Why Most Franchise Growth Strategies Fail

For many top franchise development executives, continually fine-tuning their approach to recruiting quality candidates is a process that keeps them up at night. Not only does this exercise seem to go on forever, but it can also be difficult to determine if and when you’ve hit your mark.

Using a metaphorical example of fine-tuning, imagine you’re a seasoned mechanic and auto enthusiast who needs to set the timing on a powerful V-8 engine. There is actually a well-defined process to fix this issue. It involves manually turning the crankshaft until the compression stroke aligns the first cylinder at the highest point of its travel.

This is done to ensure proper ignition timing — commonly referred to as top dead center (TDC). Once the timing mark lines up perfectly with the TDC mark on the harmonic balancer, you know you’ve got it right. Listening to the now perfectly idling engine hum is empirical evidence of a job well done — that’s the kind of closure you’re looking for.

But if your franchise recruitment strategy isn’t going according to plan, despite your best-laid intentions, there is no closure. In the desperate struggle to meet your KPIs, there is only tooling and more re-tooling as you hope to get it right.  

Does this scenario sound familiar to you? It should. Does it lead to mounting frustration? You had better believe it. Diagnosing the root problem of why your growth strategy is underperforming can often be a hapless exercise in futility. There are just so many variables to consider (and fine-tune) that franchise development teams can’t help but feel overwhelmed when attempting to get it right.

Challenging the traditional approach to franchise development

What do we mean when we refer to a “traditional approach” to franchise development? A few things. Historically, brands have clung to the notion that insufficient lead generation is one of the primary reasons their growth strategy underperforms. They just need to get more leads and sharpen their sales tactics to get back on track.

Many franchisors take big swings — increasing their marketing budgets and doubling down on efforts to monitor unit economics, ROI and operational metrics. But their overreliance on fragmented data, often pulled from incongruent sources, hampers their ability to make informed decisions.

It brings to mind an amusing quote from Indiana Jones in the blockbuster movie Raiders of the Lost Ark. While witnessing firsthand the Nazis’ futile digging efforts to locate the famed Ark of the Covenant, he wisely proclaims, “…they’re looking in the wrong place.”

Though it can be a difficult truth to confront, franchise sales and development teams should take the following realization to heart. The majority of growth strategies fall short due to three root causes: a lack of structure, misalignment among leadership and the failure to maintain discipline during the critical execution stage.

Common breakdowns in recruitment

Where do most brands get it wrong when it comes to optimal franchise recruitment? Let us count the ways, because there are many, perhaps best described by breaking down the specific phases in the franchise development funnel:

Front-of-funnel:

The common culprit is often an overreliance on third-party brokers and paid leads, in lieu of quality organic lead generation. This issue can be compounded by inconsistent lead flow, making it nearly impossible to get an accurate read on growth at the unit level.

Candidate engagement/qualification failures:

The majority of franchisors have heard this many times over — your pipeline of candidates should always focus on quality over quantity. Overly eager sales teams often get excited when an influx of new leads show up, but if they aren’t vetted properly, it’s incalculable how much time can be wasted on the wrong ones. Conversely, highly pretentious sales teams can often be too quick to dismiss certain candidates, discarding what could be quality leads for arbitrary reasons way too early in the process.

Execution/process shortfalls:

Far too often, brands also fail to achieve the right ratio of candidates across the three main development phases, resulting in pipelines that function like a washing machine crammed with an imbalanced load. In an ideal scenario, franchise sales and development teams should have roughly 60% of candidates engaged in the early stage, 30% in the active stage, with the remaining 10% dedicated to those almost at the finish line.

Another example of a breakdown in the recruiting process is the failure to measure KPIs and conversion rates throughout the candidate lifecycle. Cherry-picking the best numbers while simultaneously ignoring the bad metrics can lead to an incomplete and skewed benchmark of success.

These observations are drawn from countless real-world experiences in working with hundreds of franchise sales and development teams over the years. As more brands eventually come to the realization that generating as many leads as possible doesn’t fix what’s actually broken, there’s an opening to introduce meaningful change.

As such, we’ve reached an inflection point where brands can now experiment with a new philosophy on growth. One that relies on a more intentional, system-driven model to get the results they desire.

Embracing an intentional, system-driven model

Once we’ve established a consensus that a complexity of factors and inconsistent data play a role in fluctuating and unpredictable franchise sales numbers, the question becomes: how do we course correct? The answer may be simpler than you think — transitioning to a process that relies on interconnected operational discipline.

The infrastructure of reporting frameworks has significantly evolved, allowing us to pull and aggregate data from a wide variety of sources, networks, metrics and outcomes. Once everything is accounted for, we can take the information from these diverse datasets and turn it into actionable insights, improving the recruitment process in meaningful ways.

If you want to get some real traction, begin treating your franchise recruitment effort with the same analytical rigor as you apply to other areas of your business model, areas such as finance, marketing and operations. Because standardized systems are capable of providing us with world-class clarity.

Essentially, the Brave New World we hope to usher in will require us to embrace an intentional, system-driven model … predicated on accountability, of course.

What a concept.

For many top franchise development executives, continually fine-tuning their approach to recruiting quality candidates is a process that keeps them up at night. Not only does this exercise seem to go on forever, but it can also be difficult to determine if and when you’ve hit your mark.

Using a metaphorical example of fine-tuning, imagine you’re a seasoned mechanic and auto enthusiast who needs to set the timing on a powerful V-8 engine. There is actually a well-defined process to fix this issue. It involves manually turning the crankshaft until the compression stroke aligns the first cylinder at the highest point of its travel.

This is done to ensure proper ignition timing — commonly referred to as top dead center (TDC). Once the timing mark lines up perfectly with the TDC mark on the harmonic balancer, you know you’ve got it right. Listening to the now perfectly idling engine hum is empirical evidence of a job well done — that’s the kind of closure you’re looking for.