Writen by Lance Winslow
As a franchisor I am always asked by new and existing franchisees about future expansion. I find this to be a most wonderful question because I admire the strength of today's entrepreneur. With all and over regulation we still see hard chargers willing to battle the Tsunami of laws, rules and regulations as the debris rushes ashore. Indeed, with the Hurricane of lawyers presently in practice and Earthquake stampeding new attorneys getting out of law school, it is amazing the new warriors of free enterprise still press. Yes, in fact the modern entrepreneur has more floating and flying debris then ever before in our nations history. The of course want to shoot all the lawyers and regulators who have never made an honest dollar in their entire lives, yet no one has that much ammo and it is time consuming to run down all the much mold and slime.
As a franchisor to protect the integrity of our franchise system we had devised a fair plan for our expanding team members, which ought to looked at whether you are a franchisor or franchisee. Such policies keep the lawyers and the sneaky little petty bureaucrats behind the walls of the castle sweating it out inside their Trojan horse like the viruses and contaminators of free enterprise that they are.
Here is the policy, which is an excerpt of our Confidential Operations Manual of one of our brands. You should follow the thought process here to learn from our experiences:
"Buying of New Exclusive Territory for Your Franchise"
"Now, before we sell a territory containing a city that is next to the one you are in to a new prospective franchisee, we would obviously ask you if you wanted to be the person to buy that exclusive territory. If you did, and you had the necessary financing available and were in good standing in our system, then we would sell it to you instead of the newcomer."
"The reason is it is easier to sell it to you rather then to train a brand new person and start from scratch. Obviously if you are in business with us as a franchisee and you are doing well we want you to continue to do well. But we want you to continue to do well in your exclusive new territory as well as your present territory. So all of those factors have to be considered. Also, do you have the staff or do you have a truck manager to run the additional unit in the next territory? We want market domination. But to have market domination you need market penetration. To have market penetration you need market share. But to have market share, you have to be better than your competition. You have to be able to service more people faster, better and more efficiently. But to do that you may need an additional service unit and you may need newly trained managers".
"All these factors are taken into consideration during our evaluation as to whether or not we will sell you any additional territory. But of course we are in it to win it all the way. We support our team and we always try to hire from within first. So we would rather help our own team expand their business rather then bring on a newcomer outside of the team and risk having someone that was not as efficient as you and to lose temporary market share during the training period."
"So if your business is operating up to standards, we definitely want you to buy the territory next door and then hopefully to buy all the territories surrounding your city and have a very large, exclusive territory. That would be best for the team, if we had one franchisee for every ten cities. Of course, to expand to ten cities will cost you more money and for us to grant those to you, you would have to be doing well in all the previous cities, one through nine."
I hope you have enjoyed both my opinions and perceptions of the reality of today's market place and the tid bit of wisdom in expansion policies of home based and mobile franchise businesses. Most franchisors should agree with this policy out of simply pure fundamental principles Most franchisees should understand the need for such policies. So when a new prospective franchisee or existing franchisee of my system asks me about such thing, this is where I derive the thoughts, which make up my answers. You might also wish to think about this, because they do not teach it in school and you might get sued if you don't.
Lance Winslow
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