What are the stages of the franchise system development?

Service Business

An entrepreneur who decides to go out with his business and create a distribution network based on a franchise should plan each stage of the development of his venture very carefully. The moment at which the franchise enterprise is located largely depends on the franchise outlets operating in the network. Most often, three main stages are distinguished - the initial development, stabilization and maturity of the system. Each of them is characterized by specific conditions for the functioning of the company.

From 1 to 10 franchise outlets

At the very beginning, an entrepreneur interested in developing a franchise project conducts pilot studies to show whether it is able to survive on the market. This is a very important moment that you should devote a lot of time to, because good analyzes can help you decide what should possibly be changed or can show that a given project has no future.

After passing a series of pilot studies, it is time to verify, the first franchisees appear. This is where the first serious problems may appear - the franchisor may not have experience in selecting business partners. In addition, there are the fledgling control processes and the general lack of skill of the entrepreneur in running this type of project.

With all this, ordinary human impatience can turn out to be a serious problem - it is obvious that if someone invests some of their capital, they want to generate profits as soon as possible. Waiting for the first proceeds to the account can be a rush. The goal of the franchisor at this stage is to sell the first licenses and "forge" financially.

From 11 to 40 franchise outlets

At this stage, the franchisor still has few partners and if a situation arises (and it is very likely) that there are people among them whose actions turn out to be unsatisfactory, they may take a lot of the entrepreneur's time. Possible deficiencies in system planning can also emerge here - bad organization may lead to additional stress and tension.

The franchisor begins to build and organize the organizational structure of his project, trying to organize the work of all partners and his own in the best possible way. The big challenge he faces is to plan such a pace of development so that it does not exceed the possibilities of franchisees and meets their expectations.

From 41 to 100 franchise outlets

At this stage of development, the franchise system should be relatively mature. The franchisor should control the structure of business partners, and his income should already be satisfactory.

The main task that the entrepreneur will face at this stage will be to prepare the existing structure for further expansion and expansion. In addition, it is a good time to analyze the system's work so far and think about any changes that it could introduce. The basic question that the franchisor should answer is "does the franchise system still function?".

At this stage, the franchisor's capabilities are also verified - to what extent he is able to control the expanding structure, adapt the network to development and changes, and how he works as a manager and head of many franchisees.

Over 101 franchise outlets

This is already the stage of full maturity of the franchise system. All the information necessary to evaluate the franchisor and the project he has created is available. If the conditions for functioning in the network and the method of management by the entrepreneur fulfill their role, this is a very good harbinger and the network should work flawlessly.

However, the franchisor should not rest on his laurels, because constant observation of what is happening on the Internet and outside of it, as well as responding to development needs are his endless tasks. Each entrepreneur at such a moment will certainly appreciate the time spent on carefully planning their activities at individual stages of project development. Creating an appropriate strategy and its consistent implementation should bring results from the very beginning.