Expanding a franchise is one of the most exciting stages in the growth of any business. Not only is it a clear sign that your model is working, but it also usually means your brand is attracting increasing attention, hence the opportunity to scale.
But with rapid expansion comes a unique set of challenges that are important to address. If you don’t, then it can stall your progress and even damage your reputation.
Regardless of whether you’re expanding across Australia or heading into international markets, you are going to need to employ a thoughtful approach to growing your franchise.
Here are five of the main challenges franchisors typically face, and the practical ways they can overcome them.
- Managing money across different locations
One of the main obstacles involved in franchise expansion is how to manage money across different locations, especially if you’re venturing into overseas markets.
With aspects like exchange rates, transaction fees, and international transfer delays to contend with, it can easily eat into your margins.
Thankfully, this is where platforms like OFX can help. They typically offer more competitive exchange rates and lower fees than traditional banks do when transferring money internationally. Subsequently, for franchises wanting to scale globally, these platforms make the process of accepting cross-border payments much easier.
- Maintaining Brand Consistency
When your brand starts appearing in different cities or countries, it becomes harder to keep the customer experience that contributed to the success of your flagship store consistent.
Customers will demand the same quality, service, and branding that you built your business on, regardless of whether they visit a franchise in Sydney or the Sunshine Coast. However, without proper safeguards and systems in place, inconsistencies can inevitably creep in.
The best way to avoid this situation from arising is to develop comprehensive brand guidelines. These should cover everything from tone of voice and logo usage to store layouts and customer service expectations.
New franchisees should be trained in these standards right from the beginning, and you should also conduct regular audits or check-ins to ensure that locations are staying true to your brand.
Overall, consistency in business is the key to building trust. And it is trust that keeps customers coming back.
- Recruiting the Right Franchisees
If employees can make or break your business, then finding the right franchisees can make or break your expansion. It’s not really about having the financial capital to buy in, although this is an important factor. But it is more about finding partners who understand your brand, believe in your mission, and are willing to follow your proven systems religiously.
One challenge you might face here is that eager investors may not always be the best fit. Therefore, to avoid costly mistakes, you should be selective as to who you choose.
When doing this, start by defining what your ideal franchisee looks like in terms of skills, mindset, and values. Then use detailed screening processes, which could include background checks, interviews, and even personality assessments if necessary.
If you consider that each franchisee becomes a public face of your brand, it is better to take your time and find a great match than to rush into a bad partnership.
- Ensuring Operational Efficiency Across Locations
The more your franchise network grows, the more operational hiccups can snowball. Without clear systems in place, different locations might start doing things their own way, which can lead to inefficiencies, missed opportunities, and frustrated customers.
To prevent this from happening, you’ll need a rock-solid operations manual that outlines everything from daily procedures and technology use to staff responsibilities and best practices. The worst thing you can do is assume that every franchisee will operate the same way without clear instructions.
Instead, consider investing in franchise management software that streamlines your communication, reporting, and inventory control process. Lastly, make sure you provide your franchisees with ongoing training and support to ensure the way they are running their operation aligns with your vision of how it should be done.
- Managing Cash Flow and Financing Growth
Opening a new franchise location can cost a lot of money. Indeed, even if franchisees are footing the bill for their individual stores, your head office will still need to cover training, marketing, legal, and support systems. Therefore, if you’re not prepared for them, this can put a severe bottleneck on your cash flow.
Ideally, before opening up a new franchise, you should create a detailed financial forecast that outlines the costs and revenue expectations of each location. Doing this will help with your budgeting and help you manage your expectations a lot more realistically.
To help you, it is worth exploring multiple funding avenues, including franchise fees, reinvested profits, or business loans. As mentioned earlier, if you’re expanding internationally, consider using platforms like OFX to handle overseas payments and transfers cost-effectively.
At the end of the day, the more control you can keep on your month-to-month cash flow, the higher the likelihood will be that you don’t experience any nasty surprises when advertising new franchises and keep your growth sustainable well into the future.