5 Franchising Tips from Author of "Grow Smart, Risk Less"

by Jan Fletcher on October 12, 2011
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How does an entrepreneur get enough franchising firepower to expand her business from one location to more than 200 in just five years? Aspiring franchisors can read all about how Shelly Sun (pictured) grew her health-care staffing agency, BrightStar Care, from a two-location $3 million operation to $100 million operation in the book Grow Smart, Risk Less: A Low-Capital Path to Multiplying Your Business Through Franchising.

“I want to share my journey so other business owners have the road map to scale their businesses through franchising,” says Sun, who is both BrightStar’s CEO and a certified public accountant. Her book offers a rich assortment of practical advice and financial acumen for aspiring franchisors, including these five helpful tips:

  1. Avoid multiplying problems. Don’t offer franchisees an operational model that’s still in development. Get the pattern right from the start and multiply your own customers instead. Sun says she anticipated that her prototype would need testing and tweaking, which proved to be true. She fostered a culture of continual improvement in franchisee economics, facilitating their access to capital, because she found that strategy increases financial returns for the franchisor.
  2. Think worst-case scenario. Seat-of-the-pants experiences inevitably burn through startup funds, as unseasoned franchisors often learn through trial and error. Sun recommends lining up plenty of fallback financing.
  3. Expect to pay a hefty sum for trademark protection. Calculate this outlay into the plan early in the franchising process. Sun also advises franchisors to squat on domain names that could later dog a company’s reputation in the hands of nefarious website operators. “I recommend investing in URLs that others may try to buy if you don’t, such as name-sucks.com,’” she says.
  4. Franchising without a feasibility study can prove costly. Sun says a franchising concept has to go beyond meeting a marketplace need to encompass the quality of work a franchisee could readily envision doing every day. For example, “Look at the doggie waste pick-up business. There is clearly a market from a customer demand perspective,” she says, but few companies doing the job. Could the dearth of franchise concepts pitching puppy-poop pickup be the result of “people [who] just don’t envision themselves in a business where they are cleaning up dog waste for a living?”
  5. Build in high returns for franchisees early on. This is especially important in those first three crucial years, Sun says. Expect to outlay sufficient resources by offering incentives and support for new franchisees, especially the first ones. Even with that intact, before embarking on franchising a concept, she encourages aspiring franchisors to be prepared for “difficult conversations with franchisees,” that “help franchisees with finance-specific needs.”

The book is worth a read for that last insightful gem alone, but Grow Smart, Risk Less also has an easy-to-peruse format, with helpful graphics that highlight more do’s and don’ts — a definite timesaver for those who like to skim how-to books.

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