What are the benchmarks for success and growth in your franchise industry?

1 Revenue and Profit

Revenue and profit are the most obvious and essential benchmarks for any business, including franchises. Revenue is the amount of money you generate from selling your products or services, while profit is the amount of money you keep after deducting your expenses. You should monitor both your gross and net revenue and profit, as well as your average revenue and profit per unit, per customer, and per transaction. These metrics can help you identify your best-selling products or services, your most profitable locations, your customer retention and loyalty, and your pricing strategy.

2 Royalties and Fees

Royalties and fees are the payments that franchisees make to franchisors for using their brand, system, and support. Royalties are usually a percentage of the franchisee's revenue, while fees are fixed amounts that cover initial or ongoing costs, such as training, marketing, or technology. Royalties and fees are important benchmarks for both franchisees and franchisors, as they reflect the value and quality of the franchise relationship. Franchisees should compare the royalties and fees they pay with the benefits and resources they receive from the franchisor, as well as with the industry average. Franchisors should monitor the royalties and fees they collect from their franchisees, as they indicate the performance and satisfaction of their network, as well as their own profitability.

3 Growth Rate

Growth rate is the measure of how fast your franchise business is expanding or contracting over a period of time. Growth rate can be calculated for different aspects of your franchise, such as revenue, profit, units, customers, or market share. Growth rate is a crucial benchmark for evaluating your franchise potential, competitiveness, and sustainability. You should compare your growth rate with your own goals and projections, as well as with the industry trends and benchmarks. A positive growth rate means that your franchise is growing faster than the average, while a negative growth rate means that your franchise is losing ground or shrinking.

4 Customer Satisfaction

Customer satisfaction is the degree to which your customers are happy and loyal to your franchise brand, products, or services. Customer satisfaction is a key benchmark for assessing your franchise quality, reputation, and differentiation. Customer satisfaction can be measured by various methods, such as surveys, reviews, ratings, referrals, or repeat purchases. You should track and analyze your customer satisfaction metrics regularly, as they can help you identify your strengths and weaknesses, improve your customer service and experience, and increase your customer retention and advocacy.

5 Franchisee Satisfaction

Franchisee satisfaction is the degree to which your franchisees are happy and loyal to your franchise system, support, and culture. Franchisee satisfaction is a vital benchmark for measuring your franchise leadership, communication, and innovation. Franchisee satisfaction can be measured by various methods, such as surveys, feedback, ratings, or retention. You should track and analyze your franchisee satisfaction metrics frequently, as they can help you identify your opportunities and challenges, improve your franchise training and assistance, and increase your franchisee engagement and loyalty.

6 Benchmarking Sources and Tools

Benchmarking is the process of comparing your franchise performance with the industry standards, best practices, or competitors. This can help you set realistic and achievable goals, identify gaps and areas for improvement, and learn from the success and mistakes of others. To do this, you can use various sources and tools such as industry reports and publications for data and insights on the trends, challenges, and opportunities in your franchise sector. Additionally, franchise associations and organizations offer resources, guidance, and networking opportunities for franchisees and franchisors. Furthermore, franchise consultants and experts can analyze your franchise situation, strategy, and solutions. Finally, there are franchise software and platforms available to help you collect, manage, and visualize your franchise data and metrics.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?