Nov 12, 2020

A Three-Part Plan to Ensure Franchisee Success in 2021: Part 1

Written by Keith Gerson

If you’re like many franchise leaders, you’re currently in the midst of planning for the upcoming year. Given the challenges of 2020, it’s more important than ever to take several key steps before the year ends to set up your brand and individual franchisees for success.

Over the next several weeks, we’ll share our top franchise planning recommendations for how to prepare for 2021 to improve the visibility of your brand’s results, gain insights into franchisee behavior, and improve processes to drive efficiency. By focusing on these key items, you’ll boost franchisee performance, achieve franchisee satisfaction, ensure franchisee compliance, and drive engagement and alignment.

The first step: franchisee engagement. To achieve your goals for the year, you and your franchisees must start the year on the same page. With that in mind, it’s critical to communicate with your franchisees about the upcoming year, including goals, budgets, and more. Here are two key ways to engage with your franchisees before the end of the year to make sure they’re positioned for success in 2021.

1. Speak with every franchisee before the end of the year

Having your executive management team personally check in on franchisees between now and the end of the year won’t take much time — but it will likely produce the greatest ROI of almost any investment or activity that you can undertake. A simple call will go a long way in showing your level of commitment and conveying how much you value your franchisees, and the insights you’ll uncover can be critical for the budgeting process.

This shouldn’t be a time to inform your franchisees about all the great things you’re doing on their behalf, but rather an opportunity to ask your franchisees to share their hopes and dreams, highs and lows, and how they are doing in their personal operations. Though you likely have Franchise Business Consultants (FBCs) that initiate these conversations on a frequent basis, it makes a difference that these calls come from the executive management team. You probably remember episodes of Undercover Boss where an executive of the company would go disguised into multiple locations to learn what’s really going on in the field. While doing this can be an expensive and unscalable endeavor, by establishing these same touch points through phone calls, your franchisees will be genuinely moved that you care enough to take the time to hear how they are doing. You’ll have the opportunity to offer advice and ensure that they receive the training and support that they need to move forward in times of uncertainty. And most importantly, you’ll come away with a SWOT analysis that will help you construct your 2021 budget based on systemic needs, while your COO/VP of Ops/FBCs will have the basis for coaching your franchisees in situational instances where there is a financial or performance delta to be bridged.

Another effective way to capture these invaluable insights can be achieved by using third-party companies, such as Franchise Business Review and Franchise Research Institute, which are able to turn the voice of the franchisees into actionable data. Again, the key is to get objective feedback on the health of your franchise culture, as well as feedback on your franchise support managers’ feedback and the resources and services that are most and least valued by your franchisees. You’ll also have the opportunity to gauge if franchisees are recommending the franchise and measure franchisee intentions to sell their business, so you can minimize impact.

2. Help your franchisees budget for success

In surveys we conducted with franchisors in early 2020, 80 percent said their biggest challenge in helping their franchisees improve their performance was a lack of business and/or marketing plans. At the end of the day, franchise recruiting, satisfaction, and retention all are contingent upon franchisee profitability. With so much uncertainty in the days ahead, franchisors must lay the foundation for success in 2021 through leadership in the budgeting process to help franchisees actively engage in situational budgeting. That engagement is critical. In a study conducted by Ingage Consulting and Franchise Business Review, engaged franchisees were 3.7 times more profitable than non-engaged franchisees.  

Every franchise system has franchisees performing at different levels, especially when you consider their strengths, weaknesses, time in business, store types, etc. But despite those differences, you can — and should — have a defined process that you can use to address the varied results from location to location and region to region.  

Whether you’re aiming to complete a sales plan, marketing plan, margin plan or overhead plan, you will need an evaluation process (as we mentioned in the section above), as well as a comprehensive review of the top 10 key performance indicators (KPIs) needed to drive success on a franchisee-by-franchisee basis. To boost franchisee performance, you must equip them to monitor trends and identify what they are doing well and what may need improvement.

With that in mind, we recommend having a process-driven playbook to provide to franchisees. Your playbook should include where and how to identify KPIs aligned with your goals (e.g., cost of goods sold, revenue, or cost structures that are out of balance). You will use these KPIs to develop franchisee sales plans, marketing plans, and margin plans, as well as your budget. The whole point of the budget is to identify and mutually agree on what the priorities are, where franchisees want to make changes and what they want to fix. You’ll need to have your franchisees describe the change they desire and how they’re going to do it. Before the budget can be finalized, the franchisee must acknowledge and agree to each of these areas. This is applicable to all franchise industry types and segment sizes to educate and create engagement with franchisees throughout and beyond the budgeting process.

If you don’t already have a budgeting playbook to provide to your franchisees, download “The Franchise Budgeting Playbook: Your Roadmap to Unit-Level Profitability.

About the author

Keith Gerson

Keith Gerson, CFE is the President of Franchise Operations at FranConnect. Keith brings 40+ years of executive level expertise as a passionate and driven Franchisor and Franchisee with a proven track-record in building rapid-growth, and highly profitable franchise organizations. For nearly the past decade, Keith has worked closely with numerous Executive Boards and Leadership Teams that are part of FranConnect’s portfolio of 800+ brands and 150,000 locations. His focus is on helping franchisors to get to their desired future state in sales, operations, and marketing. Recognized in franchising circles for his extensive leadership experience, and ability to drive execution, Keith is a highly rated keynote speaker and author. He has had the rare opportunity to create several leading franchise systems from inception through launch and sustained growth into successful enterprise level brands.

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