Piloting a franchise: test the concept without the founder

A successful business is not automatically a concept that others can run. Customer relationships, problem-solving and everyday decisions may still depend on the founder. Before building a franchise network, you therefore need to test whether your way of working can be transferred to someone else. A clearly defined pilot helps you distinguish a sound business concept from a business that works specifically because of you.

1. Decide what the pilot needs to prove

The pilot’s most important question is not whether your existing outlet can keep making sales. It is whether someone else can run it using the instructions, tools and support you actually intend to offer future franchisees.

Write a simple test plan before you start. It should specify which part of the business you are testing, the conditions under which the test will run and the observations that will guide your next steps. Avoid trying to test every possible operating format at once.

For example, you might test whether:

• the person in charge can plan and complete a normal working week without ongoing decisions from the founder,
• customer enquiries and common operational issues can be handled using the available instructions,
• ordering, deliveries and administration work with the standard tools,
• support can be provided remotely at the level intended for the franchise network.

Also decide what should trigger a pause. Recurring errors that affect customer safety or legal compliance should not be accepted simply because sales look good. Set your assessment criteria in advance so that enthusiasm does not replace evaluation.

2. Create realistic conditions

You can use a company-owned outlet for the pilot, but the conditions need to be clear. Appoint someone to take operational responsibility and have the founder step back from day-to-day problem-solving. At the same time, retain the necessary oversight and the ability to intervene if serious risks arise. The test should not expose customers or staff to unnecessary problems.

Have the person in charge use the support materials that actually exist, rather than the founder’s unspoken knowledge. Record any questions those materials cannot answer. If the founder still needs to intervene, document both the reason and the work involved.

Pay particular attention to advantages that a future outlet may not enjoy: longstanding customer relationships, unusually favourable rent, help from head office staff or supplier terms based on personal contacts. These do not make the pilot worthless, but they limit what it can prove.

Choose a test period that captures the relevant variations in the business. A quiet period tells you little about how the concept handles peaks in demand. A strong launch week does not show how routine work will function. Document which situations have been tested and which remain untested, rather than treating a set number of weeks as a stamp of quality.

3. Track dependencies, not just sales

Sales measure results, but rarely explain why the business works. Also track indicators of how transferable the concept is: the number of support requests, recurring misunderstandings, rework, waiting times and decisions that only the founder can make.

Use a shared issue log with four simple fields:

• Situation: What happened, and at which stage of the work?
• Available support: What instructions or contact channels were available?
• Action: How was the problem resolved, and by whom?
• Next test: What needs to change and be tested again?

Distinguish between weaknesses in the concept and shortcomings in its execution. If several people misinterpret the same instruction, the instruction may need revising. If a task only works when the founder draws on personal contacts, the underlying approach may need redesigning.

Account for both visible and hidden support time. A short phone call may be followed by substantial work on the franchisor’s side. The total effort involved shows whether that support can be replicated as more independent businesses join the network. Do not, however, treat a successful pilot as a guarantee of future results in other locations.

4. Finish with a documented decision on expansion

Summarise what the pilot has shown, which changes have been made and what remains uncertain. Then decide whether to proceed, run another clearly defined test or pause expansion. Critical changes should be tested in practice before the underlying issues are considered resolved.

Also distinguish between an internal pilot and a test involving an independent business owner. An arrangement may fall within the franchise rules even if the contract is called a pilot agreement. What matters is its substance, not its title.

Sweden has an Act on Franchisors’ Duty to Disclose Information (2006:484). It requires clear, comprehensible written information to be provided well before a franchise agreement is entered into. If the pilot arrangement constitutes a franchise agreement, that duty already applies before the pilot agreement is signed. Have a lawyer with franchise expertise assess the arrangement before an external business owner starts operating. Sweden does not have a comprehensive franchise law; other legislation, including the Contracts Act and the Competition Act, may also be relevant.

Practical takeaway: Test whether someone else can run the concept with the support you can genuinely deliver. Expand only once the key dependencies on the founder have been identified, addressed and tested again.