Chris Hammond, VP of Operations for Clean Juice recently sent us this amazing success story about their experience with the FranchiseBlast team for integrations with new systems to enhance operations as a whole. Thanks for the kudos Chris! We are so happy to work with a forward-thinking brand like you!
If you are looking for words of encouragement in your career in franchising, take a look at some of the quotes to help you get through the day. Some of these quotes for franchisors will make you think… and some of them will make you smile!
“Leadership is a process, not a position, and is ultimately and always about producing results with and through others.” – Jim Sullivan
“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” – Maya Angelou
“If you want something to happen it will take twice as long as you expect, if you don’t want something to happen, it will happen in half the time.” – Jim Sullivan
“It is not enough to do your best; you must first know what to do and then do your best.” – W. Edwards Deming
“If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people.” – Chinese Proverb
“Multi unit leadership is like wearing a Speedo to the beach. Anyone can, but not everyone should.” – Jim Bueld
“The people who truly make a difference in our lives are rarely those with the most hype, the most money, the biggest brains, or the largest accolades. The people who make differences in our lives are the ones who truly care.” – Unknown
“Prescription without diagnosis is malpractice.” – Jim Sullivan
“Imperfections are not inadequacies; they are reminders that we’re all in this together.” – Brene Brown
“Advice is like snow – the softer it falls, the deeper it goes.” – Jim Sullivan
“How well you communicate is measured not by what you say but by how well you are understood.” – Jim Sullivan
“Great minds discuss ideas; average minds discuss events; small minds discuss people.” – Eleanor Roosevelt
“Business is like a Dylan song; you don’t have to understand it to like it.” – Jim Sullivan
Pretty much every Franchise Coach has heard this from their franchisees: one of the biggest trends for customers of franchise locations is on-demand food or off-premise. But, as discussed in an earlier post, there are two options when it comes to delivery for the franchisor as an organization, and the franchisees themselves.
- Creating ordering capabilities in-house
- Using a third-party service or food delivery service app
Today, we are going to look in-depth at the third-party services, and explore key considerations for restaurants in franchising working with these services. There are many new considerations to understand when looking at this trend, and what matters in terms of supporting your franchisees with this transition.
What is a Food Delivery Service App?
Whether it is the ubiquitous GrubHub or UberEATS, high-end Caviar or 45-minutes or less hub, DoorDash, a food delivery service app is more like having a virtual foodcourt in your pocket. There are a lot of these apps right now in a “land-grab” for space, which are both regional and national. If the customer does not have a specific restaurant in mind, they can simply scroll through the app and browse by city, address, cuisine or menu. Do you have a very specific craving for Korean Pork Bone Soup, “Fall Off the Bone” Texas ribs? Well, with a food delivery service app, you can even search by menu item.
If your franchisees are considering signing up for one or many of these services, you will want to take a few things into consideration.
As your Marketing Director will tell you, different areas have different advertising dynamics. For Pay Per Click (PPC) advertising on Google for example, the franchisee in Brooklyn, New York will have a different experience than the one in Tulsa, Oklahoma. Why? Because there is more competition in Brooklyn for just about… everything, driving the cost of advertising up.
The same dynamic is at play in Food Delivery Service Apps. There are some cities that will rely on the most popular apps-only, such as GrubHub or UberEATS. There are other cities where there is such a proliferation of apps, that franchisees need to have several iPads to keep up.
Take Mighty Quinns BBQ based in New York for example. In order to keep up with the different apps they manage their different ordering system using several iPads for each delivery service. For Christos Gourmos, co-founder of the company, he says that the back-end would be the biggest headache – as in – it is not about bringing in the customers, it is about defining who is paying.
The opposite is true for markets where there is no proliferation of apps. For some Australian businesses for example, the 35% premium just one app charges means that the cost of entry is too high.
Finances and Fees
Food Delivery Service Apps offer a challenge for franchisors, because of the added fees can put a lot of pressure on the franchise model. For example, while the apps can offer up to 35% onto the price of a meal, a franchise like Dominos can charge their franchisees just 1% for their delivery service. This is why so many brand aggregators and large franchisors are either building this capability in-house, or are partnering or taking ownership in some of these outfits. For franchisors without this option, here are some things to consider. Note, that all quotes are different according to the application and the region, so the percentages are just for illustration.
- Non-Sponsored Post Commission: A “non-sponsored” listing, means you will simply be listed on the site, with no special treatment in terms of priorities. In some markets, it can be 15% for this cost.
- Sponsored Post Commission: A “sponsored” post means that your offering will move up in the rankings, and can cost about 20%.
- Delivery: While it is possible to use these applications without using delivery, there is an added 10% for the delivery for those who need it.
In franchising, we are able to take advantage of economies of scale – and creating the ability for franchisees to do their own delivery is a great start in terms of helping them take control of the costs. Another strategy restaurants use is to have one price on the apps, and another price in the restaurant or on their own website.
Similar to the “daily deals” website such as Groupon, the risk of food delivery apps is that the customer may move the relationship from the restaurant to the application. The flexibility the consumer gets with the app can be at the expense of the franchisee. As a result, you want that food and packaging to “hook” the consumer so the next time they order they will go directly to the restaurant. Also, the data behind the consumer behavior is lost to the app, meaning some of your market intelligence abilities will be limited.
While most experts see consolidation and specialization in the future, the reality today is that there are a lot of these apps out there. As a result, taking orders from multiple apps will create duplicate data entry, which creates opportunities for human error. Also – the disconnected systems creates some administrative challenges – ones that can create a subversion of royalty fees.
Another new trend noted by McDonalds is that on-demand has created new occasions for eating. They have found that late-night eating is a new “thing” that would not be covered by a standard restaurant operating hours.
One interesting form of consolidation for brand aggregators to consider is the trend of Ghost Kitchens also known as “Virtual Kitchens”. This is where there are several brands under one roof, and it is delivery only. These kitchens are growing in popularity across North America and the UK creating a need for highly versatile chefs, but removing the need for “front of the house” staff.
Restaurants are not going away… but they are changing. One way to navigate change is by having flexible technology that goes with it. At FranchiseBlast, our brand promise is “You set the course, we’ll help you get there. Let’s enjoy the journey.” Our flexible system can move and grow with you, whether you are a traditional brick-and-mortar restaurant or a ghost kitchen. Request a demo to get started.
One of the hottest topics right now in franchising is sustainability. Basic steps like employing reusable cups only scratch the surface of the sustainable franchise, and consumers know this – if it’s easy, then chances are, it’s not enough. According to Spoon University as quoted in the Huffington Post:
“Sustainability is all about moving in an eco-friendly direction by reducing waste, composting, recycling, and focusing on conservation. Many restaurants throughout the U.S. have been trying to become more sustainable and are now serving more organic food than ever before.”
Sustainability from the Inside Out
Although sustainability is often viewed as an idealistic vision divorced from every-day concerns, the truth is, it is an important part of every business. There is a business case for the sustainable franchise. The biggest reason is our increasingly interconnected world. “Fands” or “Brand Fans” will defend you if they know what you stand for. Increasingly, brand is a verb, and you want to show your customers, franchisees and franchisee teams alike what your in “for” – that you care and that you are there to help.
Here are three sustainable franchise brands who are leading the way in terms of sustainability:
Units: 286 in 15 countries
Overview: Freshii is expanding at a rapid rate, offering healthy options to consumer. In fact, the CEO, who founded the company when he was just 24, recently wrote open letters to both McDonald’s and Subway encouraging them to convert their locations to Freshii:
According to the CBC: “Let’s explore a partnership in which we together convert select Subway stores to Freshii restaurants in a quick, low-cost way,” said the letter from Freshii founder and CEO Matthew Corrin published as a full-page newspaper ad in the Globe and Mail on Tuesday.”
When you compare the unit growth, the differences are dramatic:
“Freshii aims to have between 810 and 840 franchise locations by the end of its fiscal year 2019, according to regulatory documents filed before its initial public offering… Subway’s expansion also slowed dramatically from 2014 to 2015. Subway opened a net total of just 34 franchises in fiscal year 2015, down from 313 in 2014.”
Fresh food is more difficult to sell as a “value play” – for example, even the best-managed locations have to throw 10-20% of their food away.
According to the Globe and Mail, a recent report found that “the Millennial age cohort is willing to pay up for meals that they perceive to have higher food value and more personal relevance to them.”
Sustainable Takeaway: Consumers are choosing healthier and more sustainable options – and are willing to pay for it.
Units: 11 in San Francisco and Los Angeles
Overview: Mixt Greens focuses on sustainability as part of the DNA of their brand. The restaurant ensures that they source the best ingredients, ensuring that they are GMO-free.
“We know what we eat impacts the earth as much as ourselves, so sustainability is at the core of everything we touch, make and do— even if it negatively impacts our bottom line. We’re not just dedicated to being “green,” we’re passionate about protecting the natural systems that sustain us— a philosophy we hope is shared with our customers.”
On their website, they claim to have the following under “the mixt movement”:
Sustainable Takeaway: Taking a holistic approach to sustainability creates “fands” in a very meaningful way – with the average customer eating at Mixt Greens 21 times/month.
Units: 360 across Australia
Overview: According to Franchise Business, Red Rooster has been serving roast chicken since 1972. However, today they do so with a twist: “Their chickens are fresh, not frozen, and are free from artificial colours, flavours, hormones, and MSG. The cooking process is simple too; just a sprinkle of seasoning and then into the oven to be roasted.”
Sustainable Takeaway: Even established brands can reposition food to be more sustainable. Franchisors have to invest in everything from computers, to office supplies to client dinners to help the bottom line. The consumer appeal of disposability isn’t what it used to be – now sustainability strengthens your brand.
According to Experiential Marketing Agency Jack Morton Worldwide, “Brand is a Verb”. They say “Marketers must change the route of their brand experience by moving the brand’s actions ahead of its messages.”
To drive value for customers, showing, and not just talking about sustainability is a solid start.
How FranchiseBlast Can Help
With any change, you need the systems to support it. FranchiseBlast’s Auditing tools help brands stay on track with simpler workflow, reminders and even required photos when there is a violation (such as not-locally-sourced food). These tools help strengthen your brand, and make it more consistent. Let us know if you would like to chat further!
Want to see another restaurant trend? Check out our post on off-premise.
Which franchisees have the highest potential for growth? In this battle tested strategy, we discuss how Amy Perkins, Senior Business Consultant from Ben & Jerry’s, focused on “middle-to-top” franchisees helping lift results across her region.
It is easy for franchise coaches to focus on the weakest performers, since they are in need of the most help, and are often the squeakiest wheels. But, it is the top performers who have the most potential impact. We sat down with Amy to discuss what she did, and what other coaches can learn.
How did you get into coaching, and franchising in general?
Amy: I started at Ben & Jerry’s right out of college and was in the trenches from the ground up. I did all kinds of roles – I started as a scooper then moved up to assistant manager, manager, regional manager and area manager for all of Vermont. Later I moved my way out West and became a business consultant and have been doing that for 12 years based out of the San Francisco Bay area.
What do you like about working at Ben & Jerry’s?
Amy: Like most coaches, I spend the majority of my time talking about sales and improving business operations. Because Ben & Jerry’s focuses on so much more than that, I also get to have really unique and interesting conversations with our franchisees.
Ben & Jerry’s isn’t just the name of our brand – the guys that give it their name are two very colorful people with a lot to say. Ben once said, “business has a responsibility to give back to the community.” I love that I can go into a franchise business consultation and talk about social mission and what the franchisees are doing to change the world within their community.
And something that I think about every single day – Jerry said, “If it’s not fun, why do it?” and I’m pretty lucky that that’s how I get to live my day-to-day life – it’s a pretty awesome experience!
Which franchisees do you focus on when coaching?
Amy: I tend to focus on the group of franchisees that hovers above the middle, but not quite at the top. Results don’t often come from the folks that are already at the top because those franchisees are typically already doing what it takes to be there. But if you can focus on this middle-to-top pack, you can see some spectacular results.
Why does that make a difference?
Amy: I think that those franchisees have a higher opportunity to move the needle; they’re willing to do whatever it takes to get themselves to the top – they‘re both hungry and thirsty -they have the drive and the desire. They’re the ones that are usually the most adaptable and willing to take on new strategies or ideas. You’ll see them putting their necks out more.
They just know that the harder they work, the more they’re going to see the results. So, these folks are not necessarily comfortable just sitting at the middle of the pack since they can see what top performers can do. They want to be a top performer and they strive to be up there. They want to be at the top as much as they think they deserve it. Of course I support all of my franchisees, but I put a special focus on this group.
What do you think is a common pitfall for other franchise coaches?
Amy: I think we’re all guilty of this, but a lot of franchise business consultants and coaches spend way too much of their time focusing their efforts on the bottom 20%. It’s easy to get sucked into this. You get stuck focusing on that bottom 20% and they don’t really go anywhere. They’re not necessarily detrimental to the business, they’re just kind of comfortable living in a space that isn’t really affecting any sort of real change.
Can you tell us about some concrete examples of when this strategy has worked for you?
Amy: As part of my yearly plan, I chose three franchisees that I knew lived in this middle-to top space that I thought I could make the most direct impact on. I knew that they already had the drive and the desire, and I knew that with a little bit of extra support, they could really have an incredible year.
For the whole year I was hyper-focused on sales and trying to get as many touches in as possible. I called them more. I reached out to them more and asked them more questions. My favorite question – especially at my first consultation of the year is “what is your goal” followed up with “how are we going to make it happen”. I do this because it’s easy to create the goals, it’s much, much harder to figure out the execution plan. I made my field visits with them super-focused and direct, and I wanted them to know that I was rooting for them.
I also didn’t necessarily need them to know that they were on my top 3 list, they were simply getting additional support from me, and even though they didn’t know it, their results were pretty incredible.
Tell us about the results…
Amy: So, of the three, “Shop #1” off-premise sales, which includes business catering and events, were up 25%. Her scoop shop was also up 5%. Her staff was happier than ever. They were selling more of the right product mix, which resulted in a higher average check, a lower cost of goods sold. She also won one of our biggest awards at our annual meeting this year. She was completely shocked, but she deserved it!
For “Shop #2”, their off-premise sales were actually up over 100%. We tier all of our franchisees in our off-premise world, ranging from “Tier 1” if they’re just starting out, to “Tier 4” if they are the best of the best. Shop 2 actually hopped tiers – from Tier 2 to Tier 3. That’s not easily accomplished so I was really proud of them.
For Shop #3, she was a multi-unit operator, and she’d been in a unique situation in that she has three very different types of operations: one neighborhood scoop shop, one that’s a high-volume tourist shop, and thirdly she has a strong off-premise program. She managed to grow all three, which is pretty amazing. In doing this she really had to execute three different strategic marketing plans simultaneously.
Shop sales grew, transaction counts were up, average check was up, and off-premise was up. Their P&L was the tightest I’ve ever seen it. They were able to invest in their staff and grow a manager as well. She found herself putting out less fires and was able to focus more on driving business results. A whirlwind year for her!
What was your biggest challenge in terms of implementing this strategy?
Amy: It was hard to determine who to pick. Every organization has really strong franchisees and management teams and determining who you really want to put high amounts of effort into can be a bit of a challenge. But if you can determine the the middle-to-top performers, you’re going to see the most return.
What advice would you give another coach who’d want to try this strategy
Amy: At the beginning of the year, choose three to five franchisees and their management teams that you know are invested in their business and have what it takes to move that needle. Depending on your work load, this could represent from 5-10% of your franchisees.
Determine what your goals are for each, and then formulate your plan. Track the plan and check in regularly on the goals. Make as many touches with these franchisees as you possibly can, and watch their results play out. Don’t feel like it’s ever too late to start this process – it can be started at any point in the year!
What is the biggest benefit to you as a coach?
Amy: I think it also allows you to control the conversation from a field rep position. Sometimes franchisees think the role of their business coach is solely compliance and I think that’s short-sighted. I think it’s part of my job, and I think it’s an important part of my job, but I don’t want to focus exclusively on that.
To the contrary I want to say to the franchisee: “if you’ll let me be your business coach, we can do something pretty magical here.” This strategy allowed me to support each of the franchisees in my region, but by focusing on these high-potential franchisees – see the results! I could not be happier and I am much more fulfilled as a coach. It just felt good.
With everyone we interview, we ask a series of fun questions! Here is Amy’s Q&A!
What new beliefs, behaviors, or habits adopted in the last five years have most positively impacted your life?
I have been a pretty die-hard Orangetheory Fitness fan for almost two years now. I’m healthier, I’m lighter, I’m stronger, I’m happier, I have more energy and all of those things are great. But I feel like it’s changed who I am – it just keeps me in check and it makes me a better person. Since they are a franchise with locations across my region, I always have a little piece of home when I’m on the road.
Purchase of less than $100 that’s improved your life.
Melatonin. It’s changed my life – because I sleep a whole lot better than I used to!
What would you want to put on a billboard?
“Buy the plane ticket.”
What books have you most gifted to other people?
Kissing in Manhattan by David Schickler
Although they are in the minority, franchisors have to be aware of potential fraud from franchisees. Those who may be hitting hard times financially, will find ways to undermine safeguards instead of reaching out for help. While approved technologies utilized by franchisees may appear innocuous, ambitious ones can leverage them to their advantage to commit franchisee fraud.
The GPS technology that revolutionized local transportation now conveys food as well as passengers. Such third-party delivery services broaden the customer base with the convenience factor, but the sales they generate are beyond the confines of the franchise framework. Therefore, with sales reported separately.
A common way for franchisees to hide money is to have two businesses running in parallel – one where they pay royalties to the franchisor, and one where they do not.
A great device for rewarding the repeat customer with points toward a free frozen yogurt. But when cashiers swipe their own cards on transactions for non-members, they are rewarding themselves on the customer’s dollar…and on the franchisor’s.
Shockingly, some franchisees get their employees in on the scheme. In a recent case in the UK, a franchisor was allowed to terminate a franchisee, based on an illegal cash-back scheme he was running with his employees. After getting amounts deposited into their bank accounts, employees were asked to return cash to the franchisee in a manual safe drop at the store.
How to Prevent Fraud
In baseball, you can’t tell the players without a scorecard, and the same goes for franchisees. In lieu of being on site all day, every day to monitor best practices, franchisee activity can instead be tracked. As a franchisor, you can arm yourself with performance tools to keep a close eye on your unit-level economics.
With a dashboard and a monthly metrics scorecard, you have a customized, at-a-glance review of established benchmarks that also flag irregularities and recommend guidance on how to resolve those issues.
When specific ratios are standardized, fraudulent activity can be identified. Only a full franchise management system will provide the evidence that supports subsequent actions: be they legal proceedings or managerial intervention.
Another way to track fraud is through surveillance. Innovations in today’s industry have led to direct connections between Point of Sale transactions and video surveillance – simplifying the monitoring process.
If you are looking for a fast, simple and intuitive way to protect your business from fraud and regain lost revenue take a look at Solink. Many of the world’s biggest brands are working with their video surveillance solutions.
Embezzlement or Inefficiency?
Most franchisors charge royalties based on sales. If numbers begin to plummet or even fluctuate, what is the cause?
- Is it an honest franchisee who is genuinely struggling, doesn’t know their numbers or orders supplies they don’t need?
- Or is it a franchisee who is making a concerted effort to reduce the declared sales amount and line their pockets?
It is hard to say unless valid comparisons are made with intuitive software that produces easily digestible data.
You can read more of our posts on fraud here:
- Detecting Franchisee Fraud
- Tips for New Franchise Business Coaches
- Tips for Better, Faster, Stronger Franchise Performance Reviews
We are franchise operations professionals. We choose not a headliner but to give the headlines to our franchisees.
If franchise professionals had a “oath”, is this what it would be?
One of the key ways in which we can work together with franchisees is to build committees, which typically starts with an advisory board. In the first post, we discussed the need to strike a balance between the strengths of franchisors and the strengths of franchisees.
Advisory Boards – the Basics
According to Entrepreneur.com: “An advisory board is typically composed of a number of existing franchisees and is designed to provide the franchisor with input from their perspective. This is especially valuable for the franchisor since this perspective is usually the one closest to both the customer and the cash register.”
Advisory boards are as varied as the brands in the industry itself. According to the International Franchise Association, here are some interesting facts about advisory boards that you should consider:
- More than 90% of the Advisory Councils have their members elected by franchisees, rather than appointed by the franchisor.
- Advisory Councils typically meet with the franchisor, either quarterly or semiannually, and the members serve primarily in an advisory capacity.
- Topics discussed with these Advisory Councils vary considerably and may cover goods and services, equipment, advertising, operations, corporate policy as well as communications.
8 Best Practice Tips for Franchise Advisory Councils
- Have a charter for the council that is flexible as the needs of the council changes.
- Have leadership positions such as President, Secretary and Communications Chair. These should be 1-year appointments.
- Have new members coming into the council on a yearly basis to ensure members do not become “entrenched”.
- Have broad goals for the council.
- Ensure you have an agenda for each meeting, so it does not become a “gripe session”.
- Have senior members of the franchise join the meeting and bring in specialists for specific topics such as a training manager for training matters or an advertising agency for a marketing campaign.
- If a creative new initiative is “hatched” in the meeting, make sure that members actually participate in them rather than just talk. This gets skin in the game and reduces the risk of the council becoming an “ivory tower”.
- Following each session, have a communication go out to the field. This could take the form of a Facebook Live with all members speaking and taking questions, a webinar or even a special newsletter discussing the meeting’s result. The format is less important than the message that feedback is alive and well in the organization.
How Franchise Advisory Boards Connect to Franchise Sales
When it comes to franchise development, your franchisees are your most effective franchise sales persons. Fostering harmonious relations in many different ways benefits a franchisor’s ability to expand. In the world of instant global communications, prospective franchisees are investigating franchise systems before investing in them. A prospective franchisee will quickly become aware of any significant discord, and its presence may raise serious doubts about the desirability of joining that system.
Franchise Scorecard Initiatives
One of the biggest trends to hit franchising in recent years is franchisee scorecards. If you are implementing such an initiative it is wise to include your advisory committee. Often council members include more successful franchisees including multi-units. They often have ideas about what should be included on a scorecard for operations to succeed.
Although some franchisors can think of it as an “us vs. them” – under the first peel of the onion, it is really much subtler. Often, franchisees will want to improve quality across the board. Like a sports team, where strong members of the team want everyone to be strong, and they don’t want people to hold the success back. In a world of shared google reviews, today it is more important than ever to create authentic connections.
This can also create leadership within the system about the scorecards, rather than the franchisees feeling like they are being graded by the franchisors. Everyone improves with better unit economics in our current, high competition environment.
Humans have a basic need to be heard. Those who are entrepreneurial, in a franchise system, need that even more than the average human. In my experience, having project committees is a way to resolve contentious issues.
For better or worse, I am the one who likes to take on the most challenging project. In my humble opinion, when the mountain is higher, the view from the peak is more beautiful. The rough ride, the bumps along the road are what makes you stronger – the tension, creates something extraordinary.
Having a project committee can have the following benefits:
- Prevents the “bunker” mentality with projects coming out from home office that are not seen as beneficial by the franchisees.
- Ensures franchisees have a sense of being heard and understood.
- Working together on an initiative make it stronger, since the franchisees bring a lot of local knowledge.
In my next post, I am going to show you step-by-step through my project committee formula down to sample agendas. As usual, you will get the opportunity to use my tools and make them your own.
Stefania is the Sr. Marketing Director at FranchiseBlast. She comes from 20 years in the Marketing world, 10 of them in progressively Sr. positions in Marketing – most recently as the Director of Marketing and IT Development at Tutor Doctor. During the course of her career she has worked with companies like Microsoft, 3M, Shred-it and the Intercontinental Hotel. While at Shred-it, Stefania was recognized by Google as operating a best practice in managing a franchise PPC campaign and her website at Tutor Doctor won an “Outstanding Achievement in Internet Advertising” award by the Web Marketing Association in 2016.
Stefania has taken part in several speaking engagements across North America about entrepreneurship, franchising, marketing and technology and has volunteered for numerous organizations helping children, artists and educational institutions; she is a volunteer with Futurepreneur as a mentor, and does a number of community initiatives. She was also the past Communications Chair of the Queen’s Alumni Association of Toronto. She holds an MBA from Queen’s University and a Bachelor of Commerce from Carleton University. She lives in Vaughan, Ontario with her husband, Matthew and two children, AJ and Violet.
Every franchise relies on spreadsheets or printed forms, to some extent, to help manage its field operations. For example, to track field audit scores, benchmark franchisee performance, or collaborate on a store opening. Relying on spreadsheets during the early stages of a franchise system makes sense when it predominantly operates using simple spreadsheets being managed by small, tight-knit teams. As a franchise system matures, by adding new locations, its field audit team and reporting will grow in complexity.
As it grows, field operations will record and exchange more information to continually improve franchisee performance. No matter the stage of maturity of the franchise, the limitations that crop up because of the use of spreadsheets become warning signs to be addressed.
What are these limitations, and what do franchise systems need to consider?
Sign #1: Reduced data integrity and availability
While spreadsheets provide an easy way to template and collect information during field audits, one of the major signs it’s time to move away from the use of spreadsheets is when the information is unreliable or hard to access. Even if only a few people complete, edit, and use this information, there is still room for error. With an increase in the use of Microsoft Excel alone from 30 million users in 1996 to over 750 million users in 2015, the impact of those errors touches businesses no matter how large or small.
The impact of those errors has been studied for over a decade by a leading researcher named Raymond Panko. He has studied the impact and reasons for errors using financial field audits in his studies. He details his conclusion in the 2015 research paper, “What We Don’t Know About Spreadsheet Errors Today: The Facts, Why We Don’t Believe Them, and What We Need to Do”.
Three main outcomes from the research were:
- At least one incorrect bottom-line value is very likely to be present
- Errors are extremely difficult to detect and correct
- Spreadsheet developers and corporations are highly overconfident in the accuracy of their spreadsheets
The main reasons for these errors include rushing, inexperience, complexity, and stress. The higher the stress, the more likely the errors. The research found that even with a high level of experience, stress can increase errors five-fold.
What was found to decrease errors is software. Task-specific software, designed to achieve desired business objectives by eliminating manual steps.
Also, as a franchise system grows, so does the use and complexity of financial, operations, and supply chain systems. These separate systems create information silos, which limit the availability and exchange of information between departments. For example, by making field audit information available to development teams, they can spot their top and bottom-level performers within a territory. Development teams can also use field audit information to easily identify candidates for multi-unit franchisees based on their past performance and dedication to protecting the brand.
The ability to leverage information across a company has also become the norm. Financial, operations, and supply chain Information are aggregated into dashboard reports instead of repetitively copying and pasting information from several different systems into a single spreadsheet. This allows franchise systems to gain additional insights. For example, by comparing these additional types of information, beyond field audits, new opportunities can surface from financial information, mystery shopper scores, customer satisfaction data, online review sentiment analysis, and other third-party data sources.
If a franchise system is experiencing data integrity or availability issues, it should consider moving away from using spreadsheets. The software to automate manual processes and create franchise dashboard software is available. They can reduce errors and aggregate information from your franchise’s core data sources, and automatically present it in an easy-to-understand manner to both the franchisor and the franchisees.
Although perhaps this is the most important reason to move away from spreadsheets, once the franchisor knows its data can be relied upon, the franchise system can look to additional benefits of moving away from spreadsheets, which include recording and tracking accountability, as well as increasing engagement.
Sign #2: Reduced accountability
“Unless commitment is made, there are only promises and hopes; but no plans.”
Peter F. Drucker
Another additional benefit of moving away from spreadsheets and towards software when it pertains to field reviews and audits is to help build action plans and collect feedback from franchisees. Spreadsheets can be useful tools for field coaches to capture information during their visits. Franchise operations can then use the captured information to create action plans, which in turn can be used by franchisees to improve on their historical performance. Although spreadsheets can be used to report and collaborate to a certain extent, they cannot provide a reliable way to track and validate action plan follow-through or accountability.
If a franchisor cannot pinpoint and validate why things are falling through the cracks with its franchisee action plan follow-through or performance, it should consider moving away from spreadsheets. Solutions to facilitate the task creation and corrective action plans to address a franchisee`s weaknesses are available, and should be used to increase accountability.
Sign #3: Reduced engagement
“When people talk, listen completely”
Franchise systems today understand that growth relies on each franchisee’s financial success and how franchisees promote the system to other potential franchisees. Without their success and willingness to promote the brand, the franchise system quickly becomes undervalued or simply undesirable as an investment opportunity. Since field operations are at the front line with the franchisees, discovering what needs improvement, they can understand both the franchisee and franchisor’s perspectives.
Franchise systems rely on franchise business coaches and operations to collect, analyze, and communicate improvement plans to franchisees. This communication may be as simple as correcting compliance issues that affect the brand and customer experience or become more complex with personalized business and operational guidance. The support offered by a franchise system can help foster how a franchisee views the brand. Franchisors can deliver secure and easy-to-access personalized training, support, and franchisee resources.
To deliver this information in a way that can be tracked and acknowledged, a franchisor should not rely on spreadsheets and email. An email exchange with stale spreadsheets between two parties can quickly fall through the cracks due to overflowing inboxes which not only skew the importance (prioritization) of a message but also delays responses and actions from franchisees. Valuable feedback is also not contextualized or accessible by all stakeholders. Although email creates a paper trail, it can be cumbersome and difficult to assemble if needed at a future date.
If a franchisor is experiencing franchisee disengagement, it should consider moving away from spreadsheets. Both franchise collaboration and training software improve the bi-directional dialogue between the parties, and can sometimes even lead to healthy competition between peers.
The alternatives to spreadsheets
Today’s technology fills the gap for franchise systems who need a solution to spreadsheets and email systems when communicating with franchisees and others across franchise systems. Technology can give back time to operations by automating and streamlining workflows while ensuring that operational guidelines are followed. It can ensure that data remains reliable and that information is collected, aggregated, and reported in a timely way.
Field operations can use field audit and performance software to become and stay organized by scheduling their field visits, tracking tasks, centralizing files, and recording actions taken by the franchisor and franchisee. The franchise system can also organize its data through the use of dashboards, where operational, marketing, sales, and loyalty information can be aggregated to discover those new opportunities for customer upselling and franchise expansion.
Regardless of the solution, leveraging technology should ideally help a franchise through its growth challenges, as well as help align or even realign franchisor and franchisee goals for continual system-wide improvement.
Explore and discover more reasons why spreadsheets, as they increase in use, are exposing their limitations and risks. Read more about EuSpRIG’s Horror Stories, and consider what you might be overlooking in your own operation.
Assuming you’ve decided to adopt a Customer Relationship Management (CRM) solution in your franchise (or replace your existing solution), the purpose of this article is to help you select the franchise CRM that is a best fit for your organization.
Before we begin, let us recap the findings of our recent article on franchise development:
- On average, franchise development teams are fairly small (3 people)
- On average, franchisors only sign a handful of deals each year (7 deals)
- The franchise development process is similar to the sales process in other industries where a long term relationship is established around a recurring revenue stream of similar magnitude ($25,000 to $100,000 per year).
But wait a minute – we just dove into franchise development without actually specifying if that’s actually the core process we’re trying to improve! Many people equate franchise CRM to the tools used by the franchise development team to award new units but there are, in fact, many types of franchise CRMs.
Which type of CRM are we looking for?
There are three main types of CRMs to be discussed in the context of a franchise system. Most franchise systems need only two but service franchises typically utilize a third type.
- A franchise sales CRM with the goal of narrowing down the hundreds or thousands of candidates to those who are awarded franchises.
- An operational CRM helping your organization manage the franchisee’s launch, keeping track of franchisee information, important contract renewal dates and, more importantly, enabling your operations team to work hand-in-hand with your franchisees to improve performance.
- The franchisees of a service-based franchise also utilize a CRM to manage their own sales/operations and their customer base. In a retail or restaurant environment, they utilize a point of sale system instead (perhaps augmented with a loyalty program).
In the next sections, we’ll cover the important characteristics of each type of CRM.
Important features in the franchisor’s sales CRM
The goal of the franchisor sales CRM is to assist the franchise development team in awarding new units. As we discussed in our previous article, this CRM is used by a limited number of people closing a limited number of deals per year. An interesting rule-of-thumb known by franchise development professionals is that franchisors typically convert only 1% of their inbound leads into franchisees. This implies that even if we sign only 7 deals this year, we’ll have evaluated around 700 candidates in a year. Without going into details about franchise development best practices, here are some important features to look for in your franchise sales CRM:
- Ease of importing leads from various sources (your website, franchise portals, franchise brokers, etc.) into your CRM
- Ease of use in moving candidates from one stage to another
- Supporting the creation of tasks on every candidate, to ensure your development team can proactively manage the cycle and nothing falls through the cracks
- Ability to integrate with email marketing tools
- Ability to request information from franchisees at different stages in the process, storing this information within the CRM
- Ability to record notes within the context of each prospect
In essence, these are fundamentals of any sales CRM, precisely because the attributes of the franchise development process are similar in nature to the standard sales processes used by many organizations. Although a critical phase in the franchisee’s lifecycle, the 3 to 12 months you’ll spend exchanging with a potential franchisee before you award them a franchise pales in comparison to the 10, 15, 20 or more years they will spend in your system. The franchisee selection phase is a completely different beast than helping your franchisee grow over the next 20 years and, as such, that’s why we have separated out the franchisor’s operational CRM.
Important features in the franchisor’s operational CRM
The goal of the franchisor’s operational CRM is to manage the relationship with existing franchisees. It is typically used by the operations team (including the franchisee’s field coach), the legal team (to track legal agreements) and the franchise executives. As the development team is often involved in the franchisee’s launch, they are also typically involved as they assist in that process and eventually hand off the franchisee to operations.
As mentioned above, the franchisor’s sales CRM and operational CRM both have different purposes. The operational CRM will follow the franchisee during a much larger portion of their journey. Furthermore, improving unit-level economics is the key driver behind sustainable growth. The operational CRM thus can indirectly help you grow faster by increasing the appeal of your business model. Finally, the rise of the multi-unit owner implies a large portion of your future growth will come from within, decreasing the importance of the sales CRM. Over 75% of all franchise restaurants are now owned by multi-unit operators.
As a franchise grows, we’ve seen how the number of users in operations will grow proportionally whereas the number of users in development will typically remain almost constant. These dynamics cause the following features to be more important in the franchisor’s operational CRM:
- Ease of use by the franchisees (as franchisee engagement is a critical driver of franchise growth)
- Ease of use by the operations team in their quest to improve unit-level economics
- Capacity to aggregate information from multiple data sources (point of sale or franchisee CRM, accounting packages, customer satisfaction modules, etc.)
- Capability to derive actionable insights from the aforementioned information
You’ll notice this set of features is quite different from the features required in the sales CRM. You’re not pushing candidates through a process, we’re working the relationship on a recurring basis. The operational CRM is often simply called your franchise management system.
An important realization is that an emerging franchisor with say 50 locations will have a franchise development team that is of similar size to the operations team. However, once the franchise grows to an average of 275 locations, the operations team may be five times bigger than the development team. As such, needs will shift over time and, in the case where the same software is used for both tasks, the needs of both teams should be weighted accordingly.
Important features of the franchisee’s CRM
The goal of the CRM used by the franchisee is to help them convert prospects into customers and manage the ongoing relationship. Because the needs and processes vary drastically per industry, it is difficult to define the most important features of the franchisee’s CRM.
As an example, a franchise system where the franchisee is continuously cold calling local businesses to land printing contracts will have completely different needs than a locksmith franchise, which generates business via online ads to be performed by local technicians or the needs of a child education centre.
Still, in all cases the franchisee-level operations will require industry-specific software to help them run the business (point of sale, class management software, job management tools). Although these are focused on operations, most will include a simple sales CRM component. In cases where the sales component is the key aspect of the business (ex: cold calling), this function is typically separated from the operational software. (A print shop will have industry-specific operational tools to design graphics and manage printers separated out from their sales CRM.)
The most important features are thus:
- Be adapted to your industry, ensuring ease of use and efficient execution
- Capacity to easily export data to other systems, such as the franchisor’s operational CRM or accounting systems.
- Support aggregation of operational data (sales, jobs and other key performance metrics) across locations
Do you need a sales CRM built specifically for franchises?
We have shown that franchise development teams are relatively small, that they don’t close that many deals per year, that the franchise development process isn’t really unique and that your sales CRM is not as important as your operational CRM.
Because of these characteristics, we believe that you should use a best-of-breed sales CRM built for a broader market (there are over 164,000 people with the title inside sales representatives title on LinkedIn) instead of a franchise-specific CRM built for the 4,500 people in franchise development (according to LinkedIn). A best-of-breed sales CRM will offer higher quality features and more diverse integrations, at a fraction of the cost.
The logic is different for the operational CRM, where the software is designed to help improve performance across a potential market of over 800,000 establishments in the USA alone, with a very specialized set of needs. A best-of-breed CRM will be weaker in this context because it is simply too generic for this process without endless customizations, as easily observable when considering the 800 pound gorilla in the CRM space.
The leader in the CRM market is SalesForce. According to this article based on public financials, SalesForce had 150,000 customers, averaging 25 users per customer, two years ago. They have grown since, but this means they had roughly 3,750,000 users in 2015. A handful of franchise systems utilize SalesForce with varying levels of satisfaction. The main issue with SalesForce is that it needs to cater to such a broad market of diverse organizations (from finance, to big pharma, to automobile, etc.) that it becomes too generic and loses in simplicity and ease of use. The platform can be tailored to do anything (at a heavy cost) but it is primarily overkill for a franchisor’s three person development team. Even if you load up all your franchisees and leverage SalesForce as your operational CRM, functionality will be proportional to your budget. It is likely that SalesForce will simply be a repository of information rather than a tool utilized by your operations team to drive growth.
We believe that there are lightweight best-of-breed sales CRMs which are a great fit for franchise organizations. These franchise sales CRMs play nicely with our franchise management system, built from the ground up around the goal of improving franchisee performance. Contact us if you’d like to learn more about either solution.
Mistake #1: Not asking the right questions
The field audit questionnaire is a critical element of any field audit system. The questionnaire should reflect the franchise’s recipe for success (as defined in the operations manual) and its strategic objectives in order to reach its goals. Questions should be SMART. Questionnaires should evolve over time to clarify any confusing questions, add new questions related to recent developments in the franchise system, remove redundant or useless questions and, finally, to ensure the order of the questions themselves follows the flow of the auditor through the location.
Mistake #2: Not visiting frequently enough
Traditionally, many franchise systems performed annual reviews. However, today’s rapidly-changing business environment renders this practice obsolete. Franchisors should visit their franchisees at least once per quarter, if not more frequently. The goal of each visit can be different, but the frequency of visits has an obvious impact on the ability of a franchisee to course-correct.
Using a system such as the FranchiseBlast Franchisee Field Audits App lets you review your visit schedule and adjust it if necessary with the click of a mouse. You may also be curious to see our field audit benchmarks concerning coach to franchisee ratios.
Mistake #3: Not defining actionable tasks in order to improve
Another common mistake is to treat audits as an occasion to reprimand franchisees on their failure. Identifying problems is but the first element of a field audit. Defining concrete tasks which should be performed to solve these problems is where audits actually bring value. Solutions should be established hand-in-hand with the franchisee to ensure higher levels of engagement and, more importantly, achieving an improvement in performance.
Using a system such as the FranchiseBlast Franchisee Field Audits App lets the auditor define the follow-up tasks while performing their store visit.
Mistake #4: Not tracking follow-up task completion
As stated above, follow-up tasks are critical. However, if they are simply communicated and no system is in place to ensure they actually get done, the value of the audit quickly dwindles. Tasks are forgotten or fall through the cracks: the improvements are not made and the problem persists.
Using a system such as the FranchiseBlast Franchisee Field Audits App sends you daily reminders of upcoming and overdue tasks.
Mistake #5: Not taking a step back to discover systemic issues
Individual audits help evaluate an individual location. However, at the franchisor level, someone must take a step back and determine what are the most common failures and how these should be addressed within the system. This also ties into Mistake #1: asking the right questions. Someone at the franchisor level needs to be in charge of auditing the audit process!