Have you ever wondered why so many promising franchise networks stall after reaching 20, 30, or even 40 units? You're not alone. Research shows that nearly half of all franchisors never grow beyond 20 locations, and even those that do often struggle to scale sustainably. The reality is—growth plateaus aren’t accidental. They result from hidden barriers that, if left unchecked, can stall momentum, frustrate franchisees, and drain resources.
Why Do So Many Franchisors Plateau?
Many franchisors start their journey with enthusiasm and momentum, successfully expanding their networks to 10, 15, or even 20 franchise outlets. But then, growth slows—or stops altogether.
This isn’t just an isolated challenge. Data shows that 46% of Australian franchisors and 49% of New Zealand franchisors operate networks of fewer than 20 units. In the United States, nearly 80% of franchise systems remain below 100 units, with a significant portion stalled at smaller scales.
(Sources: Norton Rose Fulbright: Franchising inquiry report; Franchise Direct: Franchise Industry Reports and Whitepapers)
Some franchisors manage to grow beyond 20 units, reaching 30 or 40 outlets, before encountering a growth plateau. Research suggests that franchisors often need between 40 to 100 units to achieve royalty self-sufficiency, where recurring revenues sustain operations without relying on initial franchise fees. Approximately 82% of all franchise brands operate below this threshold, indicating a widespread struggle to reach financial stability.
(Source: Franchise Performance Group)
Even larger networks can experience stagnation. High-growth, market-leading franchise brands have been observed to squander market opportunities, leading to stagnation or failure despite previous success. In many cases, franchisors that achieve rapid expansion develop organisational blind spots—believing that past success guarantees future dominance. This can lead to overconfidence, poor strategic decision-making, and a failure to recognise emerging threats.
What Holds Back Success?
Over the past 25 years, I have worked with some truly iconic franchise brands, both large and small. Every one of them, at some stage, reached a plateau in their development. But why? What is it that holds back success and causes stagnation?
In 2013, I embarked on a PhD research study to uncover the underlying barriers preventing franchise success. Through extensive research, including hundreds of in-depth interviews with franchisors, franchisees, and industry experts, I identified a pattern of widespread systemic issues that consistently caused franchise networks to stall. These findings were categorised into what I now refer to as the 12 Silent Killers of Franchising.
My research also revealed that: “The outstanding difference between successful franchise systems and those in the lower performing range was controlling the Silent Killers of Franchising.” |
The 12 Silent Killers That Cause Franchisors to Plateau
Many franchisors struggle to pinpoint the exact reasons why their network stalls, despite their best efforts. Let’s explore how the Silent Killers of Franchising directly contribute to growth plateaus.
#1. Failing to fanatically follow a unifying vision to develop successful franchisees
Many franchisors start with a strong vision for success but as they grow, the focus shifts from ensuring franchisee success to just adding more units. This creates a network of underperforming franchisees, leading to stagnation.
Example: Krispy Kreme’s aggressive expansion in the early 2000s led to store closures due to franchisees struggling with profitability. |
Losing focus on franchisee success in favour of rapid expansion leads to struggling units that drain resources. Without a clear unifying vision, it’s easy for networks to veer off track, impacting consistency and performance. However, a clear vision alone is not enough—franchisors must also develop an insatiable appetite for knowledge exploration.
#2. No appetite for knowledge exploration and refinement
A franchise system that stops exploring for new knowledge is one that stops growing. Even the strongest franchises must adapt to market trends, evolving customer needs, and franchisee feedback. Without proactive knowledge refinement, networks become outdated and lose their competitive edge.
Franchisors that resist knowledge exploration risk stagnation. The most successful networks continuously learn, adapt, and innovate to stay competitive.
Example: Borders Bookstores failed to embrace digital transformation and lost to Amazon. However, even if franchisors commit to gathering know-how, they must ensure that knowledge creation isn’t limited to top leadership—franchisee insights must be valued and leveraged. |
#3. Franchisor expertise holds back knowledge creation
A failure to explore new knowledge is often exacerbated when franchisors assume they already have all the answers. Ignoring the operational insights and expertise of franchisees prevents valuable improvements from taking place.
When franchisors adopt a top-down leadership approach, they miss opportunities to refine and enhance their business model. This lack of collaboration stifles growth disengages franchisees, and limits innovation.
Example: Nokia’s leadership dismissed the rise of smartphones, failing to adapt to industry shifts. Despite having vast technical expertise within its team, the company relied too heavily on outdated strategies, leading to its decline. |
Beyond knowledge creation, another major hurdle is the lack of structured implementation strategies, where franchisors try to do too much, too fast, and without a clear plan.
#4. Randomly eating the elephant without engaging and turning the engine cogs
This means failing to set priorities and structured action plans for implementing strategies and initiatives. Instead of breaking down tasks into manageable, bite-sized chunks, franchisors attempt to tackle everything at once or in an unstructured manner, leading to disappointing results.
Momentum is critical in franchise success. Without a clear process to engage franchisees, turn the ‘engine cogs’ of implementation, and build step-by-step momentum, initiatives lose traction before they can deliver results.
Example: Domino’s faced challenges when rolling out its new digital ordering system across all stores at once, rather than in phases. Franchisees struggled to adapt, leading to operational inefficiencies, customer complaints, and delays in service. A phased approach with structured training and incremental adoption would have significantly improved implementation success. |
While implementation challenges slow progress, so too does a lack of discipline in following systems, which leads to operational inconsistencies.
#5. Lacking the discipline to follow systems.
Even with strong systems in place, growth can stall if franchisors fail to enforce consistency. As networks expand, a lack of discipline in following proven processes leads to inefficiencies and diluted brand standards.
When franchisees operate with ad-hoc execution, the system becomes fragmented, making it difficult to scale effectively.
Example: Subway’s inconsistent franchisee support led to operational challenges and a decline in store performance. |
However, operational discipline isn’t the only factor in a network’s success—franchisors must also recognise and respect the interdependent nature of their relationships with franchisees.
#6. Not Understanding the Unique Interdependent Nature of Franchising
Franchising is an interdependent ecosystem, yet some franchisors treat it as a traditional hierarchy. Without recognising the mutual success of both franchisor and franchisee, networks struggle to build trust and engagement.
Command-and-control leadership styles can result in franchisee disengagement, inefficiency, and resistance to corporate initiatives.
Example: Tim Hortons faced significant backlash when corporate leadership imposed cost-cutting measures on franchisees without collaboration. The resulting franchisee dissatisfaction led to lawsuits, negative press, and operational challenges that damaged the brand. |
Beyond structural issues, franchise networks must also ensure they cultivate a strong and positive culture—without it, engagement and success suffer.
#7. Harmful cultural conditions
A toxic or disconnected culture leads to disengaged franchisees who are less likely to embrace new initiatives. When trust and collaboration are weak, networks struggle to maintain a unified approach to growth.
Example: Cold Stone Creamery faced backlash from franchisees who felt ignored and unsupported, resulting in widespread dissatisfaction and poor system-wide execution. |
Culture is the foundation for franchisee commitment, but franchisors must also be rigorous about selecting the right franchisee partners to uphold that culture.
#8. Lack of rigour about having only bright stars onboard
The quality of franchisees directly impacts a network’s success. Franchisors that fail to prioritise high-calibre franchisee recruitment often end up with inconsistent performance across locations.
Example: McDonald’s strict franchisee selection process has been key to its sustained success. |
While recruitment is key, so is ensuring long-term financial sustainability—a misstep many franchisors make by prioritising short-term financial wins over long-term strategy.
#9. Quick fix financial performance gains at the expense of long-term strategy
Short-term financial tactics—such as aggressive discounting, excessive fee increases, or reliance on upfront franchise fees—can lead to long-term instability.
These decisions may provide an immediate revenue boost but ultimately weaken brand value, franchisee profitability, and customer trust.
Example: Pizza Hut’s reliance on aggressive discounting eroded long-term brand perception and franchisee profitability. |
Short-term decisions may also influence recruitment, and failing to apply a rigorous unifying vision test can result in poor franchisee selection.
#10. Not applying the unifying vision litmus test
Franchisors that rush recruitment often accept misaligned franchisees, leading to a fragmented network requiring excessive support.
Example: Quiznos’ rapid expansion with poorly vetted franchisees led to widespread closures and reputational damage. |
Without proper franchisee selection, even strong brands can fall into the trap of complacency, assuming past success will guarantee future growth.
#11. Resting on the Laurels of the Past, or Imaginary Laurels
Many franchisors believe that past success is a predictor of future growth. However, markets evolve, customer expectations shift, and competitors innovate. Franchisors who rely on their historical achievements rather than continuously improving their offering risk stagnation. Failing to adapt can lead to outdated business models, declining customer engagement, and franchisee dissatisfaction.
Example: Blockbuster ignored the shift to streaming and lost to Netflix. |
Resting on past achievements creates a false sense of security, but poor execution of new initiatives can also be a major stumbling block. Even with the best ideas, success depends on how well they are rolled out and adopted by franchisees.
#12. Great Initiatives Poorly Implemented
Many franchisors introduce new initiatives to drive franchisee success but fail to implement them effectively. Without proper support, buy-in, and execution, these initiatives fall flat, wasting time and resources.
Example: Burger King’s ill-fated 'Satisfries' launch failed due to poor marketing and franchisee resistance. |
Launching programmes without proper execution and franchisee buy-in results in initiatives that fail to deliver desired outcomes.
The Result?
A high-maintenance franchise network consuming excessive time and resources.
Recruitment challenges due to a lack of a replicable success model.
Constant operational firefighting overshadowing strategic growth efforts.
A stagnant brand failing to evolve and attract new markets.
Transforming Franchisee Success with Magic
To overcome these challenges, the FIVE Magic Fs program offers a structured, research-backed approach to franchise growth, enabling franchisors to break through plateaus and significantly grow successful franchisee numbers. By addressing the most common barriers to growth, this program provides franchisors with a clear, actionable framework to build a thriving and scalable network.
The first step is laying the foundations for success: Without an aligned vision and roadmap for success, franchisors often find themselves overwhelmed, spreading resources too thin, and making reactive decisions that fail to drive real progress. The FIVE Magic Fs program helps franchisors establish a structured plan that sets success priorities, controls barriers, and ensures every action is aligned with long-term franchisee success.
A strong network starts with the right people: Too many franchisors fall into the trap of rushing recruitment, leading to costly franchisee turnover and underperforming partners. The FIVE Magic Fs approach ensures that franchisors focus on recruiting and developing the right people, creating a blueprint for franchisee success that can be replicated at scale.
But having the right people isn’t enough: Leveraging knowledge is key. Many franchisors suffer from knowledge silos and operational inconsistencies because valuable know-how remains trapped within individuals. The FIVE Magic Fs program provides a framework to gather, refine, and share best practices, turning knowledge into a powerful competitive advantage.
Franchise networks thrive when built on trust, collaboration, and strong communication: Without it, franchisees become disengaged, operational silos emerge, and relationships weaken. The program emphasises creating a healthy culture through the 3Cs (Culture, Collaboration & Communication), ensuring franchisees feel supported and invested in the brand’s long-term success.
Franchisee support is another critical factor that can make or break a franchise network: Many franchisors struggle with ineffective, reactive field support, leaving franchisees frustrated and disconnected. The FIVE Magic Fs system transforms field support into a high-impact growth engine, providing franchisees with structured, strategic guidance that drives measurable results.
And finally, learning must translate into action: Many franchise networks invest heavily in training, only to find that it doesn’t lead to real behaviour change. The FIVE Magic Fs framework focuses on accelerating learning, ensuring franchisees take action, and embedding lasting behaviour change—so that every training session results in measurable outcomes and real franchisee success.
By implementing the FIVE Magic Fs, franchisors can create a structured, high-impact approach to growing successful franchisees while eliminating the resource drain caused by struggling, low-performing units. This proven framework provides the roadmap to scale your network effectively, ensuring long-term franchise success.
Proven ROI: The Results Speak for Themselves
Franchisors implementing the FIVE Magic Fs program have achieved substantial return on investment. Here’s a couple of examples:
Success Story 1: Pack & Send—Transforming B2B Sales Culture
Pack & Send, a subsidiary of MBE Global with over 170 franchise outlets, struggled with inconsistent B2B sales performance. Many franchisees operated reactively, avoiding proactive selling due to a lack of confidence and fear of rejection. With conversion rates below 12% and missed opportunities in lead follow-ups, it became clear that a shift in sales culture was needed.
To address these challenges, Pack & Send used the 5 Magic F framework to implement a tailored B2B Sales Learning and Development program. The program identified high-performing franchisee behaviours, developed confidence through hands-on workshops, closed knowledge gaps in articulating value propositions, and established a structured lead generation system. The results were transformational, with many franchisees achieving double-digit annual growth in B2B sales revenue and profitability, improved customer retention, and a network-wide shift to proactive, solution-based selling.
Pack & Send’s B2B sales program didn’t just increase revenue—it empowered franchisees with skills that led to consistent double-digit growth, higher lead conversions, and more profitable customer relationships. With a 270% ROI in just three years, this wasn’t just a short-term fix; it was a scalable, sustainable transformation.
Success Story 2: Worldwide… More Than Just Print—Driving Consistency Across the Network
Worldwide… More Than Just Print, a mid-sized Australian franchise network, struggled with inconsistent performance, inefficient operations, and an outdated operations manual that offered little value to franchisees. Without standardised processes or targeted training, each franchise operated differently, leading to inconsistent customer experiences and missed growth opportunities.
To address these challenges, Worldwide used the FIVE Magic Fs framework to implement a Five-Star Franchisee Support System. Field support managers were trained as coaches and mentors, franchisees received tailored training, coaching, and mentoring, and the operations manual was completely overhauled into a dynamic, practical resource.
The results were immediate and measurable:
|
This transformation wasn’t just about short-term gains—it provided a structured, scalable system that empowered franchisees to achieve long-term, sustainable growth. The success of this initiative reinforced how the FIVE Magic Fs framework can drive franchisee performance, operational consistency, and profitability at scale.
These results stem from implementing just one strategy. Imagine the impact of applying multiple strategies every year!
Conclusion: Scaling Beyond the Plateau
Breaking through franchise growth plateaus requires strategic planning, innovation, and a commitment to franchisee success. The FIVE Magic Fs program provides franchisors with a clear framework, enabling them to:
Develop more successful franchisees.
Reduce resource drains from underperforming units.
Strengthen operational systems for scalable growth.
Maximise recruitment development and replication of top-tier franchisees.
If your franchise network has plateaued and you’re looking for a proven strategy to reignite growth, the FIVE Magic Fs program can help.
Break Through the Franchise Growth Plateau
Stagnation isn’t just a business hurdle—it’s a sign that something needs to change. The most successful franchise networks don’t just expand; they evolve, refine, and create systems that drive franchisee success at scale.
Reflection Questions:
Is your franchise network stuck in a plateau, struggling to grow and replicate success?
Are your franchisees fully engaged, or are they operating inconsistently with mixed results?
What steps can you take today to create a structured, scalable system for franchise growth?
Take the Next StepYour franchise network’s future success depends on the actions you take today. Don’t wait until stagnation sets in. Start implementing the FIVE Magic Fs for Franchising Success now and build a thriving, high-performing franchise network. Join the movement to scale smarter and grow stronger! Learn more about the FIVE Magic Fs programme today. |
Comments