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Stefania Sigurdson Forbes

How to Use KPIs in Franchising

By | Franchisee Scorecard, KPI
KPIs in Franchising

Most franchisors are aware of KPIs and management. but going from “idea” to “roll-out” can be too big a chasm for many franchisors to overcome. But in today’s world, which is both highly competitive and data rich, KPIs in franchising are becoming a must-have to succeed.

The management style connected with KPIs is especially important in franchising. You are working with entrepreneurs, not employees. Franchisees are more independent and have to be convinced about initiatives rather than being led. This can turn many with a corporate background into a state of frustration.  But this challenge, to the right mind, can be seen as a strength. An entrepreneur, worth their salt, will be motivated to succeed and will draw on the “I’ll do what it takes” mentality. This situation sets the stage perfectly for managing via KPIs in franchising.

  • KPIs motivate: Traditional management talks about “the carrot or the stick” as the two sides needed to manage effectively. In terms of the carrot, KPIs motivate, especially when they are displayed together with leaderboards.
  • KPIs monitor: In terms of the stick, KPIs help make clear what the expectations are for a franchise. After all, a franchisee is granted the right to operate the franchisor’s brand, thus there are obligations associated with this right.

How to determine KPIs in Franchising

Your KPIs are as unique as your business. As a result, determining your KPIs can come from the following sources:

  • Industry experts: whether your franchise operates in restaurant, automotive or health and fitness, you will typically be able to find an effective, numbers-oriented expert in the space. These folks will typically come from a management background, but they can also be found with on an engineering, software or financial career-track. Look for them at your industry conferences or publications.
  • Franchisees: As people familiar with the day-to-day of the operation, franchisees can be a rich source of input into KPIs. Getting them involved also facilitates compliance and alignment down the road. Look to your Franchise Advisory Board as a starting point.
  • Internal team: Your internal team can be a valuable ally when it comes to KPIs. Your Franchise Consultants are a first stop on the road to KPIs, but you may want to check in with Marketing, HR and Training teams as well.

Sample KPIs

As discussed, KPIs are unique to every business. But sometimes seeing samples of KPIs in franchising can spark discussion and build intelligence. Due to popular request, we have sample KPIs in the following areas. To get statistics for this post, we relied heavily on the Franchise Business Outlook published by the International Franchise Association (IFA).

Restaurant Franchise KPIs

Numbers: According to the IFA, there were 226,699 Fast Food, Quick Serve and Full Serve restaurant establishments combined in January 0f 2018. This means that out of the 759,236 franchise establishments, restaurants were 55.5% of all franchises. It stands to reason that restaurants are still going strong in franchising.

Trends: The biggest change to hit restaurants are off-premise sales. Delivery, led by the pizza world is taking a bite out of the industry as a whole.

KPI Samples: Speed of Service RevPASH and % of Online Orders are indicators found across establishments. See our full list of Restaurant KPIs here.

Salon and Spa KPIs

Percent: Personal service, which includes Salon and Spas, represents 113, 536 establishments, representing 15.1% of franchised businesses. In 2015, the global wellness industry was valued at 3.7 trillion dollars.

Trends: Digital disruption is affecting salons and spas, with businesses offering apps and online appointment setting. 70% of Spas, for example, offer online appointment setting.

KPI Samples: Retail Capture Rate, Repeat Guests and GOPPATH are KPIs found in this industry. See our full list of Salon and Spa KPIs here.

Gym and Fitness KPIs

Percent: Gym and fitness is also included in the booming personal services franchise category, which, same as Salon and Spas, represents 15.1% of the franchises. Currently about 20% of Americans have a fitness membership, and that could easily double in the next 10-15 years.

Trends: Wearables sharing biometric data have emerged as a top trend in fitness today.

KPI Samples:  Active Members, Revenue/Client and Revenue per Square Foot are KPIs seen in fitness businesses. See our full list of Fitness and Gym KPIs here.

Automotive KPIs

Percent: There are 38,065 Automotive franchise establishments in the US, representing 5.0% of franchises.

Trends: With new automotive sales on the decline, drivers of older cars are more likely to pay to keep their car running, with the average older car owner 2x more likely to pay over $1,000 to keep their car running.

KPI Samples: Productivity, Efficiency % and Cycle Time are common in this industry. See our full list of Automotive KPIs here.

Education KPIs

Percent: Education is also part of the broad Personal Services franchise category, weighing in at 15.1% of all franchises.

Trends: STEM Education support is a trend in education, with the Bureau of education forecasting a million new jobs created in Science, Technology, Engineering and Math between 2012 and 2022.

KPI Samples: Trial Conversion, Attendance % and Churn % are typically found here. See our full list of Education KPIs here.

Types of Franchise KPIs

KPIs come in many different forms. See the infographic below as a guide.

KPI Best Practices

When rolling out a KPI program, it is important to remember that the program is a living and breathing organism, rather than something static. Here are some tips to keep in mind:

  • Don’t Set it and Forget it: The beauty of this program is that it helps you track your progress. That means having positive habits around review cycles is a must-have.
  • Review Consistently: As new trends come into your industry, you want to review and change what you monitor. For example, 5 years ago restaurants did not typically track % of online orders. Today it is standard.
  • Tie to Scorecards: Scorecards offer a one-page summary of what is going on with the business. This is a great user-friendly tool for franchisors and franchisees alike.

Parting Thoughts

Once you have your KPIs in place, you may want to invest in a scorecard program to make them easy and understandable. FranchiseBlast has created a comprehensive eBook on Scorecards called The Ultimate Guide to Franchisee Scorecards. Download this valuable resource now.



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Unit Level Economics for Franchise Businesses

By | Uncategorized

We have all heard that Unit Level Economics is important in franchising, but going from understanding it in theory to transforming it into action is a big step.  According to QSR Magazine, “the success or failure of a franchise concept can pivot off of how well unit economics are tracked, managed, and improved.” In this article, we will take a look at why Unit Level Economics are important in a franchise business, and how to put it in place in your organization.

Why Unit Level Economics for Franchise Businesses

Strong Unit Level Economics is the foundation upon all business success sits. Even though most franchisors get royalties from revenue, not profit, having franchisees succeed in the long run creates genuine referrals and organic growth. Those who want sustained growth for both the franchisor and franchisee pay close attention. According to Joe Matthews, strong Unit Level Economics can also help in Franchise Development as franchise candidates look for the following:

  • Does your business make money?
  • Is the business sustainable? Will it continue to make money into the foreseeable future?
  • Can I see myself in the business?

So the focus builds that franchise business from many angles.

Core Measurements

The starting point of a Unit Level Economics initiative will take the following into account:

  • Unit Profit  and Loss (P&L)
  • Break-even point
  • Payback period

Key Performance Indicators (KPIs) take center stage when it comes to any program rollout.

Sample Unit Level Economic Program Rollout

Are you ready to rollout a program? Surprisingly, we have found that sometimes more established systems are behind newer systems who may have set up strong programs  from the beginning. The best rollouts start from the top, where the Owner or CEO sets the tone and the franchisor team is full of people who care about franchise success on an emotional level.

Step 1: Determine the Key Performance Indicators (KPI)

Every business is different, so using the wrong KPIs can do more harm than good. Develop these benchmarks with input of the franchisees and industry experts. As a starting point, we have KPIs for Restaurant, Health and Fitness, Spa and Salon, Education and Automotive.

Step 2: Track and Improve KPIs

Now that you have the information that you need, you can manage your KPIs together with your franchisees. Franchisors who have a “corporate location” have more skin in the game and can experiment with the business model. Having franchise committees or forums can also help develop and share best practices. Another way to encourage performance is to have part of your franchise consultant’s salary variable based on franchisee KPIs.

Step 3: Share Information About Your KPIs 

Sharing information about KPIs is key to an organization’s success. In fact, at FranchiseBlast we have seen an increasing amount of customers tracking scorecard performance on a monthly basis as well as getting information from their POS or online reviews.

Critically Reassess the Basis of Controllable Franchisee Variable Costs

The franchise landscape changes over time. For example, off-premise has appeared in a substantial way in the past few years leading to changes in procedures, facilities and digital assets. Reviews have also taken a front-seat in  marketing, when as little as 5 years ago they were a second thought. Reassess those KPIs over time, making sure your programs are relevant.

Parting Thoughts

Overall, a strong Unit Level Economics program is alive, with participation and tracking throughout. To learn more, download our Ultimate Guide to Franchisee Scorecards.



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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!

How to Resolve Franchisee Problems Effectively

By | Brand Consistency, Field Audits
resolve franchisee problems

It is true, when selling a franchise we sell systems, and then we coach them on how to navigate through those systems. But, what happens when there is a problem? This model of franchisee problem solving starts with determining if the franchisee problem is actually important. Surprisingly, sometimes you can determine that the franchisee may not be following the system perfectly, but it doesn’t really matter that much in the big picture. If it is a problem, then it is either a skill deficiency or a knowledge deficiency. If it is skill, then there should be some sort of training – executed by the training team, or by the coach themselves. If it is a knowledge deficiency – you want to figure out if it is a case of simply providing the information that the franchisee needs,or if you need to go into performance management.

This highly rational process is great to share with both new franchise coaches and experienced ones alike. It is also a positive spin on problem resolution. Instead of starting up a round of no one’s favorite activity: the “blame game” between franchisor and franchisee, going through this process analyzes what is going on, and moves towards a solution.

Franchisee Problem Resolution Process

When a franchisor first starts, the first question is often, “how do I sell more franchises?” Once that goal is achieved, there is a next challenge, “how do I solve problems with the franchisees that I have?” As with many phases in business, one challenge is often followed by a new, and sometimes even more difficult obstacle to overcome. In this post, we will take a look at a simple but powerful process for solving franchisee problems. We also worked with some of our friends in the franchising community to enrich the article with experiences.

Now for the fun part, let’s look at some examples:

Signage Example

Due to the popularity of off-premise sales, all stores are required to have a “Online Pick-up” sign. During an audit, the FBC saw that the store did not have that sign or a special area at all.

Is it a problem?

Yes – the fastest growing stores include online ordering. The store is also struggling to reach their growth goals.

Is it a skills deficiency or a knowledge deficiency?

Skills: The franchisee was more established in the system, and was not aware of this change. The FBC took some time explaining the benefits of off-premise, and talked about one of the franchisees long-time friends who was gaining a lot of traction in this area. After getting a post-audit task via e-mail, they promptly ordered as sign and created the designated area.

Outcome

Although the franchisee was violating the system, it was a more recent development, and they made the change promptly. It also gave the FBC some time to educate them on the off-premise opportunity, and get them engaged in the idea.

Customer Service Example

A customer calls into Home Office complaining that the franchisee is not picking up the phone. The receptionist smartly takes the order over the phone and e-mails it urgently to the franchisee. However, the Franchise Business Coach (FBC) has a problem. 

Is it a problem?

Yes – taking customer orders through the phone is key to the business.

Is it a skills deficiency or a knowledge deficiency?

Both: the FBC connected with the franchisee, and found that they did their customer calls at night, and could not pick up the phone. They followed the appropriate process in that they did not answer the phone while with a customer. However, the franchisee also did not check their voicemail regularly to call customers back in a timely manner. They knew that this was a bad habit, and that it violated the system – but sadly they did not see themselves making a change. 

Outcome 

The FBC recommended that the franchisee work with an answering service to resolve this problem. This way, calls get answered without the need for the franchisee to “break the flow” of their conversation on site with the customer.

Learning

Going through the process this way helped build a stronger relationship with the franchisee, and helped the FBC understand them better (such as a dislike for multitasking).

Sales and Marketing Example

Franchisee was using out of date marketing material which included an old logo and outdated message points.

Is it important?

Yes – keeping marketing material current is key to a strong brand.

Is it a skills deficiency or a knowledge deficiency?

Knowledge: The FBC discussed the issue with the franchisee, and discovered that she was putting saving costs ahead of keeping the brand consistent. Years earlier, she had invested in a large amount of flyers due to the economies of scale with printing. But, now those flyers were holding the business back from complying with brand standards. The FBC worked with the Marketing team to help the franchisee understand the importance of a consistent brand, and Marketing provided a recommendation of approved vendors who did smaller printing runs so this would not happen in the future.

Outcome

Due to this handling of the issue by everyone involved, the franchisee became an advocate in her region about brand consistency. Treating it fairly helped strengthen the system as a whole.

Parting Thoughts

This simple and smart process can help your franchise on many levels. It is also even better if it is automated. Check out FranchiseBlast’s brand consistency tools, which includes post-audit tasks, to learn more.



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7 Common Franchise Business Plan Mistakes

By | Franchise Business Plans, Franchise Coaching
Franchise Business Plan Mistakes
Making a mistake in franchising is both painful and embarrassing – especially when you really care about your franchisees and their success. So… as a Franchise Business Coach, are you really setting your franchisees up for success with their franchise business plan or are you just going through a “tick-box exercise”? We discussed planning with several franchisors, and we came up with some of the biggest mistakes, and how you can avoid them.

1. Mistaking Cash for Profits 

Franchisors around the world have been focusing on franchisee profitability over the years, but it is good to remember that cash flow is very important in any small business. Profit is an accounting concept and not necessarily money in the bank. You want to make sure that you are tracking both as you are balancing cash-in and cash-out with your franchisee.

2. Ignoring the Bad Year Before 

An experienced franchisee knows the long-term ups and down. If you have owned a business, you also know that it can sap the motivation right out of you and you can start the year feeling like a deflated balloon. A wise franchisor once told me at an IFA Convention: “To help the franchise out, tap into why the bought the franchise in the first place. Were they creating a vacation fund, a life of more abundance or a legacy for themselves? Reharness that energy to help them overcome that challenge and move to the next phase.”

3. Not Sweating the Details

You want to get the details right. In fact, the value of the franchise business plan is to understand details including who is doing what, and when that is going to happen. Business planning is the opposite to throwing caution to the wind, it is a time to sit down and look at the specific key results that will link to each objective or goal, and who is accountable for each. This helps understand workload and balance it out for everyone. Contrary to the popular book, in this case, you DO want to sweat the small stuff!

4. Hitching their Wagon to the Franchisor’s Star

As discussed earlier, franchisees hitching their wagon to the franchisor’s star will not help them in the long run. Franchisees are much more likely to be successful if there is a personal element to their plan, such as saving for another unit or becoming a mentor to others.

5. Overvaluing Experimental Ideas 

While it is exciting to work on a new initiative, such as a National Account or a new SMS Marketing initiative, overvaluing projected results to be at their most optimistic level will not help the franchisee in the long run. Before you know it, when the campaign plays out to a below-par result, the finger-pointing will begin. Be conservative with the projected results of the campaign, and then if they are better at the end of the day, you will be pleasantly surprised.

6. Not Experiencing New Initiatives 

Sometimes a franchisee needs to see to believe in terms of recommended elements in the franchise business plan. Code Ninjas, for example, has franchisees attend two grand openings before they go live themselves, and one after. This not only creates a realistic expectations, but it also helps with the practical side of budgeting to have the event that is right for them.

7. Mistaking Deviation for Adaptation 

Sometimes a franchisee will have a creative initiative in the plan, which can be a good thing. People have to adapt to their market, such as McDonald’s Teriyaki burger in Japan, or serving wine in France. However, sometimes those initiatives will deviate from the Franchise, and create confusion in the market about the brand. When looking at initiatives, you want to understand if it is bringing the brand forward, or setting it backwards.

Last Word 

Planning the right way means tracking progress throughout the year. Check out FranchiseBlast’s Audit and Brand Consistency tools to learn more about tracking progress along the way.


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