; we only have two franchisees,” those two or three who experienced the lax enforcement may resent future enforcement. They may also recognize that they didn’t get the value of the brand standards from day one. The relationship you built will not stop that from happening. So keep the expectations clear and maintain consistency from day one.
Does This Sound a Little Scary?
Franchisee relationships are scary. There are places to make mistakes. There are places where a single mistake can be catastrophic. But they’re also some of the most rewarding relationships you can have in life.
If you’re bringing your first franchisees into the system and want help avoiding these mistakes, give us a call.