This article is part of our series about impactful field audit questions. With this series, we connect the dots between individual questions in an audit and their concrete measurable impact on the franchisee’s performance. We shouldn’t forget that one of the true goals of a franchisee field audit is to improve unit-level economics. Although seemingly innocuous, these questions have a direct impact on performance.
Question: “Is the collateral for the latest marketing campaign present?”
Although many field audit questions concern the conformity to the brand standards to ensure that customers receive a consistent experience across locations, this one is of particular interest. This specific question focuses on the latest campaign and is a better indicator of how well the franchisee is executing, rather than simply making sure the contractor used the right paint colour during construction.
Ensuring that each marketing campaign is properly executed is critical to the franchisee’s performance. If the franchisees are not picking up the ball and executing, the hundreds of thousands of dollars (if not millions!) spent by the franchisor to create and broadcast a new marketing campaign or limited time offer go to waste. These campaigns are created to attract customers by offering something new or different; fail to execute and there will be no impact: the opportunity cost can be quite substantial. From the franchisee’s perspective, performance may seem normal but will slowly decrease over time because being “good enough” is no longer sufficient in today’s competitive environment.
It’s beneficial to have a second pair of eyes evaluate each location – that’s one of the core benefits of a field audit. If you see the same thing day in and day out, you might not notice these areas for improvement. This leads us to:
Related Question: “Catering brochure is available next to the cash register?”
If you’re in the location doing the same thing every single day, you might not notice that you ran out of brochures. If you’re not advertising that you offer catering services, new customers may not be aware and this revenue stream will dry up over time.
As an example, imagine that catering sales drop by 20% because of poor execution. In a location generating $500,000 per year where catering accounts for 20% of the revenue, that’s a $20,000 drop. This is more than the total annual profit, given the industry’s slim 3.5% profit margins!
Furthermore, since the average 7% royalty is based on sales, this means an average 275 location chain would end up losing $385,000 in royalty revenue over the year and may have to let go a few people. Obviously, such a large drop would imply horrible execution across the entire system. In reality, this is just one of the 50 plus elements which can potentially go awry in each location. Continuous attention to detail is key and a properly structured field audit program is definitely a big part of the solution.
Both of these issues are very visual – we recommend that users of our field audit app snap pictures when failures occur to paint an accurate portrait of the compliance issue.