Monthly Archives

June 2020

How Key Performance Indicators (KPIs) Work with Business Plans

By | Business Plans, Sample KPIs
Franchise KPIs and Business Plans

Business plans contain Key Results (KR).  A subset of these key KRs are the Key Performance Indicators (KPIs) used by the franchise to measure its performance. It may seem a bit like “alphabet soup”, but knowing these acronyms is key to growing your franchisee. Naturally, KRs and KPIs used by a franchisor are very tightly related to their vertical.

If you are looking at a restaurant business, they will be looking at food costs and labor costs as the key drivers for the business. Other verticals focus less on controllable costs, as they are not as impactful as simply increasing top-line sales. In environments such as commercial printing, for example, the focus shifts to KPIs which drive the sales team such as number of calls made, quotes submitted or quote conversion ratios.

Similar to the detailed discussion in FranchiseBlast’s Scorecard e-book, we can define KPIs that are always important to watch. There are normally 12-15 of them at most, to avoid flooding the franchisee with information.  What is different with business plans is that based on your focus areas, you may bring back a subset of these same indicators, but you’ll normally dive deeper in your weaknesses.

The business planning cycle gives you the opportunity to take a step back and observe an area where you want to focus. Your base KR will be around the KPI you’re already tracking in your scorecard, but you’ll develop ideas around this which will augment this KR with other KR which will measure the impact of Initiatives you will be doing.

Example KRs for Restaurants: Check Size

Restaurants typically look at average check size as a metric in the scorecards. Imagine you are building a Business Plan for a franchisee. You look at their scorecard and observe the average check size is their biggest weakness.

One KR would be to increase the average check size to the same level as the average franchisee.  That is a great idea, but it is not actionable if that number has not been moving in a while. So it is a good opportunity to think through some potential root issues. This is best done as a brainstorm together with the franchisee.

In this case, imagine that together you came up with the following ideas:

  1. Staff is not upselling enough, and they need training.
  2. A larger proportion of your morning customers pick up only a coffee and then leave.
  3. Your night staff offers too many discounts.
  4. You increase prices as recommended by the brand last year because a cheaper competitor set up shop next door.

After the brainstorm, you and the franchisee can pick one or two of these to tackle at the same time. So, your business plan could have the following KRs and Initiatives:

  • 100% of the staff redoes the upselling training course before the end of June
    • Related initiatives include: Setting up a training day, having 90% of the crew completing the training, etc.
  • An average of 10 people per day buy a locally-sourced energy bar before 11 am this quarter.
    • Related initiatives include: Stocking enough energy bars, ensuring every customer is offered one, and maybe the energy bars could be included in the above training on upselling, etc. (yes… one initiative can affect multiple KRs).
  • Increase the price of 10 of the 20 top-selling items by 3% before the end of July.
    • Related initiatives include: Review competitor prices to find the easiest price increase opportunities, change menu boards, etc.

As you can see, these key results are very specifically related to your theories about what you think you can do to drive up the average check size.

Measurement

You need to be sure you can easily measure these KR from the line of business application which generates them, as they will not be as convenient to access as the metrics from the scorecard.

A major advantage of this approach is that when you do your post-mortem at the end of the period, you can go back and see if you achieved your main objective –  Increased the average check size. At the same time, you can review each of your theories that you had outlined to drive that growth. The value of franchising is in the network effect. If you find something that works for one franchisee, it can also be applied to others in the system.

If you did the upselling training and no one is buying additional elements, then either you’re not executing properly or training was not the right idea.  In the next period, you’ll want to find new theories to try.

Last Word

Overall, KPIs and business planning are tightly integrated. Throughout the process, it is good to be a guide for your franchisee as they navigate business planning.



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#FranchisingStrongerTogether with IFPG

By | Partners
IFPG

This week, Dean Hatzitheodosiou from FranchiseBlast was interviewed by Red Boswell on International Franchise Professionals Group (IFPG) #FranchisingStrongerTogether.

In this engaging conversation, Red and Dean discuss how franchisees are fortunate to have support, accountability and best practices in place during this time. They talk about phases that franchisors went through in the course of the pandemic, and how planning, in both the short and long term can help us continue to move forward together. IFPG is an organization rich on experience and content and it was great to be a part of their initiative.



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How Pivoting Your Franchise Operations will Create Success

By | COVID-19, Events
Pivoting Franchise Operations

Date: Thursday, June 18 at 3:00 PM ET
Guest: Rachel Shemuel, Field Trainer, Panago Pizza
Link: Register Now

Succeeding in this new environment is possible, but it requires a different approach. Everyone needs to shift their mindset, and pivot operations. There are several dynamic examples across the franchising community, and now is the time for us to come together and learn from each other.

  • Franchisors are pivoting to act more as coaches, instead of cops and increasing the number of touchpoints with franchisees.
  • Franchisees are leveraging procedures and tools to make sure to keep everyone safe.

Join Rachel Shemuel, Field Trainer at Panago Pizza, Dean Hatzitheodosiou, Sr. Director of Business Development at FranchiseBlast and other special guests to learn about how to use data effectively to navigate the new environment, and how communication is your best ally.

We also explore Virtual Visits and how this can be leveraged in an era of travel restrictions or the potential of second or third waves of the pandemic.

This will be a laid-back, video webinar with an opportunity for questions at the end. Register now.



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Proactive Vs. Reactive: The Franchise Support Spectrum

By | Business Plans, Franchise Relationships
proactive and reactive

Franchise business plans accelerate performance so more and more brands are encouraging people to use them.  This is something that we all strive for, but first, let’s take a step back and talk about franchise support from the big picture.

In a franchise environment, the Franchise Business Consultant (FBC) is the bridge between the franchisor and the franchisee.  They have the toughest job in franchising, having to balance emotions with pure numbers, compliance with coaching, and more.

If you think of their interactions with the franchisees on a spectrum from reactive to proactive, the franchise business plan is the most proactive element of their job.

Most Reactive to Most Proactive

The following list outlines the most reactive to the most proactive activities that can happen in the course of supporting your franchisees.

proactive reactive spectrum

Acting as a front-line employee

FBCs are often team players, and when they see a unit that is busy or otherwise needs help they just jump in and help, such as making sandwiches with the hourly staff. This sends a down-to-earth helpful signal, after all ‘no one is too tall to pick up the luggage.’

The downside of this approach is that it is highly reactive. The FBC is not utilizing their skillset, and not offering their true value to the unit.

Responding to problems

Getting calls, emails, and texts about problems can be a big part of the FBC role. While it provides excellent support, it does little to better the circumstance of franchisees. A business is like a project, and if you are not helping franchisees move forward, they will start moving backward.

Performing field audits to ensure compliance

Compliance-oriented audits are a core part of the FBC’s role. Walking around and finding problems to fix is important for a range of reasons, from health and safety to brand consistency. At the same time, this is reacting to what is not happening, and ultimately it is looking to past behavior, rather than on future actions.

Training staff and franchisee on compliance

Training staff on compliance and brand consistency, which is the baseline is something that is focused on future behavior. This activity is definitely moving towards proactivity and we know that it is the hundreds of little things that make support outstanding.  At the same time, training on the minutia of operations doesn’t give the franchisee the opportunity to look at the forest for the trees, like environmental or competitive changes, for example, which could be of great importance to their survival.

Reviewing the scorecard and coaching to improve performance

Taking a step back and reviewing KPIs, strengths, weaknesses, and coaching to bridge the gaps is one of the most proactive things that you can do as a franchise coach. On a scorecard, there will be leading indicators and lagging indicators, and a combination of both will help your franchisees.

Business planning

Putting a process in place to define the right goals and execute towards them is future-focused, so it tops our list of proactive franchise support activities. Business planning is working on the business, instead of in the business.

Balancing Act

FBCs, like the rest of us in business, can get”too busy mopping the floor to turn off the faucet.” Although the role will likely never be 100% proactive, balancing proactive and reactive activities is a great first step.



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Franchise Operations: Are You Ready for Virtual Visits?

By | COVID-19

The global pandemic has affected franchise operations heavily. How does a franchisor pivot into a new world where travel restrictions limit or even prohibit onsite visits? The answer is the virtual visit.

Franchisors have long sent Franchise Business Consultants (FBCs) to visit their franchisees, both to ensure operational compliance and also to coach. The FBC would have a conversation with the franchisee and talk about their priorities and how the franchisor can help achieve their goals. The most common output of these visits is a field audit report indicating a few areas of improvement.

Since the COVID-19 pandemic, the key to operating is to shift focus from compliance to coaching. The good news is that franchising has been moving in this direction for the past few years.

In this article, we highlight the three stages of this transition and how you can implement them in your franchise.

As a coach, the simplest way you can execute a virtual visit is to set up a scheduled call with your franchisee on one of the many communications platforms available such as Zoom, Google Meet, Apple Facetime or Microsoft Teams. Then, you can see both the location (for compliance) and the franchisee (for coaching).

Seeing the location gives you the opportunity to review certain elements remotely. You could theoretically go through your previous compliance checklist this way, but this would be counter-productive. Reviewing every single standard from your long compliance checklists is not only demotivating for the franchisee, it’s also ineffective as the visit is announced. Instead, gaining visibility in a few key elements which were historically problematic (and a few spot checks outside of those areas) would drive better conversations while saving time.

For compliance, the key is to introduce self-assessments they can fill out on their own. Compliance is about protecting everyone’s investment: it should not be neglected. Request picture proof from franchisees on a few critical standards and make this a part of the work you request from them. You can equip franchisees (and their store managers) with the right tools to give you enough insights about their operations. At FranchiseBlast, we include tools to improve the accountability of this process via polling or self-assessments.

For coaching, seeing the person lets you have a deeper connection with the individual, which is required to build enough trust to impact their performance. In your coaching session, you should ask them questions like:

  • What’s keeping you up at night?
  • What areas would you like to improve?
  • How can I help you achieve your goals?

In the conversation related to the last question, you can talk about initiatives they could be doing to achieve their goals.

One challenge VPs of Operations will face is that they will have little to no visibility about the coaching sessions. Sure, they could be recorded and stored, but that’s hardly actionable and they have no way to keep the coaches accountable.

The solution is to request that FBCs document these interactions. This opens the opportunity to use the same tools previously used for audits, but with a new questionnaire tailored for these coaching interactions. Questions should guide the FBCs in touching the key areas of the business you’d expect them to talk about such as the following:

  • marketing
  • food costs
  • labor
  • training

For each area, a few notes can be taken about the current situation, the objectives for the next quarter and what initiatives will be put in place to reach those goals. Because all their interactions with their franchisees, the VP of Operations can gain holistic insights about how the franchisor is helping each franchisee.

To sum up, virtual visits can be achieved very simply with communication tools and recorded with a mix of audits, self-assessments and franchisee polls. Franchisors gain visibility into unit-level operations plus introduce some accountability for the coaches by forcing them to document their interactions.

The process then becomes:

  1. Franchisees and FBCs connect on a recurring basis with visual communication tools
  2. Franchisees fill out self-assessments for compliance
  3. FBCs document their interactions, with the most important one being the coaching session

Stage 2: Moving to data-driven coaching sessions

The process described in Stage 1 is the beginning of the shift from compliance to coaching. It is very simple and easy to implement in any franchise. However, its simplicity does potentially add some inconsistencies across coaches.  The conversations and plans the franchisee is making with their coach are heavily impacted by their gut feelings and the data that they gathered was ad-hoc in nature.

It is in this stage that franchisors invest in putting processes and technologies in place to generate a Franchisee Scorecard. Scorecards aggregate information from various sources (Sales, Marketing, Loyalty, Controllable Expenses, Audits, etc.) into a single document which is reviewed by both the franchisee and their coach. The great thing about a scorecard is that it benchmarks each unit with the group, highlighting the areas of opportunity.

Most FBCs already look at data with the franchisees, but a scorecard streamlines the process to make their work simpler. It also standardizes which metrics are observed by all coaches, and for which specific action plans can be developed. As an example, one may observe sales are fairly average, but the average transaction amount is lower than everyone else, indicating an opportunity to coach on upselling.

Once the franchisor puts in place the processes to ensure the scorecard is always accessible and updated in a timely manner, the collaborative process looks like this:

  1. Franchisee fills out a self-assessment indicating what they’d like to discuss in their next coaching call. This lets them voice their concerns ahead of time, and the FBC can be prepare adequately.
  2. On the coaching call, the scorecard is the conversation piece. If a weakness is observed in one area, such as Customer Satisfaction, both can drill down into specific online reviews to learn more about the area of opportunity.
  3. The action plan is developed and recorded by the FBC for accountability purposes, much like in Stage 1.

Stage 3: Rolling Out More Formalized Business Planning

Once franchisors are comfortable in Stage 2, they seek a way to more actively drive change. Stage 2 helps document the action plans, but these are simply snapshots of a conversation. There rarely is any direct follow-up on these plans between interactions.  This is where business planning comes into play.

A business plan is a living document that gets continuously updated through a period, such as a quarter or a year. It includes the objectives that were collaboratively defined; these are motivational targets. For example, they could be to reach a level of performance so strong that the franchisee is ready to open a second unit or decrease variable costs so that the franchisee can afford to pay for their kids’ college education.

Objectives are broken down into key results which are measurable. Key results are metrics that you can measure but you cannot directly control. For example, a key result could be to increase the average transaction size to $15.00. Another could be ensuring labor costs are less than 25% of sales.  By defining a set of specific metrics, the success or failure to meet the objective becomes clear.

Finally, once your targets have been defined you can develop an action plan to reach those targets: these are initiatives. These are activities or tasks that you know you can perform for example:

  • roll-out touchless payments
  • build a cashflow model
  • train staff on upselling procedures
  • hiring a new manager

These initiatives represent your best guess about what you can actually do to reach your objectives.

franchisee comeback plans 3

Building the plan collaboratively with the franchisee is key in this context, as they must agree with the objectives, believe the plan is achievable and align with how to measure success. Of course, franchisors can and should bring a standard plan to the table and tweak it to fit each franchisee, but it’s key that the franchisee buy into the plan. It should focus on what is most important, helping elevate their thinking from working in the business to working on the business.

The next step is to perform recurring check-ins on the plan. By doing so, you can knock off initiatives which are completed and perhaps add new ones if the key results aren’t moving in the right direction. Check-ins are important to keep the plan alive and to highlight what’s important instead of always focusing on the day-to-day emergencies.

Once the franchisor has as standard business plan template aligned with their own strategic objectives, the process thus becomes:

  • Franchisees fill out a self-assessment indicating their desired conversation topics
  • A coaching session occurs where the business plan is developed collaboratively
    • Some key results may come directly from the scorecard
    • Some initiatives may be to get staff to fill out self-assessments on a recurring basis
  • Recurring (such as monthly) check-ins occur (likely collaboratively, but perhaps franchisee-driven)
  • At the end of the period, a post-mortem is created to review the progress made and build the next plan.

The Virtual Visit Ladder: What Heights Do You Want to Achieve?

As you can see, each stage here builds on the successes of its predecessor.

  • Stage 1 augments the toolkit to include self-assessments in addition to classic audits.
  • Stage 2 weaves in data-driven insights via franchisee scorecards.
  • Stage 3 moves from snapshots to a full-blown business planning to drive growth.

To get started with virtual visits, it’s time to move away from doing pure audits. Your first task is to begin documenting all types of interactions you’re having with franchisees. Then, you can slowly roll-out self-assessments in order to equip your franchisees with tools to improve themselves.



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