How to Build a Massively Valuable Franchisor, Part 5: Increasing Organizational Value
So far in this series, we've covered a lot of ground about how to make your franchise organization massively valuable.
Here's a quick recap, in case you missed any of our previous posts:
Part 1: Truths About The Franchising Model -- Forgive the cliche, but there has never been a better time to get into franchising. If you want to take charge of your destiny, read this post to learn how the planets are aligned and the ideal conditions are in place.
Part 2: Your Brand’s Growth Journey -- Going the franchise road alone will certainly help you grow fast, but going it together with the right financial partner will help you grow far. Here's an article about joining forces intelligently.
Part 3: Trust Versus Control In Leadership -- Who at your company resents you for not trusting them? When you feel the controlling instinct welling up inside of you, how do you keep it at bay? Learn how to avoid toxic leadership at your franchise organization in this post.
Part 4: The Universe of Fran Dev -- People who hear or read words like "fran dev," “zors” and “zees” think they’re typos, but it’s just the way people talk in this industry. For those who are new to the world of franchising, some of this terminology can make your head explode. This glossary will help!
Part 5: What’s Brand Got To Do With It? -- The question is, how much of your dollars should be spent building your b2b brand, versus your b2b brand? We answer that and more in this post filled with resources on all things branding and beyond!
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And now onto today's topic: Increasing Organizational Value
A franchise is a business operation you’re buying the rights to operate. It starts out simply as a brand, but becomes a business operation over time.
Your number one goal as a franchisor is to make the most valuable business you can. Everything else lines up behind that.
Marketing, sales, operations, there is no element of the business that isn’t positively impacted by increasing the value of your organization.
Why? Because value gives you options. Once you’ve decided that you want to franchise, then every decision a franchisor makes is to maximize the value of the franchisor. And to do so in a way that won’t wipe you out of the game. It’s possible to grow too fast and take away value, which we’ll talk more about later.
Consider how this value chain plays out over time.
Franchise is value derived from increasing royalty stream (more revenue) but also decreasing cost at franchisor level. Our goal is to teach you how to make decisions that maximize value. That way, the more valuable it is, the more options you have. You could sell the business. You could ride it forever and build a lifelong career. You could earn a seat at the table with key investors to help scale it.
It’s easy not to think about long term value from a sales perspective. But this business model isn’t about closing the next deal. It’s about maximizing the value for the franchisor, maximizing profitability for the franchisee, but still bound by the constraints of the franchise relationship.
You still pay royalties, pay for the ad fund, run the business, pay approval and transfer fees, and so on.
Outside of that, you’re always thinking down the road.
Rob Huntington is the CEO of Metric Collective. He's worked as a franchisee, franchisor, and franchise consultant, but enjoys leading a franchise marketing technology company the most.
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