The 5 Mechanics of Scale: Identifying Franchise Concepts Growing with Velocity.
With over 4,000 operating franchise concepts in North America, finding rapid growth concepts can be a challenge, but not impossible.
Growth with velocity means there are external and internal attributes of the concept impelling it forward and amplifying growth at the unit level – without your direct involvement. We call these attributes the ‘5 Mechanics of Scale’ and Franchisors whose concepts can grow with velocity have some combination of them.
1 Market Potential:
- Size – Large consumer pool
- Product/service demand – Necessary, not discretionary
- Competitive climate – Few or no recognized brands
2 Industry Growth Path:
- Where is the category or ‘industry’ on its growth path – to grow with velocity, it is a developing, not mature category.
3 Franchise Operating Model:
- Low initial and ongoing operating costs
- Manager-run structure
- Low inventory; low staff needs
- Loose real estate needs
- Your role as a franchisee to manage your Manager who in turn manages the systems and the operation.
- You focus on overall business growth.
- If available, minimum 6-figure ebitda
4 Precise Operating Systems:
- Operations dependent on systems which allow for multi-unit growth.
- Simplicity is key
5 Strong Franchise Leadership:
- A deep bench of proven franchise expertise and focus.
We are looking for the conditions to create steep ramp, strong, amplified unit economics over the long term and rapid scale, meaning additional unit opportunities.
And, if possible, a concept that’s first, second or third to market. It also doesn’t quite matter what product, service or industry we’re talking about. If it fits this model, it gets bubbled to the top of our list!
Want to see if the concept you’re looking at has the attributes to grow with velocity?
Contact the CFT for a FREE concept evaluation!