The Pace of Franchise Expansion: When Should You Pause?

When franchise enquiries start to grow, it is tempting to promise several new branch openings at once. But running a successful company-owned outlet does not automatically mean you can prepare several franchise partners at the same time. Before offering franchises, establish a policy on the pace of expansion: how many openings you can support, how you will allocate slots in the schedule, and when you will pause. In franchising, keeping your promises matters more than growing quickly.

1. Assess capacity before setting targets

Do not start by asking, “How many franchises do we want to sell?” A more useful question is, “How many new branches can we prepare without neglecting the existing business?”

List every task that requires your team’s time before and after an opening. These might include reviewing documents, visiting sites, preparing equipment, training staff and monitoring the first few weeks of operations.

For each task, record:

• who is responsible and who can cover for them;
• the actual time required, based on previous experience;
• other duties they must carry out alongside it;
• tasks that cannot begin until an earlier task is complete;
• a buffer for delays and unexpected problems.

The slowest or most stretched part of the process should determine the pace. If only one person can train a new team, approving more applicants does not increase your capacity. Nor should you count time already committed to existing branches as spare capacity.

2. Allocate slots in the schedule, not just dates

Maintain a single schedule of all anticipated openings. Distinguish between initial enquiries, applicants under assessment, those with signed agreements and those ready to open. They should not all have the same status in your planning.

Each slot in the schedule should have clear conditions attached. For example, a target month may remain provisional until equipment is confirmed or documentation is complete. Specify who has the authority to finalise the schedule; not everyone speaking to an applicant should be able to promise an opening date.

Set out separate approval stages:

• Ready for preparation: responsibilities are clear and the people needed have been allocated.
• Ready to open: the agreed conditions have been met and there are no critical gaps.
• Ready for the next opening: the preceding new branch no longer needs unusually intensive support.

Do not assume the work ends on opening day. Allow time afterwards before committing the same team to the next franchise partner. If the schedule changes, promptly explain the reason, the revised target and the implications for both parties’ preparations.

3. Align promises with the agreement and the law

Scheduling is not just an internal matter. A franchise partner may recruit staff, order equipment or incur preparation costs based on a promised date. The agreement should clearly distinguish between provisional targets and binding deadlines, and explain what happens if there is a delay.

The Philippines has no single comprehensive franchise law. However, specific regulations do apply: Executive Order No. 169, series of 2022, provides protections for micro, small and medium-sized enterprises taking on franchises. These include minimum terms for their franchise agreements and a registration mechanism through the Department of Trade and Industry (DTI). General contract law under the Civil Code and applicable intellectual property rules also apply.

Have a lawyer review provisions covering opening deadlines, date changes, notices and remedies for failure to fulfil obligations. Avoid sweeping clauses claiming that you can postpone everything at any time without liability.

The QFA’s voluntary Code of Conduct is not law. Nevertheless, its emphasis on clear obligations and good faith offers useful guidance: do not take on commitments your team cannot fulfil.

4. Set clear triggers for a pause

Before problems arise, put in writing the circumstances in which you will temporarily stop allocating new opening slots. Triggers might include repeated delays in preparation, a shortage of trainers, unresolved problems at a new branch, or declining service at your company-owned outlet because the manager is constantly elsewhere.

You do not have to stop all discussions. You can continue accepting enquiries, but explain that no opening slot is yet confirmed. Do not collect fees simply to conceal a lack of capacity or create a false impression that an opening is imminent.

Also set the conditions for resuming expansion: who will verify that the problem has been resolved, what evidence is required and who will approve the next opening.

Practical reminder: Before making a commitment to the next franchise partner, make sure you have allocated people, time and a clear slot in the schedule. A temporary pause is better than a succession of promises you cannot keep.