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Fallacies of Franchise Expansion

Are there beliefs that are fatal

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From time to time we hear brands say certain “truths” that seem universal, until reality comes with force.

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The most common of these are:

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The market is huge

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“If it worked in one city, it's going to work in all cities of that size.” Not really, each square has its own potential, saturation, and competitive dynamics.

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Customers behave the same everywhere
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To think that consumers in São Paulo will have the same habits as in the interior of Mato Grosso is to travel with mayonnaise.

The competition doesn't change
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Many assume that the competitive landscape will remain stable, but it is enough for a network to appear with a more aggressive strategy and its network crumbles.

Every franchisee can be a good operator
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To ignore the variation in the profile and execution capacity of the franchisees is to turn a blind eye to one of the model's biggest risks.

The occupancy cost is in the background

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Franchises assumes that “good point pays the bill”, but forget that high rent can kill the operation before the business even gains traction.

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Digital marketing works alone
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To think that online campaigns support sales is to underestimate the power of local activation.

More units = more billing
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Linear growth is an illusion, there always comes a time when expansion becomes saturation and then Cannibalization, with new stores taking the result of the previous ones.

Models are universal
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A format that works for shopping centers may fail on a neighborhood street. Flexibility is mandatory, not optional.

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The problem is trying to grow up with the wrong beliefs

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Successful expansion requires facing reality:

  1. Markets Have Limits
  2. The consumer is diverse
  3. Competition is dynamic
  4. The cost of making mistakes is high

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Captain?

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