How to Know If You’re Ready to Franchise: The 3-Part Readiness Test

Most founders franchise too soon. They get excited, sell a few territories, and think the momentum means they’re ready. But then the first franchisees open… and within months everyone’s frustrated.

Why? Because they franchised a business instead of franchising a system.

In this episode, I break down the number one mistake founders make before franchising—trying to franchise hustle instead of systems—and I walk you through the 3-part readiness test you need to pass before you sell your first franchise.

Key Takeaways

• The real reason early franchisees get frustrated fast
• Why an FDD doesn’t mean you’re franchise-ready
• The common triggers behind franchising too early (ego, pressure, cash crunch)
• What gets exposed immediately: ops manual gaps, ad hoc training, marketing mismatch
• How early trust loss damages long-term validation and growth
• The 3-part readiness test: economics, systems, support
• Why “slow is smooth and smooth is fast” protects your brand

Time Stamps

00:00 Introduction: The Pitfalls of Franchising Too Soon

00:37 Meet Gee: Your Franchise Growth Strategist

01:10 The Number One Mistake: Franchising Hustle, Not Systems

02:43 Why Founders Franchise Too Early

03:48 Consequences of Franchising Too Early

06:23 The Three-Part Readiness Test

08:41 Case Study: A Franchising Misstep

14:05 Tactical Takeaways for Successful Franchising

16:02 Conclusion: Scale Smart, Not Fast

If you’re thinking about franchising—or you’ve already sold a few territories and you feel the cracks showing—don’t try to out-hustle a system problem.

Go to guycoffey.com and book a Franchise Scale-Up Strategy Call. I’ll walk you through a readiness framework to determine whether you’re ready to scale now, or what you need to fix before you bring franchisees into your brand.

Connect with Guy Coffey:
LinkedIn: www.linkedin.com/in/guycoffey
Website: www.guycoffey.com
Instagram: @guycoffey
YouTube: @guycoffey

Transcript

0:00

Here's the problem. Most business owners franchise too soon. They're so eager to scale that they sell territories before they're actually ready, and that one mistake can kill the brand before it gets off the ground. I've seen it happen. A founder sells their first three to five territories. The franchisees open their doors, and within six months everybody's frustrated. Why? Because the founders franchised a business rather than franchised a system. If you're an emerging franchise founder, you already know this. The jump from 10 to 100 units is where most brands stall out, not because the concept isn't strong, but because the founder is drowning in chaos. I'm Gee, coffee franchisor, franchisee, and growth strategist. I've been where you are and I know what it takes to build a brand that scales without burning out, selling out, or losing control. That's why I created the Franchise Scaleup Show. Every week I'll share the playbooks, the red flags, and the mindset shifts that separate the brands that stall from the ones that scale. So if you're serious about protecting your vision and multiplying your brand, hit subscribe right now. This is the Franchise Scaleup Show. I'm Gee, coffee. Let's get to work. Today I'll break down the number one mistake founders make before franchising and show you how you can avoid it. By the end, you'll know what to check before you sell your first franchise. The number one mistake founders make before franchising, they try to franchise hustle, not systems. For founders thinking about franchising right now, or for founders who have launched their franchise and it's early days, or maybe you started it out and it's not going as well as you had planned. This episode is for you. I'm gonna go through the number one big mistake, why that happens, and then what you'll see if you do make that mistake first. So the number one mistake is franchising too soon without scalable systems. And that is the franchisor, the founder, trying to franchise basically what's in their head, not what's on paper or nowadays digitally. And it's also caused from founders thinking like they have a successful unit or a couple units, and all of a sudden they think that's scalable. And what I've seen is. A lot of people think, oh, I've, I've got someone working on my FDD or my franchise agreements. That means I'm ready. Like, there's a lot more to it. It's totally possible. Don't get me wrong. I'm not one of these people that says, oh, it's, it's so hard. You shouldn't try to do it. It's like, definitely you should. It's a great model, but it's a great model when you're ready to do it.'cause you don't wanna bring someone in on something that's not fully baked yet. Right. So why founders do it is. To be honest, ego is number one. They feel pressured or, um, people love my brand. I need to get this out there'cause so many people love it. Um, could be demand. Friends and family are like, you got lightning in a bottle. Like, I want a chance to do this too. Let me, let me open up a unit over here. Let me do this. Or sometimes, to be honest, it's not super great franchise professionals pressuring you into franchising before you're ready for it. And then there's also, the other thing is some people mistakenly think it's a faster way to get cash. Like so they're in a cash crunch and they don't have enough money to open more corporate units or territories and they think, wow, I'll get some money coming in from territory fees and I'll do it that way. So those are a number of reasons. If, if any of those are in your mind or they sound familiar with thoughts that you're having, please back off from franchising, get some more help and, you know, talk to some professionals that can help you sort it out. So what gets exposed when you do franchise too early? So maybe some of you are in this phase, you're like, oh yeah, that's me, or whatever the case may be. And if you haven't franchised yet. This is, um, things that will happen if you're truly not ready for it. Number one is. What gets exposed is you'll find out that like everything that's in your head and your team's head is not, common sense. It's not common knowledge. You are gonna find all the gaps in your operations manual. Like everything has to be in there, everything possible. Obviously it's an evergreen agreement and it's gonna improve over time, but as soon as you have someone else running your system, you're gonna find all the gaps in it, and that's. That's gonna get exposed by going too early. The other thing is, what you'll see if you're going down this path too early is that training is ad hoc. It's like reaction to, to everything. It's not a carefully laid out training program. Multiple different styles of learning, different times. The timing has to be right. You don't wanna train someone that's gonna be building a brick and mortar place, right after they sign their franchise agreement.'cause they're gonna open like six to nine months later and they're gonna remember nothing. So the training has to be really, really dialed in before you open your first franchise unit and then. Maybe the, the third thing is the marketing that works in your town or your city doesn't really translate that well to other towns or cities or markets or anything like that. And you'll find out quickly, you'll hear from the franchisee real quickly if your marketing isn't working for them. Then, the other thing is if you're losing trust with your franchisees because they're, they're bought into your dream, there's a saying, in the beginning, you can sell people the dream, like when you're very early stages of franchising, but later on you gotta sell on results. So in the beginning, you are selling the dream to these people lots, lots of times it's friends and family and there's nothing wrong with that. That's exactly how we got started. But you're selling them the dream because they understand that there's not a ton of results yet, but later on you're gonna have to have the results. So. You don't want those first franchisees, your pioneers to get soured on your system or their belief in you, your capability or your credibility. So that's gonna get exposed. So what, what can you check out to make sure that you're not going down this path too early? I call it the three part readiness test. And the first is your economics. Is your unit profitable? And is that profitability all your costs? Are, are they gonna be replicatable in other markets? Do you have some kind of unfair advantage almost or something that, uh, a cost that, that you're not incurring that another franchisee would? For instance, if you. I, I don't know how this would happen, but for instance, if you had like super, super cheap rent, but you are recommending that someone else, when they open your, your. Concept you're recommending that they go into a Whole Foods shopping center and have a rent. You gotta make sure that you're gonna be comparing apples to apples. So check your economics and make sure that you're as sure as you can be that they're gonna work in other markets. The second thing is your systems. We talk about systems all the time. There's a reason franchise systems are called franchise systems. They're not just franchise companies. A franchise company is really a company that provides systems, tools and processes, leadership and guidance to people to operate their model as well as their intellectual property. But that's not the point here. So you have to have your systems dialed in. And the third is support like no matter how smart or how great or sophisticated or experienced your franchisees are, if it's the first time they're running your model, they're gonna need support. And you know, the first line of support is written documentation. And the second is people to help interpret that and help implement it and help guide people how to do it properly. So there's, there's the, the three points to look at. Look at your economics, look at your support system. Look at your systems, make sure they're dialed in. This is a quick break to thank you for listening. Every week, we are getting more and more people listening to the show, and this growth is helping me to improve it and make it even more helpful to you. My intention for this show is to help more people win in business and life. To that end, I have a favor to ask. If you know of an entrepreneur that would benefit, please hit the share button and shoot them a text with the link back to the show. Make this a great day. I'm gonna give you a quick case example. early last year, I was at a conference and I was talking to somebody in the home services business who, was going to go into franchising. They were in franchising. They were at a franchise conference. Um, they hadn't sold their first unit yet, but they were super, super excited about being in franchising. They thought it was gonna bring them a lot of cash. They didn't really have enough money or bandwidth to open more corporate units, even in their general region. So someone had talked them into franchising. And I just asked them a few basic questions, in terms of how much capital they had to run this franchise system, who they had in mind for support and how they were gonna support them, both from a business perspective as well as the technical aspects of the job.'cause there's usually both of those kind of things. And, they had no answer. They were super pumped about their FTD gonna be done in a month and their franchise agreement. But I was just kind of scratching my head like, how are you even doing a franchise agreement if you don't have your support system figured out because it's gotta be in the franchise agreement. So I think in that case, whoever was doing their FDD, if it was an experienced franchise attorney against an ethical one. Um, they would probably say, if, if you don't have this dialed in, I, I don't think you should be going down this path yet. Figure that out first. But they really had no idea how they're gonna run the franchise system. And the gentleman thought that he was just gonna be able to allocate a portion of his day to running the franchise. And I. Was candid with him that that's not gonna happen unless he has figured out how he doesn't have to be in his current operation and he's gonna run the franchise system himself. He either needs to figure that out and get that done or have enough money to pay someone else to run his franchise system. So. That was gonna be a recipe for disaster right from the start and a year later. Yeah, he had two, two units open and his, his franchisees were not super happy with him and he couldn't understand why. And it was clear, why not? So you do, you do not wanna be that guy. Just to wrap this up, when you're first starting selling, don't confuse speed with being smart, like speed of sales, because your systems are gonna break at some point in time. We don't know if it's with your first unit because your operations manual and your support is not there at all, or whether it's at five because three of your first franchisees are. Knocking it out of the park, but two of them aren't, and they're pointing out all your failures or your, your gaps in support or processes and things like that. Don't get caught up in the momentum that franchise development and territory sales equals success. It doesn't. It's kinda like a rope. And, if you don't have your stuff dialed in, you're gonna reach the end of that rope and it's gonna hurt a lot. Remember that franchising is about leverage. So. That's why we talk about systems so much and support so much. There is no way to out hustle when you have multiple units going and you're not in total control of those units. You're basically leading coaching, guiding someone else to run your project. Your, your, your system, and. It's not gonna be through command and control. Um, and it's not gonna be from you coming in and helping them out. You're just not enough of you, no matter who you are. So it's about the systems. And then remember, your job isn't to sell franchises. That's a really short term. It doesn't end up with a lot of cash in your pocket usually. And even if it does, it's short term because. You are bringing people into a huge financial obligation with huge financial obligation to you. If it's a brick and mortar company, it's also a huge financial obligation to a landlord. When it doesn't go well, it's, it's problem. So what you are selling is not just franchises. You are selling a system that makes it almost inevitable that everybody will succeed if they run your system. It's almost has to be to the point of inevitable success. For you to have a clear conscience for your team to feel good about selling what you're doing and teaching and working with franchisees, that's something that's often overlooked. The belief on your team, on your franchise team has to be so high. It has to be so high just to even sell franchise territories, to be honest. It's, it's a huge expense. It's a dedicated path for your franchisee for many years to come usually. If your team doesn't believe in it, there's gonna be problems. So they don't have to believe that everything is perfect, but they have to believe that it's pretty darn good. And the people that join are have a really good shot at making money. Profitability and having the impact that they want, and that you and your team are willing to improve things. Get the feedback. Don't take things defensively. Just take it as collaborative effort to make it even better as soon as possible. So the tactical takeaways from this, don't franchise your hustle. It doesn't work. Got a franchise systems. Number two, validate your unit economics before selling. They have to be really strong. I don't wanna say exact percentages, but unless after paying you a royalty, unless your franchisees are gonna be able to make like 21% at the, at the very low end. You don't have a franchisable system yet. You have to work on your unit economics. Number three is build that documentation. Just do it. Record yourself doing stuff. Record your team doing things. Build an operations manual that can stand up to the start and get better and better with improvement. And then franchisees by confidence. If you're not ready to deliver. Don't offer it for sale. Okay? You have a huge obligation to your franchisees. You're gonna be talking about their obligation to you a lot, but it starts with your obligation to them. Make sure that you feel good about it. You can prove it with results from an average franchisee and an average market. Don't just look at some superstar that comes into your system that that doesn't cut it. It's gotta be good enough for an average franchisee in an average market. And then. Remember this, I think it comes from the seals. Um, slow is smooth and smooth is fast. You, you don't, you don't wanna come out of the box like this and have all these sales and then go down like that because of validation. People aren't happy. You're gonna be in lawsuits like the downside of growing too fast. Way outweighs the upside of growing that fast. Please don't do it. Slow is smooth. Smoothes fast. I hope this helps. If today's episode helped you see the number one mistake to avoid when franchising, please share with another founder or someone else who's thinking about franchising. If you wanna see if your systems are really ready to scale, book a call with me. Head over to gee coffee.com and book a franchise scale Up Strategy call. I run you through a four point system that will show you in detail whether you are ready or not. Until next time, keep scaling with speed and purpose. This has been the Franchise Scaleup Show with me. Gee, coffee Talk soon. That wraps up today's episode of the Franchise Scale Up Show. This gave you a strategy you can put into play. Please share it with one founder who needs the help. You might save them months of pain. If you're ready to go deeper, whether it's building your support infrastructure, accelerating territory sales, or preparing for private equity, go to gee coffee.com. That's G-U-Y-C-O-F-F. EY and book a free franchise growth strategy call. I only partner with founders who are committed to scaling without losing control. If that's you, I'd love to connect. Until next time, protect your vision. Move fast and scale smart. I'm Gee, coffee Talk soon.