For franchisors, there are no slow months. Most brands sustain an ongoing development effort throughout the year, and even those that aren’t actively seeking new franchisees must work constantly to support their existing owners. Still, the end of the year is a particularly busy time for franchisors, and SMB Franchise Advisors works closely with its clients — franchise brands of a variety of sizes from a variety of segments — to make sure they are in the best position to start the new year.
For emerging brands, which make up the majority of SMB’s clients, Beagelman urges a renewed focus on “SNOs” (signed-but-not-open franchise locations), so that they are set up to open in the new year.
“It’s important to take the time to make sure all of your SNOs are in good shape,” he said. “You want to make sure that the location is picked out, that the lease is signed and that all the little things that need to get done before they open are getting done. It’s one thing to sell a franchise, but if you are counting on that franchise being part of your system in the new year, you need to make sure they are prepared to open.”
SNOs can be a challenge for emerging brands, which Beagelman says are often too tied up in the operations of their existing systems to focus on future owners.
“It’s one of the biggest challenges emerging franchisors face,” he said. “Many of them are still running their business — the corporate operation. It’s hard to make that mental switch and step back to focus on the franchise company.”
Beagelman says SMB helps emerging franchisors make that recalibration, guiding their focus and resources to support manageable growth.
“A new franchisor may know everything there is to know about their business, and so that’s where they feel comfortable, but the fact is that they are not just running their business anymore, they are running a franchise, so we help them make that transition. We show them what areas they need to focus on and what they can do to make their franchisees successful. If you look at any emerging franchisor, the ones who have managed to step back and run the franchise rather than the day-to-day business are the ones who are most successful.”
For established franchisors, Beagelman recommends taking stock of unit economics and doing whatever possible to make sure franchisees are doing well.
“It’s all about unit economics,” he said. “How are the stores doing? Are sales up or down compared to last year? Are the operations producing the margins you want? These are the questions franchisors need to be asking as they enter the new year.”
According to Dawn Abbamondi, Director of Marketing and Brand Development for SMB, the end of the year also offers a number of useful benchmarks for franchise brands to measure the health of their systems against industry standards as well as their own goals.
“All of our clients have development goals — a number of units of franchisees they want to bring on throughout the year,” she said. “Now, we’ll reevaluate that number throughout the year. If a franchisor starts with five new units as a goal and they hit four by June, we’ll see if it makes sense to set a new goal. But the end of the year is really the time to take stock and see where a system has succeeded and where it still needs help. It’s also a great time to look at industry benchmarks. A lot of industry publications are releasing studies and best-of lists at the end of the year, which gives you a good sense of where your competitors are. We also encourage our clients to be a part of those lists and surveys, because even if you aren’t ranked at the top of your category, it’s an excellent way to bring more attention to your brand.”
Ultimately, Abbamondi and Beagelman agree that efforts to optimize any aspect of a franchise system should be ongoing, but the end of the year offers a valuable opportunity to take stock of those efforts, giving franchisors a clear picture of where they stand for the new year.
“We’re working closely with our clients to help them build and grow strong operations throughout the year. In that sense, nothing changes at the end of the year,” Beagelman said. “But a new year brings a new, refreshed attitude. It’s an opportunity to do all the things you couldn’t quite manage in the previous year, and we work hard to make sure our clients are totally equipped to hit the ground running."