When to Franchise a Business

Acai brand SoBol turned to franchising just over a year ago. Since then, the Long Island-based brand has opened more than 15 franchise locations across New York and Connecticut and signed development contracts for dozens more, including one opening in Philadelphia in April. SoBol’s rapid growth has been accommodated by a streamlined and easily adopted operational model that would seem built specifically for franchising, but founder and CEO Jason Mazzarone says the concept didn’t even occur to him until he started receiving requests from investors.

“Early on we started getting questions like, ‘is this a franchise?’ and ‘how do I get one of these in my town?’ So, we started to put some more thought into our growth strategy,” Mazzarone said. “That led us to consider our business model and how we wanted that model to work going forward.”

As SoBol’s team evaluated potential growth strategies, a customer recommended to Mazzarone that he speak with Steve Beagelman, Founder of SMB Franchise Advisors*. Beagelman showed Mazzarone how SoBol’s model could be scaled quickly and effectively through franchising. Now, Mazzarone says he tracks the brand’s wildly successful last year back to that initial meeting.

SoBol turned to franchising at just the right time, leveraging its momentum as an independent company to attract eager and qualified investors to franchise with. But the timing of that transition is not always so clear for other brands. We talked to Beagelman and Dawn Abbamondi, Director of Marketing and Brand Development for SMB, about how independent brands can find the right time to franchise.

1851: Is there a specific point in the growth of most businesses when they are ready for franchising?

Beagelman: It’s different for every brand, but it comes down to systems and processes. You might have one location open or a dozen—what matters is that you have a model in place to become a franchisor. If your operational system can’t be packaged in a way that can be picked up and operated with some training by a new owner, then your business is not ready to be a franchise.

Abbamondi: The branding should also be well established. You’ll need to be able to trademark the name and protect the brand for every owner who joins the system. The brand is one of the most important things you are selling to investors, so it has to be strong.

1851: Are there dangers to turning to franchising too early?

Beagelman: The primary danger is that you aren’t able to support the franchisees. Being a franchisor is much different than running the day-to-day operations of a business. You need to make sure that you have the systems in place to support franchisees and that you are willing to focus your efforts on maintaining and improving those systems.

Abbamondi: Supporting franchisees has to become your main focus. There is a lot that goes into that, and you may need to have a management team in place, people you can count on to do what you would do. Have a plan for your current operation that will allow you to step back and allow others to run the business while you dedicate yourself to getting new owners up and running. If you aren’t in a position to take on that change, your business is not ready to transition to franchising.

1851: Are there dangers to waiting too long?

Beagelman: Yes. Some businesses come along at just the right time, and they need to take advantage. If you have a hot concept in an emerging industry, you need to get out ahead of the competition and establish your brand as the leader. Otherwise, you’ll allow other brands to dominate the space, making it harder for you to break into franchising in the future.

Abbamondi: In nearly 10 years of working on launching concepts into franchises, we have seen some great brands that became pioneers in their industries. We’ve seen brands that were first to market, in some cases creating an entire industry, but for a variety of reasons—typically not investing enough in marketing—the brand didn’t grow as significantly as it could have. There is no such thing as the perfect time, and there’s always going to be competition out there, so if you are truly creative and have an incredibly special brand, don’t wait for the timing to be just right, you have to go for it.

1851: What does a business owner have to understand before they turn to franchising?

Beagelman: Running a franchise is a much different thing than running an independent business. It’s going to be a major change, and you have to be ready to embrace that. You are going to watch your brand expand, and you have to be able to work with other people to facilitate that expansion. Some people want to grow, but they have trouble giving up any control of their business. You have to be willing to let a franchisee run your model.

Abbamondi: It’s also important to fully understand the upside and to know why franchising makes sense for your brand. If you’ve put in the work and created a strong, duplicable system, you can find a much greater reward by allowing franchisees to open up new locations rather than investing in them yourself. It doesn’t just make growth easier, it makes it much more profitable.

1851: What is one brand that nailed the transition into franchising?

Beagelman: GYMGUYZ. Josh [York, GYMGUYZ’s founder and CEO] just gets it. He worked and continues to work really hard to support his franchisees, and that’s been clear in the way the brand has grown. They invested in the capital they needed to grow quickly and establish the proper support for franchisees, and it paid off.

Abbamondi: Josh hired the right people and suppliers to make sure that his opportunity was supported from every angle and had everything that franchise owners need when they start. That includes operations, sales, training, marketing, PR, equipment and everything else. He had a growth plan established, and he took care of every detail to make it happen.