Originally published in Franchising World Magazine, September 2013.
Every great franchise company has one thing in common – a crystal clear vision that everyone in the entire organization shares. The mistake many franchisors make is not requiring their franchisees to have their own vision. It is common for franchisees to “hitch their wagons” to the brand’s vision, only to end up frustrated and disengaged a few years down the road. When you look at the top performing franchisees within any system, it is not a shared vision, prior work experience, specialized skills, or personality that sets them apart – but a clear, personalized vision for their own business and where they want their business to take them.
Because we all live and breathe franchising every day, we often forget that a franchise – like any business investment – is simply a vehicle to help an individual achieve his or her personal goals. It is these personal goals that drive and motivate each of us to do what we do every day, yet rarely are franchisees’ personal goals shared and reviewed regularly.
Linking personal goals directly to business goals, and then creating a clear vision for how to attain those goals requires careful thought, but when done correctly, the results can be powerful. Following is an actionable, step-by-step guide to put Franchisee Vision Plans to work in your organization.
What is a Franchisee Vision Plan?
A Franchisee Vision Plan is a detailed description of what a franchisee’s business will look like in the future – typically three to five years out. Different from a business plan, which focuses on the specifics of getting a business from point A to point B, a vision plan is a higher-level description of what the business will look like, feel like, and act like in the future. Business plans focus on the day-to-day, whereas a vision plan provides the big picture details of what the business owner hopes to achieve. While both plans are important, having a longer-term vision plan in place will guide the shorter-term business plan and help ensure both plans are successful.
A good vision plan will incorporate both business and personal goals, and include several pages of written narrative, as well as detailed financial projections. Franchisees should answer questions about lifestyle, culture, core values, size of the business, number of employees, work performed, hours worked, community involvement, personal goals (short-term and long-term) and their desired day-to-day role running the franchise in the future.
In an accompanying spreadsheet, franchisees should provide detailed projections for both business and personal financials. Business projections should include capital requirements, gross sales, net income, debt service and cash flow. On the personal side, franchisees should outline projections for income, discretionary owner benefits (e.g., retirement savings, insurance, car, club memberships, etc.), personal debt repayment, savings and other asset appreciation, and accumulated equity (estimated business value).
A well-written vision plan will create a vivid picture of the business the franchisee hopes to build, and it will define exactly what “success” looks like. While franchisors can provide their franchisees (and candidates) with templates and outlines to make authoring a vision plan easier, it is critical that the plan be prepared only by the franchisee, specific to their personal vision and goals.
Benefits of Franchisee Vision Plans
Having franchisees create and maintain a vision plan offers many benefits for the franchisee individually, the franchisee community as a whole, and the franchise company. A few of the benefits for each group include:
For the Individual Franchisee
• greater probability of achieving success by putting their vision down on paper
• constructive outside feedback from individuals that see/hear the plan
• sharing the vision creates more accountability to the plan
• more self-confidence in achieving defined goals
• easier access to 3rd party capital
• greater overall performance, profitability, and return on investment
• higher levels of engagement, satisfaction, and enjoyment of the business
For the Franchisee Community
• better overall franchise relations
• more transparency and sharing of best practices
• greater brand competitiveness in the marketplace
• higher long-term business resale valuations
For the Franchise Company
• better franchisee candidate selection
• clearer expectation setting with new franchisees
• greater focus on coaching vs. compliance
• enhanced validation of the brand and business model
• stronger franchise opportunity demand
• faster overall system growth
• increased market share
• higher revenues from both royalties and franchise fees
• less franchisee legal action
Putting a Vision Plan Program into Action
Implementing any new program across a franchise network, no matter how simple and well-intentioned, needs to be carefully planned. The key is to involve a group of respected franchisees from the very beginning, start small, gain traction, and build on your successes. It is better to over-communicate the benefits of the program to all stakeholders than to under-communicate. Start by assembling 3 to 5 franchisees to serve on a newly created Vision Plan Committee. Ideally, you should have a mix of newer and more senior franchisees, as well as at least one top performer and one under-performer. The committee should also include someone from your field support team, your internal operations team, and your marketing/communications team, which will be charged with promoting the new program. Lastly (and this is critically important), your CEO—the visionary behind the brand—should have a seat on the committee.
The first task of the committee will be to create a vision plan template for your company. Include the questions mentioned above (about lifestyle, core values, culture, etc.), as well as a spreadsheet template with your standard chart of accounts, KPIs for your business, and the previously mentioned financial information. Prepopulate the spreadsheet with formulas to automatically perform all the necessary calculations.
Additional Items to Consider
1. It’s important to form a committee separate from your franchisee advisory council to oversee your franchisee vision plan program. Launching a new FVP program will require time and focus, and the typical FAC is already maxed out. Besides, it’s a great way to engage additional franchisees in an important project.
2. A good vision plan typically looks out 3 to 5 years. That said, if your franchise agreement is 10 years (or longer), your franchisees’ vision plans should match the term of your agreement.
3. As with any new program, plan for some pushback from a few franchisees. Anticipate potential questions and/or concerns in advance, and review the appropriate responses with staff and the FVP committee.
4. FVPs should be reviewed at least quarterly with field support/ops staff and each franchisee. Each of these meetings should end with milestones and short-term goals for the next review.
5. In systems with less than 100 franchisees, FVPs should be reviewed between each franchisee and CEO on an annual basis. This review should be scheduled around the franchisee’s anniversary date. As your system gets larger, and FVP reviews become too burdensome for the CEO alone, additional senior executive staff should be brought into the annual review process.
6. Last but not least, peoples’ goals and visions change over time. A vision plan is a living document, and franchisees should be encouraged to update it whenever they feel the need. Updated plans should be dated, and previous versions should be saved to track changes and progress.
Eric Stites, CFE, is CEO and Managing Director of Franchise Business Review, a national franchise market research firm. Stites serves on the IFA’s Franchise Relations Committee, and speaks frequently on the topic of franchise relations and franchisee performance. He can be reached at 603-433-2266 or [email protected].