Franchise Development Goals: How to Build a Plan for Success

After franchisors evaluate their assets, own their story, create a strong budget and are confident in their brand’s core values, they are ready to set their growth goals. Whether it is an emerging brand or an established franchisor, setting the right goals is an essential part of building a winning plan for success. 

“The development team should work directly with the leadership team on determining the brand’s growth goals,” said Jon Sica, Vice President of Franchise Development for Batteries Plus. “The key is trying to optimize growth while keeping an eye on unit level economics — we don’t want to impact the business of any franchisees already in the system. To find this balance, it requires an interesting negotiation and strategic analysis of which areas are positioned to grow and the tools that will be needed to get there.”

Creating strategic growth goals needs to be about more than just hitting a certain number of units signed. It is important to understand how the brand needs to operate in order to win on the development side. Perhaps the most essential part of that process is prioritizing the right candidates.

"Smart development goals are not about speed, they are about healthy and sustainable growth," said Paul Pickett, Chief Development Officer of Wild Birds Unlimited*. "Signing five deals with great franchisees has a much higher value to the brand than signing ten with not-so-great franchisees. The leadership team needs to be focused on the right factors, as opposed to fast growth."

As Brenda Febbo, Chief Marketing Officer at Lightbridge Academy* points out, finding the right franchisees always pays off for franchisors long-term. “When you look at KPIs and determine which franchisees are performing highest, it is always the ones who have their core values aligned with the brand,” she said. “No franchise can have a sustained system through franchise sales alone, it has to be through royalties. That is why franchise growth goals need to be more about finding the right people that will succeed in the long-term, rather than just making the quick sale.”

Thomas Flaherty, Chief Development Officer of Buffalo Wings & Rings explains that when setting goals, there should be financial targets, but there should also be a flexible, strategic plan. “There are often conversations in franchising about a ‘shotgun’ approach versus a ‘rifle’ approach,” he said. “Some brands are strategic, some are opportunistic and then some are strategically opportunistic. For example, instead of a rigid approach in which brands accelerate quickly in one specific territory, franchisors should have the resources available to pivot if a perfect candidate comes along who wants to develop in a different territory. This means brands need to set other goals, whether it be a goal to develop the best website possible or create stronger vendor partnerships, so that they will be able to strategically support new opportunities when they arise.”

Since the best franchise sales tool is a well performing unit, Flaherty also notes that franchisors need to make sure everything is working well for the brand and that franchisees are supported before setting any specific growth goals. “When creating a long-term plan for growth, I am first looking at initial investment, ramp to cash flow positive, ROI, EBITA — all the metrics associated with the brand,” he said. “Then, we are able to align that information with the ideal candidates. Keeping that information at the top of mind will ensure that brands are able to meet growth goals the right way.”

Another strategy for setting goals is to back-cast by picturing where the brand will be in a few years and then working backwards in order to create an outline for how to get there.

“Franchise development should be about understanding where the brand wants to go in the next 10 to 15 years and working backwards from there,” said Flaherty. “We start with a financial goal in mind and then work back to decide how many units need to be signed, how many need to be opened and the revenue that needs to be generated in order to reach that goal.”

Big Blue Swim School* Chief Development Officer Scott Thompson also agrees that a back-cast strategy is key for franchise development success. “One of the things we look at before putting a plan in place is understanding what the multiple on invested capital should look like for our investors,” said Thompson. “We back-cast strategically from there in order to understand and determine the sales targets for each year.”

It is important to remember that franchisors aren’t going to meet all of their goals the first time around. Setting the right growth goals takes time, communication and practice. As brands reach new milestones and learn what winning looks like for them, they will be better positioned to create new goals and build a plan for success.