10-Step Checklist to Becoming a Top Performing Franchise System
Franchise Business Review has worked with over 1,100 franchise brands to measure franchisee satisfaction, which is a direct reflection of franchise performance. Some of those brands have been top performers since day one, others have struggled but rolled up their sleeves and invested in their franchisees to improve performance, and still others are working to figure out just the right formula.
But if there’s one thing we’ve learned in our 15+ years of helping franchises reach their performance goals, it’s that becoming a top performing franchise brand isn’t easy, and it doesn’t happen overnight. Fortunately, we’ve also picked up some best practices along the way.
If you commit to making franchisee satisfaction a priority and follow the 10 steps in this checklist, you’ll have your brand humming along like a finely-tuned machine.
1. Decide how you will measure success.
It’s always important define your metrics for success before you start making changes. If you don’t know what success looks like, you won’t know if (or when) you reach your goals. Michelle Rowan, president & COO of FBR, advises, “Measure your progress in bite-size pieces. Getting some short-term wins will keep the momentum going as you work toward your long-term goals.”
2. Set expectations from day one.
Many franchises over promise on the front end. While you want to convince prospective franchisees that you have a profitable brand, too often franchisees come into the system with unrealistic expectations about your business model and the challenges they may face, including the hours as well as the effort and dollars it takes to build a successful business over time. Be brutally honest early in the due diligence process so prospective franchisees know just what they’re getting into. Rowan says, “It’s a mistake to over-promise and over-sell just to grow your brand. You NEED to prepare your franchisees for both the best and worst case, because we’ve seen that the worst case actually can happen.”
3. Track your progress.
Ultimately, becoming a top performing franchise isn’t about you, it’s about your franchisees, so ask them how you’re doing! An annual survey of your franchisees is like a performance review – it gives franchisees an opportunity to provide you with open, honest feedback on how well you’re meeting their needs and expectations. When they’re satisfied, they tend to generate more revenue and they validate well, which means you sell more franchises. Plus, survey allows you to track and quantify improvements year-over-year in specific areas, such as culture, support and training, financial expectations, and more.
4. Be transparent.
Share the results of your survey with franchisees. Point out highs AND lows. Ask for ideas on how to improve, and then talk about goals and expectations. Franchisees are more likely to be engaged if they feel like you’ve heard them and are acting on their feedback. Eric Stites, CEO of FBR, explains, “Even if you don’t implement every idea or make every change your franchisees request, if you have a valid rationale, and explain it to your franchisees, they’ll be much more likely to accept your reasons without becoming disgruntled or disengaged.”
5. Have an effective FAC in place.
Franchise Advisory Councils (FAC) are a fundamental component of a healthy franchise brand. Franchisees expect their voices will be heard and respected: They made a significant investment in your brand, and while most understand that they bought into your system of doing things, as business owners their input should be represented. An FAC serves as the voice of the franchisees to senior management, and when effective, builds trust and loyalty, increases support and buy-in to corporate initiatives, creates better programs, and minimizes resistance to change.
6. Make your annual convention a can’t-miss event.
Your annual convention should be part of an overall strategy to foster employee engagement. This is your chance to get your leadership in front of franchisees in person to inspire, engage, and celebrate them as well as share your plans for helping them be even more successful in the year to come. Rowan says, “Your role as the franchisor is not just to deliver your agenda at the convention, but to ensure there is value to the franchisees to be there. They are taking time away from their business – make sure it’s worth it.”
7. Fine-tune your Item 19.
More than ever, savvy franchise buyers are honing in on your FDD’s Item 19. After all, it’s the closest they can get to answering the burning question, “How much money can I expect to make?” A great Item 19 educates prospective franchisees on the front end, which leads to greater success on the back end. Update your Item 19 to clearly illustrate both median gross and net earnings of your entire system – too many companies only share gross numbers, or massage their financial data to focus only on top performers. Also, break out Item 19 data by franchisee tenure to clearly illustrate the typical ramp-up period of your business and time to break-even, as well as typical time to median unit performance.
8. Form peer groups.
Sometimes referred to as Franchise Performance Groups, successful peer groups are typically made up of three to five franchisees who meet regularly to discuss best practices related to operations, finances, marketing and similar topics. In many cases, franchisors 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. John Francis, a franchise consultant and peer group expert, says, “By creating a culture of professionalism, collaboration and accountability, peer groups can help franchisees achieve measurable results and take their businesses to the next level.”
9. Implement a vision plan program.
Successful franchises have a clear vision for their brand—they know where they want to be in three years, five years, and 10 years and have a plan for reaching these big picture goals. But as small business owners, franchisees need to have their own vision and goals as well. If not, you risk contending with their frustration and disengagement. Unlike a business plan, which outlines day-to-day operational goals, a vision plan focuses on the big picture. “Requiring franchisees to actually write down a vision plan for what they hope to build— both personally and professionally—gives them a guidepost for what success looks like for them,” says Stites. “That leads to better levels of engagement and satisfaction with the business, which ultimately helps to validate your brand and business model.”
10. Make corporate culture a top priority.
A positive culture significantly and positively impacts business productivity and profitability by enhancing team commitment to your company goals. Despite its critical importance, culture is often an afterthought or overlooked by leadership – perhaps because it is hard to define and even harder to shape. Start by making culture a top priority of franchise leadership, and then take a hard look at the culture of your company. Creating a positive culture doesn’t just mean having a ping pong table in the office or company parties. It’s about creating core values that staff buy into and align with your goals – and monitoring it long-term to ensure the entire team is engaged, dedicated, and working toward the same goals.
While this checklist may not seem easy, taking in bite-sized chunks will get you moving in the right direction. And while many of the items on the list take some planning and work up front, once they’re up and running, they should be easy to maintain and will become an integral part of your corporate strategy.
The team at Franchise Business Review is here to help you every step of the way – from providing educational resources, to consulting, to actually implementing some of these best practices in your system. Visit our free Resource Center, learn more about how we help franchisors, or contact us directly at [email protected] or 603.433.2270 with questions.