The fastest growing franchise in Australasia, Jetts Fitness has opened 155 franchises in just five years. The world’s largest convenience store franchise, 7-Eleven, has just added more than 200 Australian outlets, at one stage opening four new stores per week. Even though it only started franchising in 2012, The Cupcake Factory will double its franchises to 40 in Australia this year – and we’ll no doubt see them soon in New Zealand. And even McDonald’s is re-igniting its growth with a successful New Zealand franchise recruitment campaign. Just how do the world’s fastest growing franchises do it?

 

   

 

By smart, we mean selling in a way that’s consistent with the way prospective franchisees now buy – that is, give them all the information they need to self-educate themselves about your franchise and at the same time self-qualify themselves as suitable candidates.

 

You wouldn’t think fast-food icon and the world’s second-largest franchise, McDonald’s, would need to advertise for new franchisees, but in New Zealand a few years back they ran a campaign that was integrated and, reportedly, very successful. Here’s how it worked:

 

Success, as they say, breeds success. The fact that around 65 per cent of Jetts Fitness franchisees have opened more than one gym has contributed mightily to Jetts’ status as Australasia’s fastest growing franchise.

“There are very few franchisees who don’t want to open more [gyms],” says founder Brendon Levenson.

Not surprising given that Levenson also claims the average annual return on capital is about 30 per cent and most franchisees need to work only 5 – 10 hours a week on the business. Naturally, that is also a compelling offer for many people who aren’t already franchisees, something that Jetts pushes

hard on its franchise recruitment website – see below.

Despite only having started franchising in 2011, The Cupcake Bakery established twenty stores, 80% of them franchised, by the end of that year and is targeting forty by the end of 2012. A big part of that growth will come from working with high-performing multi-site operators, according to owner Alex Perry.

“We have a clause that says after six months if you’re meeting KPIs we’ll grant you the next franchise and let you open up a store,” he says. “If you don’t, then we’ll stick to the one store.”

The second part of The Cupcake Factory’s expansion strategy came about because they simply couldn’t cope with recruitment as well as working with new franchisees to develop their businesses. So Alex Perry made the decision to outsource recruitment, with “fantastic results”.

When Mr Rental went from zero to 28 franchises in the first three years, owners Glen and Kerrianne Hickman knew they needed help.

 

“I realised I had limitations in my abilities to manage the business,” says Glen. “The day-to-day running of an organisation is a completely different skill set than creating a business. I realise that there are people that are better than me at running a franchise system … We decided to buy expertise. We put on a general manager with many years of experience in franchising from a legal and accounting background.”

Brendon Levenson recognised the need for specialist expertise when he partnered up with Mark Stocks, a former management consultant to top Australian corporations including Wesfarmers, Rio Tinto and Thiess, to create Jetts Fitness.

“We took the corporate programs we developed for these corporations and applied them to our small business model,” says Stocks.

 

An alternative to outsourcing franchise recruitment is to get master franchisees to sell and set up franchises for you. This works especially well in regions that are geographically remote from your franchise headquarters – if you’re expanding across a country as vast as Australia, or into a different country. Founded in New Zealand, Laser Electrical recognised the need for local representation when they crossed the ditch, and took on an Australian master franchisee.

Smith & Sons Renovations & Extensions have used a master franchise structure to grow to over 65 franchises in Australia and New Zealand after just four years in business, becoming BRW's Fastest Franchise for Outlet Growth and 2nd Fastest for Revenue growth in 2012.

 

While many of the world’s fastest growing franchises, including Subway and McDonald’s, have used multi-unit ownership as an expansion strategy, others have shied away from it. Although Quest Serviced Apartments has used it in the past, chairman Paul Constantinou is concerned that direct

franchisee contact with customers, which he says is is a critical success factor of the business, can be lost if a franchisee has more than one site.

To achieve its ambitious target of growing from 146 to 250 units by 2020, Quest is having success with current franchisee referrals, word of mouth, online franchise recruitment and, surprisingly in such a capital intensive business, funding younger franchisees.

“We will assist young franchisees by funding them if we believe they’ve got the best chance of building a business,” says Constantinou.

The strategy is being used by other franchisors to expand their pool of potential franchisees, previously considered to be mainly comprised of the 40 – 60 age group.

 

The largest convenience store franchise in the world, 7-Eleven has grown from around 400 stores in Australia to 593 since 2010. Although a strong product sales focus and word of mouth have played a part in this explosive growth, the major factor has been the acquisition of 295 Mobil service stations in Australia and franchising and converting them to 7-Eleven outlets which also supply petrol.

 

“We’re very decisive,” say former chemical engineers Alex and Angela Perry of The Cupcake Bakery. “If we say we’re planning to open up 20 stores this year, we’ll open up 20 stores. “

We believe them. They’re already No. 37 on the 2012 BRW Fast Franchise list.

The young overachievers behind the success of Zambrero Fresh Mex Grill, which has appeared in the BRW Fast Franchise Top 5 for the past two

years, are CEO Stuart Cook, who is only 25, and chairman Sam Prince, 27, who founded the business while he was in medical school and is now a practising doctor.

 

It is our belief that the ambition, drive and energy of the franchisor is probably more important than any other single factor in the success of any franchise recruitment strategy, and this is certainly the case with Zambrero and all of the other franchises mentioned in this article.