Franchising is one of the most scalable business models. Just think of the phenomenal growth of McDonald's, which is perhaps the world’s most scalable business. Having started my own franchise business in the world of dentistry, it's always struck me that many of the disciplines applied to franchising can be applied to any business and have a dramatic effect.
So, how could thinking like a franchisor help you transition from high growth potential to high growth performance? Even if you have no intention of franchising your business, adopting the mindset of a franchisor can help generate ideas, processes, and systems that can create a more scalable business model and unlock significant growth potential.
When we think of franchises, we envision a ubiquitous presence across the globe. But what exactly makes franchise models so scalable?
Cash flow and growth capital: The day-to-day cash constraints that most businesses contend with are passed down by the franchisor to the franchisee, supporting a positive cash position. The fee paid by the franchisee to purchase the franchise provides cash to the franchisor that can be reinvested in growth and development. Providing franchisees perform, the franchisor generates revenue from licensing, royalties, selling supplies (that must be purchased by the franchisee from the franchisor) and potentially a share of the profits, generating the recurring and predictable revenue that underpins confidence in rapid growth via reinvestment.
Operating leverage: As the number of franchisees grows, there is a marginal impact on the franchisor's fixed costs combined with increased purchasing power meaning that the bigger they get, the more profitable they become, providing the capital needed to accelerate their expansion.
Talent attraction: Essentially, the franchisor is creating a business in a box, driving automation and allowing people at a lower level of skills to perform the business functions, further reducing costs, and opening up the talent pool.
Replicability: Franchises are designed to be easily replicated. Whether you visit a McDonald's in New York or Tokyo, you expect the same Big Mac and fries. Franchisors provide comprehensive training, operations manuals, and support systems to help franchisees replicate their success in new locations. This standardisation streamlines operations, reduces costs, and ensures a uniform customer experience.
Local Adaptation: While maintaining consistency, successful franchises also recognise the importance of adapting to local tastes and preferences. This flexibility allows them to appeal to diverse markets without sacrificing their core identity.
So how can applying franchise characteristics help you scale your business? Now that we understand why franchise models are scalable, let's explore how you can apply these characteristics to unlock your growth potential:
Empower, don’t control: In a recent blog post, my fellow Scaleup Partner, Angelina Bell, discussed why empowerment is critical to scaling and why, to do it well, it demands a more structured approach. Franchises provide the level of structure, measurement, and monitoring required to effectively empower people. This structure also enables the identification of best practice that can be shared across the business encouraging a culture of innovation, continuous improvement and service excellence.
Invest in Training: Although it can be difficult to make time, especially when your business is going through a growth phase, the benefits of investing in and structuring training around your key operating processes will pay dividends. Now that you have developed comprehensive manuals and training materials, it’s possible to provide thorough training and ongoing support to your employees to ensure that they have the skills and knowledge needed to deliver your core processes consistently to deliver exceptional service.
Adapt to New Markets: While maintaining consistency, adopting a franchise mindset will allow you to think globally and act locally, remaining attentive to local market preferences and cultural nuances. This discipline means that the customer remains at the centre, allowing for the conscious tailoring of your products, services, and communications to resonate with different demographics and geographic regions.
How RTC Can Help
At RTC, we specialise in helping businesses unlock their growth potential. Our team of Scaleup Partners are dedicated to providing personalised support and guidance tailored to your unique business needs. Whether you're looking to standardise your operations, strengthen your brand, or expand into new markets, we're here to help you every step of the way.
Ready to take your business to the next level? Reach out to connect with a Scaleup Partner and start realising your growth potential. Together, we can turn your high growth potential into high growth performance. You can find out more about how we can help you scale up your business here:
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