How I would create a franchise, in 10 steps

For the past 10 years, I have fallen in love with the franchise industry (surely, something none of us ever dreamt of as children). I have fallen in love with the struggles, the challenges, the problems and, in turn, the solutions. I have seen and interacted with hundreds of brands and have constantly judged them on the merits of their businesses — seeing all the good, the bad and the ugly. Having spent the past decade committed to franchising, I have formulated many opinions on how I would build a business if I were a franchisor. In the communications world (our agency, No Limit Agency*, handles all forms of communications on behalf of the brands that we represent), I have sponged the best practices and, frankly, am confident that our agency knows more about the best ways to create awareness for a brand than anyone. Recently, when evaluating our business model with a mission to poke more holes in No Limit Agency, I realized that none of us had ever sold a franchise, something all of our franchise clients desperately desire to do. So we recruited Sean Fitzgerald, an 1851 Magazine “Young One to Watch” and awesome franchise professional, to add that X-factor to our agency (copycats will follow). Our agency now has more credibility to poke holes in other businesses and ultimately provide our clients, friends and colleagues with what we find as the best practices, based on what’s working for our many great clients. If I were going to create a franchise today, here are 10 things I would do: 1. Front-load the business with more capital than needed. 2. Invest in a continued 1:4 ratio of company-owned units to franchise locations. 3. Say no to 99 percent of inquiries for the first 10 franchisees. 4. Focus 90 percent of my growth budget to five states and stay the course until I can secure 20 units in each. 5. Hire a qualifier first, then a head of development. 6. Make my website incredible — and invest more into PPC than SEO. 7. Tell my personal story and then leverage each franchisee’s personal story. 8. Over-invest in corporate support, especially operations. 9. Don’t establish my lifestyle until after the brand hits 30 to 40 units, so that cash flow remains sound. 10. Set realistic goals — despite every bone in my body wanting more and more and more — and understand that it will cost between $8,000 and $12,000 in marketing spend to get one unit. It is rare to find a startup willing to invest properly in infrastructure, team and growth. This is because anything can become a franchise and often does. Unfortunately, this is a problem in franchising. I wish there were a governing body (other than the state of Maryland making it tough to be a franchisor) that gave a clear stamp of approval for a concept to turn into a franchise. I have argued with franchise consultants that they should be more reserved in helping concepts that won’t succeed in becoming a franchise. They argue back that if they don’t do it, someone else will, and they are ultimately the good guy. I agree with that argument, but it still doesn’t solve the issue of too many bad franchisors, which, in turn, will create too many bad franchisees. While I know it would be very tough to say no to bad franchise prospects, especially when they are waiving a check in my face, I know the pain that comes along with wrong matches. Those first supporters will be your last if they are not the right fit. Franchising is tough. There are no magic bullets. It is hard to do it the right way, and no matter how much you budget for it, it will always cost you more. When done right, it can be a beautiful thing. The No. 1 piece of advice I have for a new franchisor is to be guarded and trust your gut. There are a lot of bad suppliers in franchising, unfortunately, so make sure you land with the good ones.