By SJ Kim
Taking the first step into establishing a small business is a rigorous journey. But the transition from small business to franchise is even more daunting. Small businesses have the capacity to thrive in their local environments, as the business owner is usually familiar with their neighborhood. They have the potential to create a local fan base and increase sales organically whether it’s through the word-of-mouth and/or local marketing campaigns. And with the right momentum, small business owners start to ponder the thought of “What if? What if I expanded the business into other territories and markets?” Well today, I want to take a look at three basic steps that any business must consider when proceeding to the next level: franchise.
Franchises are those small businesses that created a whole lot of buzz during the single location phase. They created a business model that was attractive and compatible for any location worldwide. They were also the type of businesses that did thorough research in their respective competitive markets. Take Chipotle and Five Guys, for example. They are located internationally with hundreds of locations. And to create an ideal business model like Chipotle and Five-Guys requires a several things.
A Great Product
A strong reason customers flock to a certain establishment is because of their products and/or services. Let’s take a closer look at Chipotle for a moment. They provide a great product at a great value. They have a diversified portfolio for Mexican meals and provide many combinations for a customizable appetite. And their product portfolio is unique enough to disassociate themselves from establishments such as Taco-Bell and Del-Taco, which primarily focus on hard-shelled tacos rather than burritos.
Chipotle also raised brand awareness with the introduction of its signature guacamole. Customers largely associate this brand with the signature product and come directly to Chipotle to have a little more of it. Having the power to draw sales with your product is a necessity in order to establish a successful franchise.
Five Guys displays a signature product as well, just with peanuts. This franchise provides free peanuts to its customers to scoop up along with their meal. Peanuts and hamburgers may sound like polar opposites but Five Guys has been driving in customers through this combination. Many customers recognize unique pairings such as Five Guys and it tends to become embedded in their memory once they recognize the uniqueness.
A Solid Internal Infrastructure
Transitioning from single location to franchise requires fortification of internal business infrastructure. Keeping tabs on one location might’ve been just fine with simple software systems, but accessing data for multi-locations requires advanced technology and systems. New tech companies continue to pop up in order to assist in this transition process with the latest cloud-based technology that is capable of documenting all sales-related data along with handling inventory management.
Internal infrastructure is something many business owners forget about as they get too focused on the idea of franchising. Many franchisors are too concentrated on location, layout, labor, and other costs, while not recognizing the importance of data collection. Internal infrastructure is a small idea that plays a big role.
Small business owners also have to recognize that multi-location businesses require a look of unity. When someone walks into a Starbucks or McDonalds, they instantly know they’re in one of those establishments without having to look at any logos. They reflect a design, which their brand stands for. So, excluding the logo itself, a franchise needs to establish its aesthetic appeals for customers to broaden their brand recognition.
We can even refer back to Chipotle, which uses a lot of chrome in its franchise locations and displays their food as a matter of transparency. They want to be open with customers about their ingredients and have the aesthetic appeal of serving premium products.