Growth Brands Share Tips to Scale
Heather Elrod, Frank Milner, Jeremy Morgan and Matt Stanton offer their growth expertise from the franchisor level.
Tap into the intellectual capital of the franchisees you have in the beginning, advised Frank Milner, president of Tutor Doctor, as he noted these people likely have relevant experience that when put to use can benefit the brand overall.
“Leverage the expertise of your franchisees early on,” said Milner. “That helped us to also build the relationships and we still look to do that today.”
At Amazing Lash, CEO Heather Elrod said franchisees who signed with the eyelash extension brand soon after its launch in 2010 have proved especially useful when it’s time to train new franchisees. “We’ve even taken the step to paying them to train other franchisees,” said Elrod, who oversees a system of 200-plus salons.
Elrod and Milner, along with Elements Massage CEO Jeremy Morgan and Matt Stanton of WellBiz Brands (which owns Elements and Amazing Lash) offered their advice during a panel at the IFA’s Emerging Franchisor Conference in Miami last month.
Involving franchisees from the outset also serves as a strategic way to keep the lines of communication open so any problems can be solved “relationally, before legal gets involved,” said Elrod.
As disgruntled franchisee associations at various brands call for change, the subject of communication and managing expectations is on the minds of many franchisors, acknowledged Morgan as he advised the young brands in the audience to be a part of conversations with franchisees early and often.
“You don’t want franchisees to go and form a council on their own,” said Morgan.
Instead, franchisors should be part of the council formation process and include as criteria that the ‘zees involved be “successful and profitable” so they can positively impact the system.
Emerging franchise systems are often turning to regional developer or area representative agreements to jumpstart growth, but there are pros and cons to a model that has the developer or representative selling franchises and splitting royalties with the franchisor.
“It’s a great way to get big and get big fast without a lot of capital coming in on the front end,” said Stanton. “The downside is not all regional developers are good at everything, such as oversight. And as you grow, you’re giving up half your profits.”
WellBiz has actually bought back some of the regional developer territories it sold early on because development schedules weren’t being followed.
“You really are going to want strong agreements with RDs so you can hold them accountable,” added Morgan.
When considering multi-unit agreements, Elrod also advised using caution “because they could be sitting on a great territory where you want to put a single owner.” Amazing Lash aims to mix in single-unit deals in addition to its larger agreements.