What SaaS Companies Can Learn From Franchisees

Your business is as good as a rating on a scale from 0 to 1. That’s the core of it.

Scale, in its essence, means you attribute a multiplier to this number between 0 and 1. This core number becomes crucial to software products.

Why? Whatever you scale in your company will be based on how well that core number is.

Look at any restaurant franchise and you’ll see. The other locations are rarely as good as (or even less so better) than the flagship store. On the other hand, whatever problem/gap/misconduct may be happening in the original business will not only be replicated in the other stores, but amplified.

That’s exactly the opposite of scale. In its worst shape, negative scale. No one wants to scale negatively by attributing a -3 multiplier.

And let’s spend another minute on that “problem/gap/misconduct” — it’s more about the founders of the franchise. Whatever they can’t see (due to experience, interest, “hunger” etc) will not be fixed and/or optimised, therefore it will become a bigger problem every day.

As a brief example, if they’re overpaying on a certain basic ingredient, that will scale — negatively. But that’s a brief example.

Let’s say they have a stronger issue. Let’s say their franchisor selection process is not properly optimised for some reason. How will this scale negatively, you may ask?

Slowly but surely. When the breakpoint of this issue will hit the threshold, it will be not 2, not 4 franchisees (who are not a good fit for their brand) that they have to take care of.

It will be 38 franchisees that they’ll have to take care of. And if each of them has multiple stores… you can see how it adds up.

What’s the bottom line, then?

This imaginary example is happening in the franchise world — where things are physical and tangible.

In the software world, we need to be 100 times more careful. Because we’re talking about code, which is not necessarily physical.

Whatever you don’t fix today, will come back in 100 days stronger.

Get that core right, I’d say. Otherwise, you’ll pay interest on it.

About Ch Daniel

I’ve updated this signature in July 2020, so older mentions of the signature might not make sense.

I currently don’t write on this blog anymore. I wrote daily for 9 months on this very blog, but now I’m focused on building the CH Group.

If you want to follow my newer articles, check out the CH Group’s blog.

See everything I do here: Chdaniel.com

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