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How Franchisors Should Decide Where to Grow

A targeted growth strategy is a key component of franchise development, and franchisors need to be able to choose the right markets.

When developing a franchise growth strategy, identifying target markets is a must. Before a target growth market search begins, though, franchisors need to ensure that the necessary systems and processes are in place, including legal support, administration, technology, culture, finance, supply chain, training, marketing and operations. Once franchisors feel confident in these aspects of their brand, it is time for targeted aggressive growth.

The Right Markets

When actually identifying the specific target markets prime for growth, the analysis should consider population, demographics, the business and political climate, socio-economic factors and legal environment. These demographics should be considered from both a franchisee and consumer perspective. 

When choosing specific areas to prioritize, it is critical that validating markets — or areas with an established brand presence — exist in each targeted region. If validating markets do not exist, the franchisor should select specific markets that are best suited for their brand or product and develop them as future validating markets. 

Then, a careful review of the targeted high-growth markets should be completed to allow for prioritization of the areas. Since each market will be a little different, a decision should be made on a market-by-market basis regarding the targeting of specific franchise developers. These decisions are critical if a franchise hopes to avoid wasted resources and effort. 

The Right Resources

For each market, franchisors need to define which franchise development models to use and determine the associated fee structure. Franchisors also need to ensure that the fee structure is flexible enough to allow for adapting to local market conditions. 

“In addition to the financial requirements, ideal franchise partner profiles should be established,” said 1851 Franchise publisher Nick Powills. “The profiles should include desired experience, business and strategic portfolio, core competencies required and any attributes that are deemed essential for the particular brand.”

Next, it is essential to create user-friendly content and highly informative franchise development websites that point towards these development markets. Prospects in the area should easily be able to find the brand history and key attributes, multiple testimonials from partners in the validating markets, detailed financial requirements, contact information and more. In order to maximize a brand’s reach and to further support the discovery process of franchise prospects, brands will also want to make sure they have localized content (written, PR, video, social) that shares their story.

The Right Local Partners

So, the markets are identified, but how do brands spread the word? First, existing partner referrals are the most powerful and valuable leads. These candidates are then already familiar with the brand and have developed an affinity for the business model because of their relationship with a successful existing partner. 

“Franchisees sell franchises,” said Powills. “Whether it is through a PR campaign, a validation phone call or digital content, having the right stories in place and aligning them with candidates is a major tool in the development process.” 

There are plenty of ways for franchisors to generate localized leads, including portals, brokers or pay-per-click digital marketing. Events organized by the International Franchise Association are also strong tools for use in lead generation, especially with local and regional franchise groups. 

In many ways, the most important decision a franchise will make as it expands is partner selection. No matter how efficiently the target markets are laid out, who a franchise does business with will determine its success.

Remember, no brand is perfect — mistakes will be made as the target markets are established. The development team just needs to ensure that both failures and successes are analyzed in order to internalize best practices moving forward. With this strategy, franchisors will be able to find the perfect markets for growth and successfully expand their footprints through franchising.