Over the years, thanks to our franchisee field audit app, we have seen how countless franchises manage the franchisee coaching process. This article will give you some perspective on how you compare to other franchises and some actionable insights to get to the next level.
Here are the seven stages:
- Recurring conversations
- Recurring structured conversations
- Guided conversations
- Operational efficiency
- Predictive analytics
Let’s now drill down into these stages!
Stage 1: Reactive
Franchises typically start out in a reactive mode, simply waiting for franchisees to reach out when they have issues.
- This is most common: in emerging franchises or legacy franchises
- Areas of improvement: being reactive is indicative of giving poor support to your franchisees, negatively impacting unit-level economics, franchisee engagement and, worst of all, brand consistency. Franchisees typically call when it’s too late to act.
- Actionable insight: you must be proactive in today’s franchise market. Start by scheduling quarterly calls or visits with your franchisees to begin conversations about what you can do to help.
Stage 2: Recurring conversations
Franchises naturally evolve into recurring field visits and/or calls with their franchisees. At this stage, the conversations are often unstructured and guided by the franchisee. The conversations may be brief and in-person visits may focus more on compliance than coaching.
- This is most common: in mobile service franchises, other systems with lower average unit sales, emerging franchises
- Areas of improvement: while the franchisee is given the opportunity to speak up on a recurring basis, franchisees are typically stuck in operations and haven’t had time to properly think through where they need help. The topics will often revolve around symptoms instead of root causes. Some may even choose to avoid talking about certain harder topics.
- Actionable insight: after having had enough of these conversations, you’ll have an idea of the common subjects. Start by creating a checklist of all the subjects you want to discuss during a visit, painting a holistic picture of the franchisee’s business (sales, operations, finance, HR, etc.) and breaking these down into subtopics (local store marketing spend, etc.)
Stage 3: Recurring structured conversations
Once a structured checklist of topics is put on paper, it becomes the driver of the conversation. All subjects are discussed and the feedback given to the franchisee becomes more meaningful.
- This is most common: in service franchises and some retail franchises
- Areas of improvement: at this stage, one typically finds tremendous variances between franchise business coaches. Given the free-form nature of the checklist, each subject is addressed but the coaches may give wildly differing action plans to the franchisee.
- Actionable insights: Ensure your coaches record their interactions with franchisees, specifically focusing on listing out common issues and the proposed solutions. Set up monthly alignment calls with all coaches so that they can share what they are hearing in the field and the solutions that they are proposing. Start documenting the collective insights and sharing them back with franchisees.
- Pro-tip: Between your quarterly or annual visits, schedule calls to discuss one specific topic (ex: local store marketing) at a time. Give the franchisee time to prepare/research in order to make the call more impactful and drill deeper into the subject. Look at their key performance metrics (or have them share them) ahead of time.
Stage 4: Guided conversations
Once franchises have developed a common knowledge base with the help of their field team, they are in a position to start defining the franchise’s recommended solution for each issue. Instead of asking did you post on social media last month, they start asking (and recording) how many posts were made. It is at this stage where the field team starts validating their assumptions with data, by correlating strategies with concrete data available in P&Ls and operational systems.
- This is most common: in restaurant franchises, in more forward-thinking service franchises
- Areas of improvement: this is the stage where recommendations start being made based on facts and concrete data instead of opinions. However, data at this stage is sometimes limited (either in the number of metrics or the frequency of collection), not aggregated and thus harder than it should be for the coach to access timely information in order to make the biggest impact.
- Actionable insight: invest in tools to facilitate the gathering of information from your franchisees and aggregating that data.
- Pro-tip: automate as much of the collection as you can, but don’t go overboard. Focus on the dozen or so key metrics which are most impactful on performance. It’s okay to have some manual processes in place for some metrics.
- Shameless plug: We have developed tools to semi-automate the collection of franchisee financials when it is impossible for you to connect to their accounting systems.
“Most franchises today are at stage 3 or 4, depending on their business model. They have integrated some benchmarking into their business, but are not necessarily fully leveraging its power to improve unit-level economics and franchisee engagement. “
Stage 5: Benchmarking
Once franchises have franchisee data at their fingertips, benchmarking becomes much more prevalent (and easy!). Questions become very precise: are your food costs within 1% of the franchise average? It becomes easy for the franchise business coach to focus on specific issues to drive profitability.
- This is most common: in established restaurant franchises
- Areas of improvement: although data is now accessible, it often becomes overwhelming. There are so many sources of data now accessible, the coach and franchisee sometimes are unsure of what to focus on. Benchmarked P&Ls are a goldmine of information, but they are not actionable for those without a background in accounting or finance.
- Actionable insight: develop a franchisee scorecard that is simple to understand, annotated with leaderboard information (how the franchisee ranks) and make it very easy to determine which weaknesses to work on next (making it actionable)
- Pro-tip: Try not to exceed a dozen key performance indicators in your franchisee scorecard.
Stage 6: Operational efficiency
Once information is collected, benchmarked and automatically transformed into easy to understand scorecards, franchises begin working on improving the workflow at various levels. For example, they integrate the scorecards into the field auditing process or automate alerts up the chain when certain thresholds are not met.
- This is most common: in sophisticated restaurant franchises
- Areas of improvement: As the coaches’ work has been partially automated, the danger at this stage is to rely too much on automation to cut costs rather than allowing the coach to leverage this time to be more impactful with their expertise.
- Actionable insight: find new ways to get creative insights on how to improve the franchise, outside of the rigid framework you have created.
- Pro-tip: we have seen some systems create teams of franchisees where each franchisee visits four other ones and discusses areas of improvement. As the information comes from knowledgeable peers, franchisee engagement goes through the roof.
Stage 7: Predictive analytics
At this final stage, franchises try to predict issues before they happen by mining their data. A great example for restaurant franchises is trying to predict which stores are more likely to have a food safety issue, enabling them to allocate resources efficiently while keeping the public safe. Predicting the future is incredibly difficult; few franchisors are at this stage but the advances in artificial intelligence and big data show promise.
- This is most common: research & development labs; not common
- Areas of improvement: predicting the future is not always accurate, one must constantly work on improving the algorithms
- Actionable insight: increase the granularity of your data, for example, moving from monthly sales to daily sales.
- Pro-tip: talk to us! We’re looking to collaborate with forward-thinking franchises in our research & development on this topic.
Franchises should not get discouraged if they are in an earlier stage than they would like. We have observed restaurant franchises that are typically further along in the process because of the quantity of comparable data in their respective industries, driven by the availability of powerful software tools in this space. We have also found that many service franchises, although not as far along with regards to automation of the coaching process, have established better processes with regards to the franchisee-franchisor relationship. From our vantage point, we see the best of both worlds, and can appreciate how improving unit-level economics and franchisee engagement are key drivers of franchise growth.