Choosing a profitable franchise When thinking...
When you're considering a Canadian franchise, especially a newer one, one of the many concerns you'll have is how well the brand is expanding. Even companies with great products or services and strong performance records have suffered serious losses due to poorly-executed expansion, so it's only natural to want to avoid a brand that simply isn't handling its growth the right way.
As you weigh your franchise options, keep the following expansion red flags in mind.
Internal processes and systems are lacking or nonexistent
A brand selling franchises without the infrastructure needed to support its incoming and current franchises is a very common problem. The business model needs to work and has to be replicable on a bigger scale. If it's not, your new franchise will suffer, along with the rest of the system. Ask what systems the brand has in place and learn about the infrastructure as much as you can.
The franchises are being sold too fast
Rapid growth, believe it or not, isn't always a good thing. If the brand's support team and infrastructure aren't yet equipped to handle a wave of new franchisees, it will buckle under the pressure. Find out the level of support available to you, including how many people are working at the franchisor's management and support team levels.
Going beyond the home base too soon
This is more relevant to a newer franchise but still applicable in many cases. When a brand based in New York grows and decides to franchise the concept, it shouldn't view California, for example, as the home of its next location. Beyond the obvious--lack of supply chain and infrastructure--a brand jumping cross-country will be in an uphill battle when it comes to franchisee support, brand recognition and site visits.
Lack of validation
Ideally, your franchise will validate its franchisees. Whether the brand is emerging or established, there's simply no way for it to grow properly if it does not validate its franchisees. It's the franchisees who play a fundamental role in building a brand, so the franchise speaking in a positive way of and to them is necessary to ensure the franchisee is doing the same about the system to others. When a brand does not honor its obligations or commitments as a franchisor or disparages franchisees in public, those franchisees will not act as they should, namely recruiting new franchisees into the system, which is necessary for growth.
Growth is good, but in the world of franchises, this is only true when it's approached and handled the proper way. If a franchise you are considering displays any signs that it is struggling with expansion, keep this firmly in mind before you join the system.