By John Francis, Next Level Franchise, and Eric Stites, CEO and Managing Director, Franchise Business Review
Franchisors frequently implement new programs with the intention of adding value for all (or most) of their franchisees, but oftentimes, it’s hard to create programs that impact the more experienced, high-achiever franchisees in your system who have already figured out how to be successful.
Franchise peer groups (sometimes called peer performance groups or franchise performance groups), however, can inspire and motivate all franchisees, including those already successful and mature franchisees, and give them the tools to take their businesses to an even higher level.
When implemented properly, franchise peer groups will likely require some upfront and ongoing training and support, but once up and running they can be structured to mostly self-manage.
If you’re considering implementing peer groups in your franchise system, there are several key areas you’ll need to think about to ensure that your groups are effective and bring value to your franchisees: structure, facilitation, and meeting frequency and format.
Setting Expectations for Peer Groups
Before we get to actually implementing a peer group meeting, it’s important to set clear expectations for peer group participants in order to create an environment of trust
in which franchisees feel comfortable sharing information candidly. The two most critical expectations to convey to the group include:
1. Confidentiality is paramount.
Group participants need to be able to share freely about what’s really going on in their business in order to reap the value of peer groups. Conversations can get personal—they may be discussing staff members, business partners, family, and spouses—so everyone needs to understand that what is said in the room stays in the room.
2. There’s no place for judgement.
Peer groups are not forums to tell others what to do; their intent is to allow franchisees to share advice and insight. It’s easy to criticize how someone else is running their business or the decisions they’ve made, but there is always more to the story and more than one right way to do something. Peer group participants have to be able to withhold judgement of others, as well as be willing to learn and share advice—regardless of whether others choose to take that advice or not.
How to Structure Peer Groups
There are a number of factors to consider when setting up peer groups. These need to be clearly defined prior to launch, and with the ability to maintain flexibility to adjust as needed.
It’s easiest for the franchisor to determine which franchisees to include in launching a peer group. It’s important to have a diverse mix of franchisees in order to create a dynamic group that functions as a true opportunity to learn from each other and gain new perspectives. These are some of the key factors you’ll need to consider:
1. Number of people
Typically, you need at least three franchisees, and no more than five or six. If there are more than six or so franchisees in the group, it becomes more difficult to go into depth and each franchisee gets less quality time to share what’s working and not working in their business.
Determine if the franchise unit ownership represents one or more individuals. Sometimes spouses or business partners want to be in the same peer group together; however it’s sometimes better if only one individual participates, or if they split into separate peer groups. Determine what’s best for your brand in advance; if this issue comes up you need to be prepared for it.
Consider including franchisees whose years of experience in the system varies between new, medium, and old. If, for example, you create a peer group of franchisees who have all been in the system 10+ years, they will likely just compare themselves to each other instead of bringing fresh perspectives. By mixing it up, the newer franchisees tend to be able to share newer practices around training and technology, while older franchisees bring practical experience. Consider your goals and be prepared to articulate them to the participants when the groups are assembled.
Similarly, if you include franchisees who operate too close in proximity to each other, there is a risk that they may not want to share information that another franchisee could use to compete with them. Try to include franchisees from different geographic regions.
The goal here is to assemble the groups with a range of performance levels: low, medium, and high performers can all benefit from working together. The challenge may be that high performers and low performers likely have a large gap between them and oftentimes that can create unnecessary complexity to peer groups. You can mitigate that by grouping or segmenting the participants by multiple factors including performance, but not only performance.
Franchisees who have multiple units in multiple markets may want to collaborate with others who are of similar structure and scale. Smaller single unit owners may want to collaborate with others of similar structure and scale. Mixing these two types of franchisees in a peer group depends on the range of difference and the complexities of their businesses, depending on the brand and its particulars. The goal is to include franchisees of various sizes in a group to the extent they appreciate one another and learn from each other without being so different they have little in common.
Peer Group Meeting Facilitation
Having a skilled facilitator is one of the most important keys for peer group launch success. Initially, you will ideally have someone from the corporate team act as facilitator, otherwise you risk one or two of the stronger personalities in the group dominating the conversation. After a couple of meetings, the new peer group will be up and running and formed foundational relationships. If it’s good, the group can begin to facilitate themselves.
So, who makes for a good facilitator? Being an effective meeting facilitator requires skill and patience. You need someone who is able to keep the group on track, elicit constructive feedback, make sure all voices are represented, and be trusted to keep meeting discussions confidential.
Training programs can provide great value for facilitators, and the following questions can be shared with peer group facilitators to use as a starting point to help participants engage.
Questions for Peer Group Facilitators
- Are you happy with the way your business is performing?
- Is your business meeting your expectations (from when you started) or have you modified your expectations based on results (what changed and why)?
- If you have had to modify your expectations, what are you willing to do about that? How
- important is it to make a change? What’s the cost of not changing?
- How long has that [ISSUE] been going on? How long would you like it to continue? (Look for pain points as motivation to change approach.)
- What are you willing to do to make that change? (Look for other ideas and alternatives not yet considered. Incremental commitment is needed to move ahead, but make it
- specific and realistic, e.g., use S.M.A.R.T. goals.)
- What’s the benefit (economic or lifestyle) to making that change? (Help them see the results of making the changes: Visualize a better future to make it real in their minds for motivation and accountability.)
Planning Peer Group Meetings
Typically, peer groups meet at least four times per year, usually once per quarter. Meetings can have various formats, and can last from 2-3 hours, all day, or multiple days, depending on the number of participants and depth of the conversation.
They are usually held in-person for longer meetings and the location rotates among the franchisees, with at least one of the meetings being held in conjunction with your brand’s annual convention and/or an industry trade show that the group participants are attending.
Often shorter “update” meetings can be conference calls between the longer in-person meetings. A mix of in-person and calls or shared-screen meetings can be used to start, and may change over time.
Here are some other considerations to keep in mind.
1. Format. Peer group meetings typically do not have a strict or formal agenda. Participants usually take turns going around the table sharing any big challenges that are holding them back and reporting back to the group on the outcome of any initiatives they tried since the last meeting.
It takes time and repetition to gain the foundational knowledge and understanding of everyone’s situation in order to be able to offer and consider advice.
In the early stages, the meetings are more informational as franchisees are learning about each other. They may start off by sharing a one-page summary of who they are, how many units they operate, where they’re located, and their financials. Sharing written materials in advance is effective, but only if everyone has the opportunity and will commit to reviewing the materials in advance of the meeting.
Later on, as the group becomes established and familiar with each other and their businesses, the discussions dive into deeper, more provocative questions, such as: What’s holding you back from growth? What are your goals for the business? What is your succession plan?
2. Costs. Sometimes the corporate office will have a small budget to support peer group meetings—i.e., dinners, facilitators, etc. If not, the group should discuss logistics and agree in advance how costs will be split for meals, meeting space, conference room fees (if needed), etc.
3. Meeting Follow Up. In between meetings, participants generally share updates with other group participants that include action items from the last meeting, a status of where he or she stands with solving the issues at hand, and any other new challenges that have arisen.
At the meeting itself, the group can then discuss what was in the update and determine any new action items. Tracking action items and holding each other accountable is an important factor in peer groups. Asking each participant to clearly define their own action item and the timeline for each step will help everyone stay clear and hold each other to those results, as things will happen and change.
At the end of each meeting, schedule the next meeting. Determine when, where, and at whose location the meeting will be held. Groups typically rotate around to each franchisee’s location, which offers the opportunity to physically visit the markets where the owners are located, see the operations, and meet staff and spouses.
4. Rules of Conduct. Common ground rules should be established and revisited at the beginning of each meeting. Remind participants that the meetings will only be effective if there is:
- One conversation at a time.
- No talking over each other.
- No defensiveness.
- No judgmental comments or attitude.
- Openess. The more candid you are the more helpful the group will be—your peers need to understand the whole situation and people involved.
Following these general rules will help ensure one or two personalities do not dominate, conversation and information flows effectively, and people feel comfortable sharing and getting time to be heard.
5. Accountability. After a group meets three or four times, it’s common for people to start thinking they’ve gotten all the value they can from the group. In reality, the first few meetings usually accomplish the routine, obvious work.
It’s only after those initial meetings that the truly valuable insights start to emerge. In order to maintain continuity and fairness, everyone in the group needs to attend the meetings. Part of your rules of conduct may include a stipulation that any member of the group who misses two meetings in a row is subject to removal.
Additionally, there needs to be accountability on the part of the franchisees in the group to track progress. The role of the facilitator is to draw out issues and capture the group’s suggestion for action. Franchisees then provide written updates in between meetings to report their progress. This can be in the form of a “scorecard” that tracks financials, ratios, and benchmarks. Some systems already have a scorecard that can be used or the group can develop their own.
How to Increase Franchisee Engagement Through Peer Groups
When used properly, peer groups can be a powerful mechanism to get franchisees to understand specifically and practically what they need to do to be successful and how to get there. Seeing things from a peer perspective can help with communication, understanding, interpretation, and sharing of what works, and what doesn’t, with real-world experience from fellow franchisees.
Implementing peer groups doesn’t have to be hard, but it does have to be planned thoughtfully with long-term goals in mind to be effective. In order to reap the benefits of peer groups, franchisors need to understand why, when, and how to build a peer group program from the ground up.
Our Franchising By Design workbooks are designed to walk you through how to implement effective, structured peer groups that emphasize efficient, open and meaningful communication and keep both franchisor and franchisees happy.
You can request a copy of Increasing Franchisee Engagement Through Peer Groups for a step-by-step guide to:
- Implementing a peer group program that will inspire and motivate all franchisees, including those already successful and mature franchisees, and give them the tools to take their businesses to an even higher level.
- Creating a peer group format that encourages participation, learning, and actionable results.
- Tracking and measuring effectiveness over time as your system grows and matures, and ensure accountability.