Monthly Archives

July 2019

CEO’s Guide to Creating and Maintaining a Positive Culture in Franchising

By | Franchise Culture
Franchising Positive Culture

Business culture exists in every company, whether it’s managed effectively by the leadership team, or is the result of neglect.

A positive culture significantly impacts business productivity and profitability by enhancing team commitment to the goals of the enterprise. Conversely, a negative culture disrupts the ‘team spirit” and significantly reduces cooperation among team members, increases turnover, and reduces productivity.

In many ways, franchise organizations are even more dependent upon a positive culture than other business models. Franchisees are independent business owners, typically with entrepreneurial spirit, and less inclined to follow instructions than typical employees and managers. Many franchisors are looking for alternatives to the cop perception of franchisors, and want to make compliance a part of the culture.

To help franchisors in our community, Franchise Business Review, an independent market research firm that has partnered with over 1,100 top-performing franchisors, has created a guide, that will help you:

  • Learn about what culture means in the franchise context
  • Several real-life examples of culture programs in action of top franchisors
  • 12 steps on how to build a positive franchise culture

Download the free guide

Why Culture Matters in Franchise Systems

  • Increased engagement
  • Increased performance
  • Compliance is more likely
  • Creates consistent behaviors across the organization (because they WANT to)

Despite its critical importance to organizations, culture is frequently overlooked by leadership, and the result is an organization that lacks clarity and purpose. Leadership is responsible for the creation and maintenance of a positive culture that creates alignment of team behavior and company values, as well as aligns individual employee goals with those of the enterprise.

The best leaders personify their vision, mission, and passion. Only through authentic values and principles can you provide clear organizational expectations that drive norms and motivate employees at all levels.

6 Elements of “Leader” Driven Culture

  1. Vision – a leader’s basic job.
  2. Mission – innovative and inspirational.
  3. Relationship – lead by example.
  4. Employees – must align team goals and objectives with company values and mission.
  5. Accessibility – continually connect and share knowledge with the team.
  6. Business Acumen – strong skills for today’s business environment.

 

Ready to Make Positive Culture a Priority?

In many ways, franchising IS culture. The same attitude, the same behavior, the same tools, even the same words used in each franchise location, impart the culture of the brand. Each location may have some flexibility in how they deliver service, but they can’t be so far from the standard to undermine the underlying franchise brand “culture” as perceived by their customers.

This eBook will examine the three foundational components of a positive culture—and provide practical advice for franchise leadership teams for creating and maintaining a culture that leads to greater productivity and profitability.

 

Download the free guide

Capture franchisees’ feedback on your culture and franchise community with Franchise Business Review’s Franchisee Satisfaction Surveys, and measure and improve employee engagement and franchise culture at the corporate and/or franchisee level with Employee Satisfaction Surveys.

Michelle Rowan FBR

About the Author: Michelle Rowan

Michelle is the president of FBR, vice chair of the International Franchise Association Women’s Franchise Committee, and a Certified Franchise Executive. She has facilitated CEO Performance Groups and Executive Networking Groups and is also a mentor of UNH college students. When she is not at work she is usually reading, playing outside, or hanging out with her husband and daughter.

8 Important Automotive KPIs

By | Automotive, KPI
automotive kpi

According to Franchise Direct, there’s almost 32,000 auto franchise units among over 100 concepts currently operating in the United States. These concepts include aftermarket parts and accessories, maintenance and repair and cosmetic and paint. We took a look at the most important KPIs in this segment of the franchise community.

Sales and Marketing

Star Rating

87% of consumers will not consider working with a business with only 1-2 stars, according to SearchEngineLand. Franchisees who don’t stay on top of reviews could pay a heavy price. Tracking their star rating on Google, Yelp and similar sites is a key marketing metric.

Quote Capture Rate

Quote capture rate helps you track what percent of people are buying after they are quoted. If this number is too low, dig into sales or do some competitive analysis on what is happening in the local market.

Quote Capture Rate = Total Sales ÷ Total Quotes

Customer Acquisition Rate

A strong automotive business has a combination of new customers and retained customers. The customer acquisition rate, as a ratio, tells you how good the business is at sales. In the world of “hunters vs. farmers”, these are the hunters.

Customer Acquisition Rate = New Customers ÷ Total Customers

Operations

Customer Retention Rate

As a complement to the sales metric above, the customer retention rate tracks how well your service team is performing. Automotive businesses rely on repeat customers, so you want to keep this KPI strong.

Customer Retention Rate = Repeat Customers ÷ Total Customers (a complement to customer acquisition rate)

Productivity

Productivity measures how much free time your technicians have. If this is low, it shows there is not enough work to support the staff that you have.

Productivity = Hours Clocked ÷ Hours Available

Efficiency %

If a tech takes 4 hours to complete a 5 hour repair, his efficiency is 125%. This number tells you about the systems you have in place, the accuracy of quotes and your team performance as a whole.

Efficiency % = Sold Hours ÷ Worked Hours x 100

Sales Mix %

As a franchisor, you may see advantages of franchisees performing one service over another. Usually these services are higher-margin and can enhance the profitability of the business overall.

Sales Mix % = Revenue from X Service ÷ Total Revenue x 100

Cycle Time

Cycle time can be measured in many ways, but the most practical one according to experts is from time from drop-off to delivery. This can be measured based on the POS or other operational systems.

 



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10 Important KPIs for Education

By | Education, KPI

In education, tutoring and children’s services, you want to have your students to have good habits. But sometimes it is worthwhile to take a look at your own habits. Is your business getting an A+? Also, what habits will predict success? After years of experience and looking at dozens of franchised businesses, we compiled the list of KPIs below.

Sales and Marketing

Cost/Lead

Cost/Lead is an important metric for any small business and is best done both overall, and by marketing method that are popular in education such as Pay Per Click (PPC), Social, Direct Mail, Events etc. Start by tracking it overall, and the buckets can be added on over time. The Home Office should set cost/lead depending on the economics of the business and the franchisees can follow. This is a great way to benefit from the “network effect” in the franchise model. When counting leads, you want to focus on the qualified one, not ones with incomplete information or ones that are vendors trying to sell you something. It should only be people who want to buy your services.

Cost/Lead =(Total Marketing Cost)/(Total Qualified Leads)

Leads

This simple metric reflects the overall health of the business. Year Over Year (YOY) comparisons are useful in education businesses, since they are seasonal depending on the school year and standardized tests.

Trials

Many education businesses focus on trials giving potential customers a “taste” through one free class or a trial. Having a goal for trials for your franchisee is a fantastic way to encourage them to keep momentum within the business. Seasonally, they will wax and wane but there is always opportunity for momentum.

Trial Conversion

Trial conversion measures a few things. It looks at the experience of the trial – did you have the best coach work with that student, and did they get a good outcome? It also measures the sales process after the trial is done. Trial conversion can vary widely depending on the individuals in your organization, so it is definitely worth studying. Some organizations also choose to do deeper qualitative research on former trials.

Trial Conversion = (New Students for Period)/(Trials for the Period) 

Students Created

Having a regular flow of students keeps the environment vibrant and lively. Benchmarking these across franchises can also create a healthy sense of competition.

Operations

Attendance %

While some see low attendance as a good thing – since students are paying but not attending means facilities are not used as much yet the business is still making revenue. But this attitude is outdated. Having students attend regularly means they will come back, instead of losing interest in the program. Also – parents will leave more positive reviews.

Attendance %=(Total Attended)/(total Scheduled)

Churn %

Churn rate, also known as the rate of attrition, is the percentage of users who stop using your services within a given period. In these competitive times where customers have a myriad of options, it is good to watch this number closely.

Churn %=((Students at Beginning)-(Students at End))/(Students at Beginning)

Net Promoter Score (NPS)

NPS is a customer loyalty metric which rates customers as a Promoter, Detractor or Neutral depending on their answer to the following question: “How likely would you be to recommend us to a friend or family member?” on a 10-point scale. Promoters are 9-10, Neutrals are 7-8 and Detractors are 0-6. It can be calculated as follows:

NPS =  (%Promoters)-(%Detractors)

CSAT is also a popular way to measure customer satisfaction

Coaches or Tutors

Hours Taught

Hours taught tracks the operational side of the business, and does not depend on payment plans etc. This is another metric that varies with the seasons and is better to be compared YOY.

NPS/Coach

Tracking NPS/coach helps you determine which coaches are stronger. It then stands to reason that your overall NPS will get higher if you put those popular coaches on more shifts. To calculate, attribute the NPS to each individual coach. You may need to extend the period if there are a lower number of survey responses.

Get More Educated

Looking for more KPIs for your Franchise? Look at our post on how to use KPIs in Franchising.



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15 Important Restaurant KPIs

By | Franchisee Scorecard, KPI, Restaurants
Restaurant KPIs

The majority of restaurants are franchised. The 2012 US Economic Census numbers say: “the estimated 122,042 limited-service franchise restaurants (NAICS 722513) make up approximately 54 percent of all fast-food restaurants in the United States, nearly 70 percent of the sales of fast-food restaurants ($185.4 billion), and about 73 percent of the employment of fast-food restaurants (3.6 million).”

So – how do you effectively manage a restaurant in terms of Key Performance Indicators (KPIs) in the franchising environment. See our list of 15 helpful KPIs below.

Sales and Marketing

Average Online Rating

With 91% of 18-34 year olds trusting online reviews as much as a personal recommendation, and consumers willing to pay 31% more on a business with positive reviews, there is a great reason why this should top the list for restaurant KPIs. The average star rating, along with the number of ratings within the last month or quarter is the right place to start.

Net Promoter Score (NPS)

NPS is a customer loyalty metric which rates customers as a Promoter, Detractor or Neutral depending on their answer to the following question: “How likely would you be to recommend us to a friend or family member?” on a 10-point scale. Promoters are 9-10, Neutrals are 7-8 and Detractors are 0-6. It can be calculated as follows:

NPS =  (%Promoters)-(%Detractors)

CSAT is also a popular way to measure customer satisfaction.

Number of Transactions

Number of transactions is a way to assess customer count. This can typically be retrieved from your Point of Sale (POS) system.

Average Check Size

Some restaurants prefer looking at this simple metric over worrying about upsell metrics. Essentially, a strong average check size shows that the location is getting more from each of their customers. It can be calculated as follows:

Average Check Size=(Total Sales)/(Total Transactions)

Number of New Loyalty Program Members or App Downloads

Loyalty programs and apps matter in the restaurant space, since increasing retention by just 5% through customer loyalty programs can boost revenue by 25 to 95%. Measuring this helps keep the franchisee’s eye on the ball when it comes to this vital activity. Another way to look at this is % of transactions using the loyalty app.

Service

Speed of Service

This is a great one for increasingly time-starved customers, and it does not require any new data points. Measure this automatically from time the customer walks in or drives up to your restaurant through the  POS, to the time when the food is delivered to them based on your kitchen display system. Some compare this to NPS as well.

Speed of Service=(Food Order Time)-(Food Delivery Time)

Customer Retention Rate (CRR)

Customer retention rates vary greatly depending on the location and the size of the restaurant. For example, you would expect the CRR at a location at the airport to be low, given the audience in transition. This metric can be measured using the following formula:

CRR=((#of customers at the end of the period)-(# of new customers for that period))/(# of customers at the start of the period)

RevPASH (Revenue per available seat per hour)

If your franchisees have empty seats, their profitability is likely suffering. If you watch this metric hour by hour, you can make adjustments to improve the bottom line.

RevPASH=(Revenue/hour)/((Available Seats)/(hour))

% Online Orders

With Off Premise sales becoming such a major part of franchising, this is a great metric to start with. The only caution is that you don’t want to punish those that are growing their revenue in the traditional business. Online orders also tend to have a bigger check size.

% Online Orders = (Online Order Sales)/(Total Sales)

Expenses

% Labor Costs

You may want to split your hourly staff wages versus your manager wages. Some owners-operator franchisees pay themselves a salary. Others pay themselves a dividend out of the profits for tax purposes. By carving out hourly wages into a separate entry, values become more comparable when benchmarked against the system.

% Hourly Labor Costs = (Hourly Labor Costs)/(Total Revenue)

% Food Costs

You should have the actual cost of the items you sold in that period so that you’re properly evaluating profitability. However, some systems don’t have this data easily on hand and they make an approximation using ‘purchases’ during that period. These two numbers don’t necessarily align, so be careful. Make sure you use consistent information for each unit.

% Food Costs = (Purchases)/(Total Revenue)

% of a Strategic Category

Some franchise systems have a very successful category with great profitability, such as soft drinks. Selling a bigger percentage of soft drinks, or whichever that category is within your system is a great start.

% of a Strategic Category = (Category Sales)/(Total Sales)

Food Cost Variance

A metric a lot of franchisors are talking about today is the actual cost of food compared to the planned cost. Tracking this helps track forecasting and handling fluctuations in certain costs such as beef in the future.

Food Cost Variance = (Actual Food Cost)/(Planned Food Cost)

Employees

Employee Turnover Rate (ETR)

Every industry has to deal with turnover, and it is a good idea to determine what is an “acceptable” number in your system.

ETR= (# of employees who left in that period)/((# of employees at the beginning) + (# of employees at the end))/2

eNPS

Similar to Net Promoter Score for customers, above, the Employee Net Promoter score can help you understand how happy your team is. Though some franchisees are hesitant about measuring employees this way, it can add insight – and happy front-line employees mean happy customers.

Ready to Go Further?

Looking for more KPIs for your Franchise? Look at our post on how to use KPIs in Franchising. If you are ready to go one step further, check out our eBook: Ultimate Guide to Franchisee Scorecards.



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357 Franchise Field Audit Questions

By | Franchise Audits, Franchise Coaching

Are you looking for inspiration on your field audits? You are not alone. In fact, people have been asking for audit question resources since we started the company 12 years ago.

  • To meet the demand, we created a comprehensive resource, where you will get sample questions from the top franchisors around the world, and much more:
    357 Field Audit Questions including Customer Service, Marketing, Food Safety and Quality, Cleanliness and Management.
  • How to make sure that your questions link back to your processes.
  • How to “audit your audit”, ensuring it is as effective as possible.
  • Where to find your processes – it is easier than you think!