Great Article By Brian Scudamore, Founder of 1-800 Got Junk

December 2008 Franchising World
It is critical to build a foundation of strong systems and support that will set franchisees up to be profitable. By Brian Scudamore

Successful franchisors have found the last few years to be very rewarding. A quick look at a few industry statistics shows just how significant franchising is to our economy.

Research released earlier this year by the International Franchise Association found that in the United States alone:
• Small franchised businesses generated more jobs between 2001 and 2005 than several of the nation’s major economic sectors.
• During that period, franchising expanded by over 18 percent, and its direct economic output increased by more than 40 percent.
• The franchise industry in 2005 included more than 900,000 establishments generating 4.4 percent of the U.S. private-sector economy.

Yet despite the booming nature of the industry, many established franchisors have more sobering thoughts in their minds: the economic turmoil that has defined the last half of 2008. Not exactly a fortuitous environment for a franchisor poised to cross the threshold of 100 units. So what does a franchisor do to stay on target for a new level of growth, particularly in an economic downturn? There are five common mistakes franchisors planning to grow beyond 100 units must avoid. However, given the current economic conditions, here’s a colossal sixth mistake that is critical to address today: Letting the economy hold you back

Times of economic turmoil are actually some of the best during which to focus on growth. Maintaining the success and profitability of existing franchisees becomes more vital than ever before, which means concentrating on strengths–the systems that helped build the company from infancy to establishment. What better example for a potential franchisee than franchisors that showcase their top performers? Identifying and cultivating best practices will “wow” the right candidates and help you award more franchises, despite the economic picture. In addition, the top achievers in any franchise system become role models for those franchisees who aren’t yet performing at their peak. Focusing on alignment and best-practice sharing will strengthen the entire system and help boost the results of under-achievers. The spinoff benefit is that this is a very attractive and efficient franchise system for a prospective franchisee. Now here are the five common mistakes franchisors seeking to grow beyond 100 units should avoid. Lacking vision

A vision is a compelling, crystal-clear picture of the franchise in the future. It defines every element of an organization’s success and guides franchisees and employees toward common, realistic goals. Vision is the most important leadership tool a franchisor can master because it charts a clear path to successful growth. While many entrepreneurs keep their vision in their heads, either to prevent someone from copying it or because they don’t have enough faith to share it, some entrepreneurs don’t have a vision at all. Lacking vision is a grave mistake, and a surprisingly common one. Even an out-of-this-world business concept can only take a franchisor that has a weak vision, or worse, no vision at all, so far, and certainly not beyond 100 units. Great ideas are really only as good as the vision that guides them. So what does a solid vision look like for a successful franchise looking to grow beyond 100 units? Check your vision against these four criteria:

• Vision must be attainable: Franchisees will invest their livelihood in a solid franchise business with proven systems, but not if the vision for the company is unclear or unrealistic. Employees are the same. They will buy into a great vision, but without a steady guideline of where they’re going, they’ll drift.
• Vision must be well-articulated: A well-articulated vision is one that includes all facets of a business. It is more than ”who will do what by when?” It speaks to the company’s core beliefs and values. It paints a broad and colorful picture about how the business looks, acts and feels at various points in the future.
• Vision must be shared with passion: A vision must be shared with passion, and to as many people as possible: Current and prospective corporate employees, current and prospective franchisees, the media, friends, family, neighbors and so on. Why? The passion with which true vision is imparted will propel the franchise toward achieving it and attract constant interest from others.
• Vision must be revised often: Franchisors do not want to run the risk of becoming complacent, growing too fast, choosing the wrong people or neglecting important systems. A strong vision, reviewed on a regular basis, will ensure the organization is on the right track. Complacency Many successful franchise entrepreneurs reach a point where they say, “Success has come so easily,” and they believe it will continue to be so. Perhaps a phenomenal business concept has catapulted the organization into “mostwatched” status in the media. Everybody wants a piece of the company. It’s a heady feeling for a franchisor which can lead to a premature sense of security. The belief is that the hard work of building out strong systems, hiring great people, and getting the expansion strategy down on paper has been done. The flywheel has momentum. Franchisees are posting record satisfaction scores. Employees are engaged and motivated. This is a peak moment in the life of a franchise. However, a word of caution: it’s also a pivotal moment. All businesses face unexpected challenges. Now is not the time to become complacent, yet now is often the time when many franchisors do. Now is the time to be hyper-vigilant about every aspect of the business. Complacency can be a deadly mistake for successful franchisors poised to transition beyond 100 units. One of the most common indications that a franchise is leaning toward complacency is expanding internationally without performing adequate due diligence. It is always tempting for any business to answer calls for its service or product in a new international market. Franchises today are expanding internationally at a much faster rate than in the past. The common pitfall is believing what worked here will work as well there. Not so. Even the most common expansion markets such as Australia and the United Kingdom, present different cultures, consumers, market trends, economic climates, labor laws, and business expectations. Franchisors must approach international expansion as though devel oping a new franchise business, albeit utilizing the foundations of a strong franchise model, rather than taking the complacent attitude that success here will easily translate into success there.

Growing too fast
Franchising is widely believed to result in fast and easy growth because it uses other people’s money to build out infrastructure. Franchising requires a proven business model, strong systems and the right people–things that take a lot of time to develop. For many entrepreneurs, particularly those who are impatient by nature or who have fallen into complacency through their success, it’s easy to make the dire mistake of growing too quickly. To ensure the franchise system is on target for healthy, sustainable growth, a franchisor must filter everything through the following two-part question: Is there an appetite in the market that warrants the business growing beyond 100 units and can the existing infrastructure sustain such growth? Franchisors must understand with absolute clarity why expanding beyond 100 units is the right move for the brand and for the franchise system. It is critical to build a foundation of strong systems and support that will set franchisees up to be profitable. Happy, successful franchisees paint a positive picture of the entire system, which will attract new candidates and foster growth when conditions are favorable.

Choosing the wrong people
Failing to hire the right people to grow a franchised business beyond 100 units can be a fatal mistake. Hiring the right people pertains to all areas of a franchise system: the franchisees, the franchise leaders, and all employees. Franchisors must never compromise on the quality of their franchisees. A helpful way to ensure this doesn’t happen is to get used to the concept of awarding, rather than selling franchises. An organization seeking to attain critical mass must avoid bringing on franchisees merely to hit their quota. It is not enough for a candidate to bring a lot of money and a business degree into the interview room. Dig deep to discover if the candidate has the business drive, experience, stamina and passion to go along with their investment and education. Due diligence is significant with franchisees because they are a lot more difficult to exit than the wrong employees are. In the early days of a franchise, enthusiasm may be impetus enough to motivate employees to succeed and grow. Many, including budding leaders, learn the ropes along the way, growing up with the business. But once a franchise has reached a size of close to 100 units, it’s time to shop for the best–the experienced leaders with a track record of building companies of substantial size. Too many entrepreneurs hold back for fear of letting a faithful, hard-working leader go, when the best solution is to allow the leader to thrive in another start-up and make room for the star who can commandeer the franchise to new levels of growth.

Inadequate systems
It is a deadly mistake for franchise organizations to consider significant growth without proven, established systems. Strong systems are the operational building blocks that grow the business. By the time most franchises are planning to expand beyond the 100-unit mark, the time for trial and error of major systems has passed and the era of proven, scalable systems has arrived. On the path to building a business, there are so many valuable lessons. Wellknown professional sales coach, Jack Daly says: “Inspect what you expect.” It’s a simple, catchy phrase that serves as a reminder to always stay on top of company systems. The mistake of complacency often leads to issues with missing systems, but inspecting what you expect ensures those missing systems are caught and tightened in a timely manner. To facilitate growth, successful franchises must have a process to uncover deficiencies. Systematizing the process of inspecting is simple. It involves creating a list of the key, measurable components of the business, then making people accountable for achieving and monitoring them.

If you’re looking to grow beyond 100 units, you’re at a very exciting time in your business. I remember when I awarded the 100th 1-800-GOT-JUNK? franchise. It was a goal I’d had my sights on since the inception of the business and it was a huge achievement for me. Today, 1-800-GOT-JUNK? has more than 275 franchises across North America and Australia, and I have my sights set on 500 units. But all of the common mistakes I outlined here still apply to my business even today. Maintaining the health of the existing system while pursuing expansion can be challenging. However, with laser focus on the foundational pillars of any business: vision, people and systems, the pitfalls can be avoided and the results are very rewarding.
Brian Scudamore is founder and CEO of 1-800-GOT-JUNK? He can be reached at bscudamore@1800GOTJUNK.com  .