Tips on franchise expansion
After you’ve selected the franchise that’s right for you and started yours, we hope things are going well. If you’re making money, enjoying your career, and have found a great company to partner with, you might want to reinvest and expand your operations. This month, we share advice on expansion and look at some companies that are opening new locations.
Making a Plan
Expansion into new territory requires a solid marketing plan. What worked in one area might not be the best strategy in a new place if the demographics are significantly different. Selecting locations will require the same homework as acquiring your initial franchise did. Will you take over an existing location, or be building a new one? Startup costs will vary with each option. Use your network of fellow franchisees and your relationships with the parent company to find out if there are any existing franchises up for sale or expansion opportunities. If a fellow franchisee is looking to sell, you’ll want to figure out why. It could be that they’re just looking to retire, or there might be a problem with that location that has the franchisee seeking an exit.
Once you’re ready to move forward, you’ll want to develop a launch plan for each new location, including an advertising campaign. Working with the parent company and other franchisees opening new stores can help in creating a coordinated plan that allows for splitting advertising costs and spreading the word to potential new customers to the benefit of all. A soft opening a few weeks before the official opening will also help generate buzz.
Say you’ve had success in Australia and are looking to expand into New Zealand, a market 70 per cent of Aussie franchisors are targeting, according to a 2016 survey by Franchising Australia. There is a whole new set of rules and customs to be aware of with such an international expansion. First, you’ll want to make sure the franchisor has registered the brand name and logo with the intellectual property office. Next, you’ll want to make sure the name and logo are being widely used to get the new market familiar with the brand. Then you’ll want to get stores up and running soon after while interest is high. You might want to adapt your operations manual to account for differences in suppliers and account for local trends — especially ingredients if you’re in the food business.
Tips from the Masters
Aged 23, Stuart Cook became CEO of Mexican restaurant chain Zambrero. In six years, he oversaw expansion to more than 100 locations in three countries and a 75-fold increase in annual sales. He then went on to start TWIYO Capital before joining fitness chain Fitstop this year as chairman of the board. Fitstop began 2018 with six locations and ended it with 15, with plans for further growth.
“I had many heroes during my time at Zambreros,” he told Faster to Master. “When I first took the role as CEO, I’d never worked in a restaurant before and I hadn’t even seen a Zambrero location. I picked up a magazine with a feature on the fastest growing Australian franchise chains and took about 80 CEOs out for coffees, breakfasts, and lunches to learn what had made them successful and what mistakes they had made.”
Also, in the fitness space, Lift Brands is expanding throughout the Asia-Pacific region. Lift Brands has franchises in several areas, from traditional gyms to kickboxing to yoga. Asia-Pacific CEO Ty Menzies purchased his first franchise aged 20. He said keeping one eye on the future is key.
“No matter which brand you go with, we are always looking at what’s next,” Menzies told VENTURE. “If you invest in the Snap Fitness brand now you may be investing in a 9Round in six months’ time in your same territory. In 18 months’ time you could be investing in something completely different that we’re developing in the pipeline. We’re not just a one-stroke wonder. We have opportunities that go outside one set brand; even with that one brand we are always developing to stay both relevant for our members and progressive within the industry.”
With its solid base of wealth, growing population, and increased urban sprawl, the Australian market is ripe for franchise expansion. CORE+, another fitness franchise with an emphasis on variety, opened three franchise studios in Melbourne last year and plans to grow the network to 30 across Australia and New Zealand by 2021. Jon Smith Subs has 35 locations in various stages of development, including in Australia.
McDonald’s is launching a $500 million nationwide expansion over the next three years, concentrating on Sydney and Melbourne suburbs. The global giant plans a combination of refurbishing existing stores and opening new locations.
“The things we consider for potential locations include the availability of sites, suitable zoning, access to major thoroughfares, population growth, and local demand,” senior development director Josh Bannister told the Sydney Morning Herald. “We are a business model that favours land ownership and we own the land of two in every three restaurants that we open.”
Taiwanese-founded bubble tea purveyors Chatime came to Australia in 2009, and franchise locations hit 100 last year, with 31 openings in 2018. Chatime expects to top $100 million in revenue in 2019 and has plans to branch out into all aspects of tea in the coming years.
“No matter how much the franchisee is dropping in, be it $1 million or $300,000, you need to make sure they’re bringing passion and experience, and you need to back them,” Australia general manager Carlos Antonius told Fast Company. “We’re also very confident about the business model. That sort of thing has really contributed to the success of the brand.”
Possibly the best advice for expansion is being confident in the quality of what you’re selling.
“If you don’t have a great product, it doesn’t matter what you do,” Antonius said.