The 5 F's of Franchising | Franchise Network

Franchising is all about building relationships. Relationships with your team, vendors, franchisees, clients and everyone who touches to the business. If one of those relationships is imbalanced or dysfunctional, your franchise business suffers the consequences. This article looks at the importance of having a successful franchisee network.

Your franchisees are the living proof of your business success. If they struggle in business, this probably means that your franchise is also in trouble. Think about your most challenged franchisee- why is it that they feel challenged, what doesn’t work in their favour? What is there to be done about it? Do you have a process in place to identify first signs of underperformance? Most franchisors measure success in royalties that are being collected from their franchisees, as well as the number of franchised locations they have sold. However, both of these success factors have an intrinsic relation to the performance of the franchisees themselves.

'You are only as strong as your weakest link' Thomas Reid (‘Essays on the Intellectual Powers of Man’, which was published in 1786.)

On-boarding a new franchisee and letting them run their business as they may is not acceptable if you are looking for long-term and incremental growth. The concept of franchising is fundamentally about continuous support, building a strong network of franchisees and processes in place to facilitate their success. Collecting a marketing fund is one small step of the whole process but merely not enough. A marketing fund without having a solid franchise marketing plan will not go a long way. How you utilise that fund for the benefit of your franchise network is of importance. As an extreme example, some franchisors don't even believe in marketing and only spend on lead generation to sell their franchise because they see an immediate return on investment for every new unit sold. In this way they fail to see the bigger picture, namely that investing in your franchisees will also bring a great return on investment long-term. In other words, if the franchisees are successful and are generating higher revenue, then the franchisor will be collecting higher royalties in return.

When you first come into an agreement with your franchisees you shake hands on them buying not only a territorial unit but also buying into your business, support and knowledge. As a franchisor if you fail to provide any of the aforementioned, chances are that your franchisees will struggle. This will lead to your business startling too. A franchisee that feels alone and unsupported is a recipe for disaster- negative attitude and complaints arise, the way the service is also being delivered is affected inevitably, that results in unhappy clients and in turn in reputation and brand damage. What is more, when your franchise accumulates negative reviews and harms the overall franchise reputation, the number of franchise leads also drops, after all, nobody wants to invest in a poor business with many complaints. The franchisee in turn feels lone, neglected, deceived and loses trust in the brand and you as a franchisor. This means any guidance and directions from the head office will not be adhered to, as the relationship between both parties has been destroyed. To make matters worse, this may well lead to the franchisee wanting to exit your business, in other words, having to close a location or resell it. 

On the contrary, imagine a healthy relationship with any of your franchisees- a scenario where they take on board everything that you recommend, follow the best practice guides and adopt the strategy of the head office fully. Time over time, their performance improves, and so does their revenue and profits. Not only does this translate into more royalties for yourself as a franchisor, but also a happy franchisee that feels accomplished and successful, overachieves targets but also is a strong ambassador of your brand for outsiders, a living testimonial and proof of your business concept, and most importantly, someone that could help turn a potential franchisee lead into a buyer of your franchise model.

After identifying why a strong relationship should be maintained with your network of franchisees at any cost, you may now wonder how to do that and put that support process in place, so that you do not end up with unsuccessful franchisees. There are a few ways to go about it, but most of all, it is down to having honest candid conversations with your network. Setting up regular quarterly or monthly meetings, and a franchisee committee of top performers who actively help in decision making, is one way to go about it.

Furthermore, consider setting up a process that alerts you if a franchisee falls under a certain acceptable threshold, or in other words, what the minimum requirements/ targets a franchisee has to hit are and how you measure those. What monthly/ quarterly reports that track franchisee performance do you look at? How can those be improved? What is the main key performance indicator (KPI)?

Apart from measuring success and identifying poor performers, a support process should be set in place if a franchisee is not doing so well. How do you evaluate where the problem is? Do you listen to sales calls, have you got a secret customer, or do you just have a chat with the franchisee itself? Identifying the reason why the franchisee is not performing can be a challenge, but it could mean that they need additional training, or some more leads in the sales funnel, or that they are going through a tough period in their personal life and just need someone to talk to. Your role as a franchisor is to analyse, identify and solve the problem.

A franchisor reaction should also be proactive rather than reactive only. Why wait until a franchisee starts idling? Why not instead ensure they are all doing great and are meeting the minimum goals set, and even exceeding expectations? This can be done through utilizing the marketing fund in a cost-effective way that provides equal opportunities and return on investment for all franchisees. Starting a local marketing campaign for each of your franchisees through using Google My Business is a great way to ensure that the business is always discovered by potential customers and their sales funnel is always full. Another great option is to launch a national search campaign through Google Ads or social media ads, whichever is proven to work best for your specific audience and sector. The beauty of the above digital marketing channels is that they can either work for the good of the whole franchise network but can also be set so that they aid franchisees that need that initial push and then paused.

Creating a marketing plan and calendar for your franchisees with all the activities that they need to do themselves to stay in line with the overall strategy and plan of the brand is another way to ensure continuous support, as well as consistency of the franchise. Encouraging peer groups and meetings with the top performing franchisees (marketing committee) where they can share experiences and give advice to newer franchisees can also do wonders. Get creative but think help and always see yourself (the franchisor) being in service to your network.

It really is not that difficult once you get your head around it. Plus, not acting on building strong relationships with your franchisees will cost you a lot more in the long run. What is there to lose? Your lifework, your business, your reputation. What is the reward? A successful business that grows year on year and expands onto new territories that you never even dreamed of. Which one you’d choose is entirely up to you.

To recap, your role as a franchisor is to be of service to the franchisees, to nurture the relationship, support them through their entrepreneurial journey, ensure they have the right environment for their business to thrive and guide them through difficult times towards a common goal. Because the success of your franchisees is also your own success.

Not sure where to start or where you stand? Contact Local Fame today for a no-obligation chat. We will be more than happy to evaluate the current performance of your franchisees and identify those ones that need help. We will then draw up a custom plan and suggest specific actions to help them become overachievers.