One of the most important—and undervalued—components of a new franchise is the grand opening. It is often ignored, even as franchisees spend considerable money on office space and supplies, vehicles, computer equipment and other items not directly impacting their bottom line. Once investment cash dries up and weeks or months have elapsed since they opened their doors, most franchisees either scale back the grand opening celebration or simply cut it out completely. This can be a big mistake. After selecting your franchise system and business location, the grand opening should be your most important early activity.

What is a grand opening?

A proper grand opening is a preplanned event involving a ceremony, e.g. ribbon cutting, and invited guests (perhaps the public as well, but often not). Guests are encouraged to sample the products or services you offer. In some cases, you will also have media coverage and hold contests. The grand opening is typically followed by promotions, giveaways and special discounts that encourage new customers to visit your location. These promotions will last for a limited time, establishing a sense of urgency in the consumer's mind.

Your grand opening will likely not take place the first day you're open for business. In fact, it may not take place until several weeks or even a month after you get started. This is a wise move, because such openings will draw a lot of people and overwhelm both you and your inexperienced staff.

Franchisees who host a grand opening on day one must often choose between a scaled-down event they can deal with or a big event that is too much for them. Both options fail to impress the customer. Instead, make day one a 'soft opening,' with little or no fanfare, and postpone the grand opening until you and your staff are more settled.

Why is a grand opening so important?

A successful grand opening directly impacts not only initial sales volumes, but also sales volumes over the life of a franchised business. Certainly, the wave of customers drawn to your store by a grand opening will eventually subside, leaving your sales to settle into an average weekly volume. However, a great grand opening generates word-of-mouth and this, combined with quality customer service, will continue to build sales and drive new traffic to your door. Besides, those who did not attend may still have seen the balloons and signs in front of your store or read about the event in the newspaper—now they have your information filed away for their future needs. Without a grand opening, you hamper your customers' ability to recall your location, or even realize you exist.

Typical arguments against grand openings

There are many reasons why franchisees are reluctant to host these big events—here are some common ones:

1. "I spent too much money constructing/renovating my location and can't afford to host a grand opening, too."
2. "I'd rather re-direct the grand opening expenses toward purchasing more inventory."
3. "If my franchisor won't pay for a grand opening, why should I?"
4. "I can't organize the event—I'm too busy getting the business up and running."
5. "My staff isn't ready to handle the rush of people a grand opening would bring in on one day."

These are legitimate concerns, but all can be overcome with proper advance planning. Above all, the grand opening should be budgeted for as part of your normal expenses, not treated as an 'extra' to be considered only if the first few months are unexpectedly profitable.