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4 Stages of Franchise Growth

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Casey Shull

If you are thinking about starting up a franchise or want to fine-tune your existing franchise's processes, you’ll need to be familiar with the stages of franchise growth.

Part of that growth is understanding what steps to expect, what unique challenges and opportunities will come your way, and how to help each of your franchises become successful.

In this guide, we take you through the most common stages of the growth process we see the most:

Stage one: the start-up stage

The beginning stage of your franchise venture is known as the “start-up” stage, where you decide where the physical location of your business will be. As you probably know, it’s not as simple as driving down the road and picking the first building with a “for lease” sign.

You will need to research the development in the area and become familiar with the demographics of your potential customers so you can determine the most optimal property for your first location, and potentially expanded locations.

At this stage, you will also get to know the key players of your franchise and what your roles and responsibilities will look like. One of the best parts of starting a franchise is the support you will receive regarding the business assets, systems, and existing operations.

Now is the time to build your budget and determine how to finance the operation. If you have experience in this area, then you know that starting a franchise will most often require heavy investments to cover things like starting costs and payroll. Don’t let this discourage you. Every franchise has to start somewhere, and before you know it, you will be moving on to stage number two.

Stage two: the growth stage

The franchise magic doesn’t necessarily happen overnight. Most franchises hit their growth stage around the two-year mark. You might see this stage arrive even sooner because you are likely operating under a brand name that people are familiar with, and you already have key processes in place.

When you reach the growth stage, you have a solid customer base in place, and you will be starting to cover your overhead costs, which means profits are on the way. If you are considering opening multiple franchises, this is typically the time when owners pursue those options. Otherwise, consider hiring more employees to help scale your business or increase marketing efforts.

Adapting is the key to staying on an upward trajectory once you hit the growth stage, as well as the time to delegate day-to-day responsibilities and focus on larger aspirations, such as monitoring your finances, spotting growth opportunities, and setting clear goals for the future.

Stage three: the maturity stage

The maturity stage is when operations are running smoothly, and you are likely making a comfortable profit, and it is quite an accomplishment. While you should certainly take a moment to appreciate how far you’ve come, that does not mean it’s time to go stagnant.

Now is the time to perform key market research and stay ahead of the curve to ensure your franchise remains on top. Look at what your competitors are doing. Are there any benefits they offer that your franchise does not? Keep an eye on industry trends and keep your franchise current.

This is also when a digital marketing team like Scorpion can help your franchise reach a wider audience. On the other hand, some franchise owners might consider taking a step back or even selling at this stage. When your franchise has reached this maturity stage, you will likely see interest from potential buyers.

Stage four: the renewal or decline stage

Stage four is the long-awaited outcome of your years of work: will your franchise continue to grow, adapt, and succeed, or will it fall the way of Blockbuster and decline? Of course, some factors are out of your control, such as the economic climate and other extraneous trends. Most businesses will have some years that do worse than others, so if this happens, don’t assume that you’ve hit the decline stage.

Instead, it’s time to hit the ground running and ask yourself the critical questions:

  • Have you expanded or diversified where necessary?
  • Is the industry changing, and have you kept up with those changes?
  • Is your technology up to speed with what your customers expect?
  • What about your competitors?

If you have been analyzing all these factors up to this point, you might not reach the decline stage. Instead, you might see continued renewal and steady growth for your franchise.

Scorpion wants to help ensure that your franchise never hits that decline stage and that you only see renewal for many years to come.

Our expert team offers strategies, such as website management, search engine optimization, listings management, reputation monitoring, and social media management. In other words, we have the tools you need to help your franchise generate more revenue and run your best franchise business. Contact us today to learn what a partnership with Scorpion can do for your franchise.