Why scaling a franchise is more profitable than just growing

posted in: Blog | 0

As a franchisor, you may be focused on growing your franchise network, to expand your brand and increase your revenue. However, simply adding more franchise units to your network may not be enough to achieve sustainable growth, and profits

Sure, “expanding” will increase overall revenue and presence in the market, but it may not necessarily result in significant growth or efficiencies in the way the business operates, hence, shareholder profits will not meet expectations.

Unfortunately, one common solution when growing and everyone is “real busy”, is by throwing even more people at it! Just growing means you also grow your overhead – not your bottom line.
Hint: Revenue does not equal profit.

However, a scalable franchise model is one that is able to grow and expand without requiring a proportionate increase in resources. This means that as the network grows, the cost of operating additional units and producing goods or services decreases, resulting in higher profits.

In contrast, a business that is not scalable will typically see its costs increase as it grows, which can lead to lower profits or even losses.

Scaling means – get the right tools and do the right things

Scaling involves implementing systems, processes, and infrastructure that allow the brand to expand more rapidly and efficiently. This may involve standardizing operations across all units, streamlining processes, and leveraging technology to improve efficiency. Scaling a franchise can help the business to achieve significant growth and increase its market share and profitability, but it may also require a greater investment of time, resources, and effort. But that’s just what success spells like.

Scaling your franchise with the help of a digital platform like Chainformation can help you optimize your operations and drive more value from your franchise network.

When you’re just growing your network, you may be adding more units without considering how to optimize your operations. This can lead to inefficiencies and a lack of consistency within your franchise, which never is a road to success. On the other hand, scaling with the help of a digital platform like Chainformation allows you to streamline your operations and ensure that all units in your franchise are following the same standard operating procedures (SOPs).

How do you know all restrooms have been cleaned today?

One of the key benefits of using a digital platform is the ability to centralize your Manuals, SOPs, Task- and Checklists and other forms of documentation, and have them easily available from any device 24/7.

This makes it easier for franchisees to access, follow and verify the execution of correct procedures, which in turn help to maintain consistency across all locations. Additionally, the platform can provide tools for tracking and measuring compliance with SOPs and immediately notify managers when there are discrepancies and deviations.

Your Operations Team will quickly be able to identify any potential issues or challenges, and take corrective action as needed. This can help to ensure that everyone is on track and working towards common standards, leading to increased customer satisfaction and loyalty across all locations.

And this is a well-known formula: Loyalty equals Profitability.

Loyalty among happy franchisees

When talking about Scaling and efficiency, most would agree that it’s more profitable for a Franchisor to keep existing units happy than constantly having to recruit new franchisees. Franchisors using Chainformation for many years knows this is a vital part, supporting local operators to become and stay successful and happy for several reasons:

Retention costs:
Recruiting and training new franchisees can be costly and time-consuming. By keeping existing franchisees happy and satisfied, a franchise can reduce its retention costs and invest its resources in other areas of the business.

Customer loyalty:
Happy, well-informed franchisees are more likely to provide high-quality products or services to their customers, which lead to customer loyalty. Loyal customers are more likely to return to the franchise and recommend it to others, which inevitably is a key to increased profits.

Brand reputation:
Franchisees are an extension of the franchise brand, and their actions and interactions with customers have a significant impact on the franchise’s reputation. Franchisees that follow the system are more likely to maintain a positive brand reputation, which can lead to…. Yes, increased profits. It can also be a vital part of your Franchise Sales process and marketing when prospects contact your existing ones for reference.

Employee retention:
Franchisees who are happy and satisfied are more likely to retain their employees, which can reduce staff turnover and training costs. This in turn lead to increased efficiency and productivity, which can translate into lower operating costs for the franchisee.

Customers using Chainformation say:

“Chainformation has completely transformed the way our franchise operates. The digital manuals and checklists make it so much easier for our Franchisees and their employees to access the information they need and keep track of tasks. It’s been a game-changer for our business.”

“Before implementing Chainformation, we were constantly struggling with outdated paper manuals and disorganized checklists. Now, everything is digital, organized, and accessible in one place 24/7. It’s made our franchise run so much smoother and more efficiently.”

“We’ve seen a huge improvement in compliance to our routines since switching to Chainformation for our digital manuals and checklists. Our local staff are now able to quickly access the information they need and make informed decisions, resulting in a better experience for our customers. It’s been a great investment for our franchise.”

Conclusion:
While simply growing a franchise network can be a quick and easy way to expand, building a scalable concept with the help of a digital platform like Chainformation require a little more thinking, but it can provide a significantly stronger foundation for long-term growth and success.

How does Chainformation help

Chainformation is a cloud-based software suite, uniquely developed for the needs and demands of multi-unit operators like franchises and other chains. On any device, Chainformation is a single unified hub for all aspects of internal communication, collaboration and with tools for digital Operations manuals, digital Checklists and Task management – it’s a powerful tool. Chainformation will greatly improve the conditions for franchisees to stay compliant and “follow the system” and thus deliver a cohesive and consistent customer experience across all locations.     

Chainformation offers solutions that fit operators in a wide range of industries and sizes, from 3-4 locations, as well as for national and international brands with thousands across the globe. 

BOOK A DEMO NOW
Invest 30 minutes and sign up for a Demo and see how Chainformation works in reality