The goal is not just to expand globally, but to expand in a disciplined way that places your business in those markets where it is most likely to be successful.

While there are many fundamentals such as a having a successful domestic experience, sufficient capital, broad support within your own organization and a persistent commitment to achieve long-term growth, mistakes are always just around the corner.

So, you are ready to take your business global. Congratulations!

No doubt that it took much hard work and a considerable investment time, money and energy to reach this point and, likely, some advice from other International Franchise Association members who have gone before you to build successful businesses.  Lessons learned from them not only expedited growth, but protected you from some risky decisions.

As I promised during the 2015 IFA Annual Convention when I accepted the Bonnie LeVine Award, my commitment going forward is to take what I have learned about international franchising from my mentors and share it with others. So, perhaps the right place to begin would be with a recounting of some of the lessons learned during 20 years in international franchising.

Lessons for International Franchising

While there are many fundamentals such as a having a successful domestic experience, sufficient capital, broad support within your own organization and a persistent commitment to achieve long-term growth, the five most common mistakes and the resulting lessons are these:

Lesson No. 1 – Choose your markets and franchisees very, very carefully.
Lesson No. 2 – The best franchisee will struggle to overcome the challenges of a poor market.
Lesson No. 3 – A great market cannot compensate for a sub-performing franchisee.
Lesson No. 4 – There are no exceptions to Lessons 1, 2 and 3.
Lesson No. 5 – Don’t take shortcuts – you will almost certainly regret it.

In my experience, high-potential global franchise networks stumble right out of the gate because they ignored Lesson No. 1 – choosing markets and franchisees very carefully.  Why? Many reasons are likely, but there seems to be a universal impulse to take the first opportunity that comes along.  The importance of beginning with the end in mind cannot be overemphasized.  That means that the goal is not just to expand globally, but to expand in a disciplined way that places your business in those markets where it is most likely to be successful and into the hands of entrepreneurs who have the greatest potential to grow your brand into a model that others elsewhere will want to be a part of.

What are the critical ingredients that you absolutely must find in a market to increase your potential for success?  First, let me acknowledge that some may be concept-specific — the “selling coals in Newcastle” challenge, for example.  But others and the most important markets are consistent across concepts and cultures.

Consider the following at the top of the list:

• A business-friendly environment with appropriate levels of incentives for business development, supportive regulations, protection from those who would pirate your brand and business cultures which are free from corruption and economic and political stability.  It is easier to determine which markets meet these criteria than you may think.  The U.S. Commercial Service and the U.S. State Department can be of enormous help.  Perhaps the best way to narrow your list of potential markets is to just look where other franchise systems have gone successfully.
• Look for a franchise-friendly culture.  This is not the same as a business-friendly environment as many have learned to their chagrin. It means that for your business to flourish you must have a regulatory environment where franchising is understood and encouraged. IFA and each of the national franchise associations around the world are fantastic resources in this area.
• Look for economically-fertile markets where the economy and per capita income are high enough to support your business.

Following a Process

The process begins with identifying your top target markets, but it very rapidly comes to the question of finding the right entrepreneur in those markets. And, this is where the task of global franchising becomes even trickier. Think of it as finding the needle in the haystack – a lot of work, but definitely worth it in the end.

Let’s not go into the question of how to develop leads since there are many articles and experts who offer advice and assistance in this area.  Instead, I will speak to what may be even more important — the characteristics of a potentially-successful franchise partner for the right countries. Here the work is as much a gut feeling as it is science, but by following the right process you can absolutely find the right partners.

Let’s begin with the science, not really science per se, but with the hard facts that can lead you to well-informed decisions. It’s akin to putting all the candidates through progressively finer filters until you are left with only the best.

First of all, look for a proven entrepreneur, someone with a track record who gives you confidence that he can make your concept successful, too.  Check out the candidate’s financial strength and character with bank and personal and business references. Integrity rises to the top here as a characteristic you want. As you get closer to choosing your partner, try to get a sense of his business acumen, maturity of thinking and the seriousness with which he has thought through developing your brand. Ask the candidate to develop both short- and long-term business plans.

As you work through these progressively finer screens filtering out candidates who are not a good fit, you will eventually get to the point where you’re left with a decision guided in part by a gut feeling. It’s a relatively simple question:  Do you like the candidate? You should because you are going to be affiliated with this person for a very long time.  Think of it this way: The initial investment in time, energy and resources to ensure that you have fully vetted future partners is a small price to pay to ensure that you have the right person or organization you will be working with for many, many years.

Now, back to the five lessons.

Choose your markets and partners very carefully.  An “A” level candidate in a “D” level market is most likely destined for a mediocre performance and, perhaps, failure.  A “D” level candidate in an “A” level market will be the extremely frustrating to you. Don’t go there!  Worse, the damage to your brand and cost of making a change can be very high both in terms of financial cost and personal frustration.

Whatever you do, do not forget Lesson No. 4:  There are virtually no exceptions to lessons 1, 2 and 3.

But then there is Lesson No. 5:  Don’t take shortcuts. You can do well for your brand and your business by following Lesson No. 5, but remember, building an international brand begins by following Lesson No. 1 – choosing both markets and franchisees carefully. Do this and you will be well on your way to building a successful global business.

Good luck!

 Yoshino Nakajima, who was honored earlier this year as the recipient of IFA’s Bonny LeVine Award recognizing female leadership, retired recently from Home Instead Senior Care as the chief development officer for Global Markets and was active in the International Franchise Association’s International Leadership Committee. Find her at fransocial.franchise.org.

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Startup Franchisor fail, we all know. Business owners that are considering franchising their business should understand why before taking the plunge.

If an existing business owner is considering franchising their business then understanding why a startup franchisor can fail will provide a clearer perspective of what is key to success. Although data on the number of new startup franchisors is solely lacking, so too is which startup franchisors fail and why, here are some reasons that we have seen in these years.

Startup Franchisors Fail – Reasons Why

1. The business is not an appropriate model for franchising

Simply stated the business can’t be built into a successful franchise model. At the very beginning of the franchising evaluation process, it’s important to be cautious and objective when evaluating a business for a franchise. This means not relying solely on the analysis and opinion of a franchise consultant. Rather, you should do your homework and independent analysis. Consult with your financial and legal advisors and request they provide you uncensored feedback. Remember, if there are no franchises that are similar to your business, there could be a good reason why and it may not be because you’re smarter than others. Related to this issue is that the franchise model must be based upon a well-tested business with no major unsolved operating problems.

2. The business owner and staff lack the business skills to operate a franchise system.

This situation can manifest itself in several ways including the inability to lead or manage a multi unit organization. There needs to be management staff in place or in the wings that can help to operate the new franchise plus the existing business. When a business goes from one company to two management will be operating two separate businesses.

3. The business owner doesn’t fully understand the implications of franchising a business and what it takes to be successful.

The allure of franchising is such that a business owner may only see the success stories and not the failures. Developing and launching a successful franchise program, requires the right ingredients. Unfortunately, a good deal of emphasis is placed upon building the franchise and not the launch and development of the system. The next point presents a key.

4. The franchise model is appropriate and can be successful developed, however, there is a lack of capital necessary to build, develop and operate the franchise.

A major reason why a startup franchisor fails is a lack of capital to sustain the business during the launch of its new franchise. An often unanswered question is, if a startup franchisor had sufficient working capital could that enable them to overcome some of its shortcomings? Perhaps some could and others couldn’t. Some startup franchisors lack the working capital they need to launch and grow their new franchise. The cost of building the new franchise program including consulting and legal fees can cost a lot! And this is before any funds are spent on advertising, processing and closing new franchise transactions. A number of startup franchisors burn their capital on the building stage and when it comes to marketing and supporting new franchises the new franchisor lacks the necessary funds to continue.

The bottom line: Business owners that are thinking of franchising their business need to be cautious and understand what it takes to be successful. Understanding the reasons why a startup franchisor fails should be foremost in the minds of those considering the franchise route.

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Franchise recruitment and development is the critical component of expanding a business using franchising as a growth strategy.

The question we keep hearing is, “How do we recruit better and more qualified candidates?” As franchisors seek eligible, competent, franchisees to increase their businesses, they realize that the strategies for success used in the 20th Century are ineffective in the 21st Century.

The “good old days”

As times change so must franchisors, particularly in their approach to the generation, qualification and granting of franchises to qualified individuals and entities. To be a successful franchisor in the 21st century the practices used to grant franchises in the 20th Century, are ineffective. Franchisors need to redesign their strategies to best meet the needs and expectations of the 21st century candidates. Franchisors need to create an environment where the customer is the focus of everything and everyone in the company. Franchisors must grant franchises only to those qualified individuals and entities who will implement their systems, fully, completely, and consistently, resulting in the acquisition and retention of VERY satisfied, loyal, frequent user Promoter customers who will build their Brand.

the 21th century

To bring your business into the 21st Century, Management 2000 had identified four primary areas of focus: Philosophy, Process, Technology and People

Every Brand needs to have state-of-the art marketing strategies and tactics, using website optimization tools and social networking sites. Brands need to take advantage of proven technologies to interact with the candidates. All processes for handling the candidates, from first contact through signing the franchise agreement or area development agreement should be streamlined.

17 Must for recruitment

To understand a successful franchise recruit system from 30,000-foot overview, we have listed 17 things to help you recruit better-qualified candidates.

1. Follow a process.
2. Stay in control.
3. Framing the process of granting a franchise (not “selling” a franchise) as a “Mutual Decision-Making Process” designed to: “Help you decide if our company is the best opportunity for you, at this time in your life, to help you achieve your personal goals for income, lifestyle, wealth, equity, and debt elimination, and for us to decide if you are the best person/entity to help us achieve our goals.”
4. Existing customers are the “diamonds in your backyard” and are often overlooked as the most ready, willing, and able to become your franchisee.
5. Existing franchisees opening new units as part of their personal business plan.
6. Existing franchisees giving you referrals and recommendations, especially in other markets.
7. Making the candidate the “center of the universe,” and not you, your concept or your franchise. The “mutual decision making process” is not about you, it is about the candidate or entity wanting to decide to become your franchisee.
8. Identifying and eliminating “deal breakers” in the very beginning of the process.
9. Having a web site dedicated to franchising (and make sure there is a reason for them to call you after they look at your web site).
10. The use of technology to help qualify and interact with the prospects, inquiries, qualified individuals and entities, while making a decision about whether or not to grant a franchise.
11. Having a behavioral based profile that has measurable criteria.
12. Ensuring the candidates have the correct understanding of franchising and of the terms: initial fee, royalty, territory, what “granting” means, what is “granted.”
13. Using the power of the principle: “Personal Goals Drive Business Goals.”
14. Using the power of the principle: “Decisions are made on emotion, not intellect.”
15. Using financial disclosure information.
16. Using a Qualification Specialist, either real or virtual.
17. Having very specific “must haves” and “like to have” profile for the candidate.

Before you start the franchise recruitment process, you must identify your ideal candidate, and the qualifications he/she must have and tailor your franchise recruitment process to that end.

Take the time to analyze your processes and determine how they can be used to discover qualified candidates.

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Training Guarantees Success but not everybody is up-to-date.

With the widespread use of technology in the twenty first century, franchise recruitment has changed drastically. Potential franchisees research possible franchise opportunities on the internet. How do you grant franchises to excellent candidates? For franchisors, the whole way of choosing qualified candidates has also changed. Choosing the right candidate the first time, will reduce turnover and allow you to build a strong customer-centric team to share your vision of success.

How are your franchisor/ franchisee relationships?

Are your Field Consultants viewed inspectors who only visit the franchisee to check for compliance violations?  Or are they seen as true business consultants involved in a strategic partnership with the Franchisor and the Franchisee with common business goals?  The goal of Field Consultants is to help the franchisee understand how the franchise relationship will help them succeed. Field Consultants will learn how to change franchisees behaviors, and their own, to increase the franchisees success.

Training Guarantees Success

For many franchise systems the big question is how do we increase unit revenue and profits? Understanding what the customer values is one of those keys. Before we can understand what the customer wants, we need to know who our customers are and where our customers are. How do we keep existing very satisfied, promoter customers and recruit new customers? These are just some of the keys to increasing profit and growth on a unit level.

As with anything worthwhile, practice makes perfect. You need to train yourself and team members consistently, to take advantage of the latest advances in technology, and implement innovative changes to grow your business.

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“A franchise is a type of business that is the same everywhere you go.”

“McDonald’s is a franchise. So are KFC and Burger King.”

Those answers are all correct. But, there’s more to franchising than just uniformity.

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