Are there any universal issues that were present then that are still present with regard to franchising? The right people do the right things, and the wrong people do the wrong things. Poor execution is still a losing formula, and great execution is still a winning formula. Franchisees picking bad locations over good locations because of cheaper rents is still dumb.

What are the typical considerations for growing a regional brand into a national one? Aside from supply side issues that tend to bother unprepared companies, it’s all about unit-level execution, so there really isn’t anything to worry about provided the concept is solid, the location is solid, and execution is solid. It is definitely easier to oversee a location closer to your home base, but as long as you have the right people in the right places, nationwide expansion can be successful. Just look at Chipotle, Panera Bread, ZPizza, Starbucks, and Five Guys Burgers.

What determines the strength of a brand at the regional level? Numbers. The easiest ways to measure a unit’s success is by the numbers. When your customer counts are growing, your customers are buying the products you are trying to sell and your overall sales are growing, then you have a strong brand at the local or regional level. When you don’t, you don’t. A strong location and strong unit-level execution is the key to success on any level.

What criteria must be met before a brand is ready for the national stage? The concept has to be fundamentally successful in the first place. I get calls every week from people that want our help to franchise their broken concepts. Just recently I got a call from someone that said they had a concept like Chipotle, except with better food. Obviously this is exciting, so I asked a few more questions and soon found out they only did $400,000 a year in sales—a small fraction of a typical Chipotle—the location was poor and the food costs were offensively high. This guy was looking at franchising to somehow save his train wreck. Needless to say, that concept is not ready for any stage, let alone the national stage. But if you have a concept that is fundamentally sound—same-store sales growth, same-store customer count growth, good sales-to-investment ratios, good profitability and ROI, you understand who you customers are, and you expand in markets that are filled with your target customers—then you have a good chance of success.

What does preparation for growth involve? Really understanding who your customers are and who they aren’t. No concept should try to be all things to all people. You should know who your customers are, why they like your concept, what you need to do to sustain that customer and then build a model of those customers. Before you expand into a new market, make sure customers with those characteristics are in the target trade area. ZPizza, for example, is a rapidly growing pizza concept in one of the most saturated segments around, but they continue to open new stores all over the country with several years of double-digit same-store sales growth, in part because they spent a considerable amount of money to build their ideal customer model. And they only grow in areas that already have sufficient numbers of their ideal customers. Successful growth involves deliberate planning, the right organization, modeling of ideal locations and key employees, connecting the supply line dots, and bringing the best and brightest people into your organization. Companies like Boelter Equipment can automate the supply side for your furniture, fixtures, equipment, signage, and small wares anywhere in the country, making this a very simple process.

What should franchisees consider before deciding to get involved in a franchised business? Franchisees should plan and map out their strategy and understand what they are trying to eventually build. Does the franchisee want to buy a job or build a multi-unit company to manage? How do they want to be involved in the business? What sort of income are they looking for and how much do they want to invest? Then, look in the UFOC and find all the current and former franchisees and call as many as possible to better understand how likely it is to achieve your dreams with that concept. Numbers don’t lie. Scrub the numbers and create a model making sure you can still achieve your financial goals, even if your sales are off 15 percent to 20 percent. Franchisees have to make money, sometimes in spite of themselves. Find and meet the most successful franchisees already in that system and understand what they do differently than anyone else, and decide if that is a level of execution you are committed to. Successfully building a multi-unit franchise business that a franchisee wants to manage on a macro level is completely different than buying a franchise to own and operate like a job. Franchisees need to understand this up front or their expectations will never be met.

When you think of a brand ideally suited for growth from a smaller, regional brand to a national brand, which brand comes to mind? I love better mousetraps. Look what Panera did to the sandwich segment, what Starbucks did to the way people used to get their coffee. I love what Antonio Swad has done with Pizza Patron. He is creating the first branded concept targeted to Latin Americans. You want to sell what people eat, and you don’t want to have to teach people new behavior. People are already used to eating sandwiches, pizza, burgers, steaks, coffee, and ice cream. Make sure your brand has a unique selling proposition that is validated by the numbers. I especially love concepts that are easy to operate as multi-unit businesses. next