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Franchising: Successful Strategic Market Build-out

Does Your Franchise Have The Correct Growth Strategy_

The following is a two section excerpt from my book 5 Pennies: Ten Rules to Successfully Building a Franchise Mega-Brand and Maximizing System Profits.

Successful Strategic Market Buildout

Shortly after I started my first chain in the early 90’s – Computer Doctor – I met and became friends with Ray Barton, the Chairman of Great Clips.

One day while visiting him at his headquarters in Minneapolis, MN – Ray asked me how many Computer Doctor stores I was planning on building in the Minneapolis/St. Paul market.

Without hesitation, I told him 24 locations – one in every suburb. He smiled and told me that is exactly how many Great Clips they had initially planned to open there as well.

He then asked me how many salons that I thought they had currently in the market, to which I guessed at around 50-75.

He said that was a good guess – but they actually have around 120 or so and still growing.

He then told me some advice that I have never forgotten…

“Lonnie” he said, “What you know today about your unit operations will change in two years, five years, and certainly ten or twenty years. Never give too much territory away, as the geography required to generate that location’s sales will change. Always measure that and make adjustments as you grow.  

Because of that, we only open a new geography to grow into when we are ready to pour into it the resources that it requires to be successful. We thoroughly build out the market and then move on to another.”

What Great Clips as a franchise Mega-Brand has done so exceedingly well is concentric market development – meaning they started with a supportable market and grew out in concentric circles until the market was completely developed.

Concentric market development is franchising 101 – but yet is the hardest strategy for new and emerging franchisors to stick with because of what I call the “Urgency to grow and can’t say no!” syndrome, or in other words – the need to make a sale because of a shortage of cash.

Great Clips has never wavered on their commitment to concentric market development and the size and strength of their system is testament to this brand growth strategy.

Ten Keys to a Successful Area Developer or Representative Program

  1. Recruiting the right qualified candidate as an Area Developer or Representative.
  2. Providing dedicated support and coaching to them.
  3. Jointly developing localized marketing and networking plans for recruiting new single unit franchisees in the territory.
  4. Establishing a realistic territory size and development schedule that can be met.
  5. Integrating them into your corporate infrastructure.
  6. Hosting required quarterly Area Developer or Representative only meetings.
  7. Setting realistic territory unit sales goals, single unit development goals and holding them accountable for it.
  8. Provide them with dashboard and metrics tools to effectively manage their territory.
  9. Poll their territory franchisees to grade the Area Developer or Representative on their franchisee relationships, support and other operational items.
  10. Providing specialized and advanced operations training to them.

Give us a shout for a free consultation on how to improve and grow your brand!

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