In Transition: Changes Require Meticulous Planning and Execution

For multi-unit franchisees, navigating change is crucial. Expansion from a few units to a vast network, leadership and ownership changes, or diversifying into different brands presents unique challenges. It’s essential to adapt to economic climates, franchisor demands, and customer preferences. Robust growth and transition strategies ensure leadership continuity and sustained profitability as the business scales.

Case study

Amelia Delia, owner of Health Lifestyle Brands, which includes 20 smoothie franchises, four yoga and Pilates studios, and four med spas, is a prime example of strategic business management. Beginning at age 22 with a single location and her parents’ support, Amelia expanded her enterprise into a regional powerhouse by her mid-40s. When she was ready to reduce her day-to-day involvement to focus on strategic growth, it required meticulous planning and execution. Recognizing the complexity of transitioning leadership and growing a business of this scale, she collaborated closely with her team of advisors, including a CPA, attorney, wealth advisor, and growth and transition specialist.

CEO transition

Amelia’s vision involved grooming her husband, John, to assume the CEO role. Previously a technology consultant, John was poised to inject a new perspective and drive the franchise’s next phase of growth. However, Amelia recognized through her advisory team’s insights that transitioning leadership was more complex than a simple handoff. The process involved aligning John’s distinct leadership style with the existing culture, fostering trust among key leaders, ensuring John’s understanding of the industry and brands, and addressing the financial shift from dual to single-household income to rely solely on the business.

Leadership development

After starting the CEO transition, Amelia and John learned their CFO intended to retire in five years. Healthy Lifestyle Brands initiated a leadership development program focused on identifying internal talent and planning for a smooth CFO succession over three to five years. With input from growth and transition experts, they identified essential behaviors, attitudes, skills, knowledge, and experience (BASKE) for key roles, crafting customized development plans for promising team members. This proactive strategy ensured the company prepared effective leaders to sustain growth and mitigate risks from potential departures.

Key leadership

Amelia’s team of advisors recommended implementing “golden handcuffs” for managers critical to supporting John’s transition into the CEO position. She implemented performance-based bonuses and established supplemental executive retirement plans (SERPs) to provide competitive compensation packages that aligned with long-term business goals.

Strategic planning 

As John assumes the CEO role, Amelia’s advisory team suggested a strategic planning session with C-level leaders to reinforce the company’s vision, mission, and values. They aimed to define growth strategies for three to five years, setting the stage for their 10, 15, and 20-year visions. Facilitated by a growth and transition expert, the strategic planning led to clear action plans for reaching growth objectives. John, Amelia, and their team identified necessary resources and discussed market shifts to swiftly adapt, ensuring sustainability and a competitive edge.

Advisory board

To foster unity and strategic alignment, Amelia’s advisory team recommended establishing a management advisory board. With key managers from various brands and facilitated by a growth and transition expert, the board drove strategic initiatives, tested new ideas, and ensured cohesive leadership across the company.

Family governance

Amelia and John established clear policies for family member involvement to minimize the impact of family dynamics on business decisions. This preparation was crucial for setting the stage for their daughter’s future involvement without disrupting the business’ culture or performance.

Effective succession planning

• Define vision and objectives. Clearly define your future role and the company’s direction. Specify expansion scale and brand portfolio diversification. Plan in five-year segments, detailing goals for size (revenue/units), brand mix, locations, and the evolution of your role.
• Assess current resources. Evaluate your operational capabilities, leadership, and financial status to pinpoint improvements to achieve growth objectives.
• Develop a transition road map. Pinpoint key growth areas and new market opportunities that match customer preferences. Plan for leadership development across key roles to support growth and leadership transitions, addressing potential challenges strategically.
• Implement strategic initiatives. Launch targeted training and standardized processes to ensure quality across expansions. Align strategic initiatives and compensation plans with long-term goals.
• Monitor progress and adjust. Regularly assess the impact of strategies through KPIs and adjust tactics to enhance results.
• Engage with external advisors. Assemble a team of specialized advisors to gain insights into the challenges of growth and change in multi-unit franchising.

The importance of advisors

Managing a growing multi-unit franchise operation often requires expertise beyond the internal capabilities of the business. Building a team of skilled advisors is crucial. These professionals offer specialized knowledge in legal, financial, strategic, and operational areas.

For smaller operations (one to five units), focus on foundational advisory support, including a CPA, an attorney, and an operational specialist. For larger operations, expand your team to include specialists in growth and transition planning.

By adopting a strategic approach to planning, engaging with the right advisors, and implementing a structured plan, franchisees can navigate growth and transitions. Franchisees can plan for their futures and actively manage growth and transitions, safeguarding and enhancing their businesses’ value.

Kendall Rawls with Rawls Succession Planners knows and understands the challenges that impact the success of a complex, privately held, and family-owned business. For more information, visit seekingsuccession.com or email kendall@rawlsgroup.com.