Time and again, prospective franchisors say that the only thing holding them back from franchising their business is the fear that franchisees won’t sustain the quality standards they’ve established. A typical lament is, “I’ve worked too long and too hard building this brand to let someone else screw it up.”
Frankly, I’m always heartened when I hear these words, because that tells me the prospective franchisor is focusing on the right things. Maintaining quality in your franchise system should be a key focus for a franchisor. This is what differentiates great franchise brands from those that don’t succeed.
What’s more, if done correctly, franchising can improve quality.
That’s right: franchising, done right, can be responsible for increased quality.
The problem is that many people who contemplate franchising associate franchised operations with fast food. In doing so, they confuse the ultimate quality of the product (which can be judged as low) with the quality of the operation.
The fact of the matter is that McDonald’s is among the world’s most quality-oriented brands, but the value proposition and price point aren’t appropriate for steak and lobster. There are, however, high-end franchise brands known for detailed attention to quality.
Quality is not about what’s on the menu; it’s about consistency of the operation.
The Hen and the Pig
When entrepreneurs fear a loss of quality, what they really fear is a loss of control. As a franchisor, they cannot fire a franchisee simply because they don’t like the way the franchisee runs a unit. They cannot fire the franchisee’s unit managers or employees. And they cannot force the franchisee to comply with their standards in the same way their own employees do.
But a closer examination of the situation tells a different story.
The franchisor has a tremendous amount of power over the franchisee. With a unit manager, poor performance can lead to job loss. With a franchisee, poor performance can lead to the loss of the entire franchise, which in turn can lead to the loss of the franchisee’s investment, home, lifestyle, children’s college fund and retirement plans.
There’s an old joke about a bacon-and-egg breakfast. The hen was involved, but the pig was committed. And it’s precisely that type of do-or-die commitment that a franchisee brings to the table.
The franchisee is not only committed, but is also motivated to excel, as the rewards for strong performance far exceed the rewards associated with managing a business. In addition to increased compensation they’re likely to achieve from a strong performance, franchisees can build the business and, in the long term, sell that business as an asset.
Franchisees are also motivated by pride of ownership. They relate to their businesses far more deeply than even the best employee can. In fact, time and again when I see a franchise system that has trouble controlling quality, it’s often the best franchisees of that system who complain the loudest about poor franchisees that aren’t maintaining standards.
Finally, franchisees almost always have a longer tenure on the job than managers. Over time, these owner-operators continue to accumulate knowledge and expertise. Most managers, on the other hand, move on, leaving the business owner to hire, train and supervise a new manager who, in turn, will leave the system in a similar bind years (or even months) down the line.
Here’s the bottom line: in many ways, franchising facilitates improvements in quality at the unit level. One study on this subject showed that franchisees outperformed their company-owned counterparts by an average of 10% to 30%. In addition, case studies abound in which franchisees, who’ve taken over stores previously run by managers, are able to increase sales by 30% or more almost overnight. I’ve even heard from more than one franchisor who stopped running their own operations because they couldn’t manage them as well as the franchisees.
Highly motivated franchisees drive a higher unit volume.
Whether it’s because they run their units better, work later, do a better job with add-on sales or are simply more involved in their communities, their consumers are voting with their money, and the results say it all.
Talk is Cheap
Of course, franchising alone is not a prescription for quality. When it comes to quality control, there will be good franchisors, and there will be bad franchisors. From a franchisor’s standpoint, there are four pillars of quality and each of them has a cost.
– Franchisee selection
– Franchisee training
– Ongoing support
Quality starts with franchisee selection.
The best franchisors award franchises only to well-qualified candidates, and they walk away from the rest. Of course, that means the franchisor will sacrifice the fees and royalties he might have obtained from those rejected, but in exchange, quality is maintained.
Training also comes with a cost – in terms of time, salaries and the expense associated with developing training programmes and learning management systems. But training is equally as important as franchisee selection when it comes to maintaining the brand. The best franchisors routinely provide the most – and the most comprehensive – training to their franchisees.
Ongoing support can come in many forms and, again, all of them come at a cost. Field support has associated salary and travel costs, so the frequency and length of site visits will increase staffing ratios and associated expenses. Advertising, purchasing, public relations, technology, the list goes on and on. All have associated costs, but all also contribute to both higher-quality and more profitable franchisees.
Finally, the franchisor must be committed to compliance with the franchise’s systems and standards. While the franchisor cannot fire franchisees the way that he or she could fire an employee, a well-crafted contract will grant the franchisor the ability to terminate a non-compliant franchisee. From a quality control perspective, the question isn’t whether a franchisor can enforce these standards, but rather if the franchisor will. Enforcing standards, when done from day one, can be relatively painless, but it must be done.
If standards aren’t rigorously enforced from day one, chances are these standards will continue to slip, and in the process, they’ll become more and more difficult to maintain. Again, maintaining compliance comes at a cost – ranging from the costs of having an attorney send a compliance letter to the costs of franchisee termination (and potentially the costs of defending that termination), along with the forgone royalties such a termination would entail.
Quality control is all about commitment. For a good franchisee, that commitment comes naturally. For the franchisor, it comes at a price. But franchisors who are willing to pay that price will find their ability to build a quality brand greatly enhanced.
Get Your Franchise Running Smoothly – Even When You’re Not There
Does the thought of taking time off from your franchise outlet make you nervous? Then you have to learn to run your business instead of letting it run you.
“A sign of a successful business is one that can operate without your physical presence 24/7,” says Brad Sugars, start-up expert, author and founder of ActionCOACH. While your franchise systems and operations are designed to run smoothly and consistently, is your staff trained to be productive in your absence?
“Franchises are already by nature systematised operations, so it boils down to how you as a business owner hire and train people to get the necessary jobs done,” says Sugars.
If you know a sick day will cause havoc in your store, an assessment of how you’re running your business is needed. Are you really running a successful franchise if things fall about without your supervision? Take a step back and consider the following steps to manage your franchise without it controlling your life. Pretty soon you could book that vacation.
Determine your role in the franchise
Are you managing the franchise, taking orders, doing admin and handling every other aspect of the business? Then you’re not hiring the right people, because those roles should be filled by people who can be left to carry them out unsupervised.
“And if you don’t have the right people for the job then it might be time to start hiring, so you can free up your franchise’s most valuable resource – you,” says Pieter Scholtz, co-Master Licensee for ActionCOACH in Southern Africa.
“You need to get an idea of how you can hire people to take repetitive or administrative tasks away from you. Ask yourself: ‘Do I really need to be doing this?’” says Sugars. Your business cannot run optimally if you’re the single most-knowledgeable and capable person there.
Lead with clarity
You have long-term goals for your business, perhaps even acquiring more locations and running multiple units. While growth is good, you need to share the load and ensure everyone employed in your business is working towards the same goals, otherwise, it’ll be difficult to get there. Sugars suggests asking yourself the following:
- How will you make your vision a reality?
- What makes you different from other franchisees and business owners?
- What kind of team do you want to recruit and create?
- How does all of this deliver value to your customer?
Conveying your vision can help ensure employees know how to get to the end-goal faster and more efficiently.
Plan for long-term cash flow
Loyal customers ensure a constant flow of cash through the franchise and this requires exceptional service and the building of strong relationships. “Target your top-spending customers and establish a good relationship with them for long-term cash flow,” Sugars suggests.
Although the broader campaigns are covered by the marketing fee you’re paying to your franchisor, it’s wise to focus on your local’s tastes and suggestions when looking to deliver an experience worth returning for.
Are Your Employees On Board With Your Franchise’s Brand Promise?
You cannot run a successful franchise if your staff isn’t aligned to the brand’s values.
Are the people who work in your franchise outlet familiar with the franchise’s brand promise? As a franchisee, you’re required to deliver a uniform experience, so any customer who walks through your door feels like they’re at the same store the franchisor has across multiple locations. If your employees aren’t able to embody the franchise’s brand promise at every interaction, you have a challenge on hand.
“If your company’s brand promise is a warm and friendly atmosphere, you can’t deliver that if your employees aren’t warm and friendly,” says Robin William, Senior Practice Consultant at Gallup.
“Selecting the right employees is essential to providing the right brand service. Hiring people who can’t behave the way the brand wants them to will doom a service initiative.”
When employees know what’s expected of them, they’re able to keep the promise the franchise makes to customers – leading to higher customer and employee engagement, trust, and revenue.
More than a mission statement
Even if you’ve ensured every one of your staff members know the brand’s mission statement, how can you be sure they’re able to exemplify it in their behaviour every day? William suggests that you do the following:
- Create structures and mechanisms to consistently instil brand values in the franchise’s culture.
- Discuss brand behaviours daily.
- Demonstrate brand behaviours yourself every day.
- Praise the efforts of individuals who demonstrate brand behaviours.
- Hold employees accountable for not exhibiting brand behaviours.
Once you’ve clearly defined the right brand behaviours, it’ll be easier to have staff on board who deliver your franchisor’s brand promise.
Internalise the culture
Here’s a conundrum. Do your staff know what to do in a situation where a customer’s request might not be aligned with the brand promise, but the brand promise is always to deliver on customers’ requests? It’s a tricky situation, but if you’ve clearly articulated the promise, your staff will know how to “Behave the brand”, says William.
“Do whatever it takes to deliver on its brand promise. Whether it’s focusing quality, fast service, customer care, or low prices,” he says.
“Employees must execute brand and service behaviours consistently, and frequent reminders can help employees understand and internalise these behaviours.”
Empower your staff
Investing in your staff is the best way to encourage them to act in line with your brand’s promise. Once they understand why it’s important to act along the lines of your brand, they will feel empowered and motivated to do so.
Starbucks trains employees to memorise customers’ names and preferences in line with their promise of making everyone who visits their stores feel at home. Apple’s strategy of hiring nice, smart people who are passionate about service and the product aligns with the company’s belief that knowledge can be improved, but personality cannot.
How To Write An Operations Manual For Your Franchise
After establishing that your business is franchise material, ensure you’ve created a clear roadmap to success for your franchisees.
Documenting the replicability of your business is key to launching a viable franchise operation. Without manuals and instructions on how exactly you carried out your concept to its current level of success, your franchisees won’t accomplish the results you anticipate.
“Unless you can capture your business on paper, you cannot claim to have a business system to sell. Even detailed documentation may not be enough,” says Franchise Direct’s Lorraine Courtney.
“You may need to provide structured education programmes for new franchisees and their staff to teach them your business system.”
With the help of an experienced franchise consultant, you can devise the critical document that contains all the aspects of what make your brand successful.
Why you need a franchise operations manual
If you’re second-guessing the importance of crafting an operations manual, then you shouldn’t go into franchising. “Your operations manual is your go-to document for deciding who is responsible for what in any franchisor-franchisee relationship,” says Dani Peleva, Managing Director at online marketing agency, Local Fame.
According to Peleva, your manual should generally include each franchisee’s contractual obligations to you as well as the complete details on how you expect them to fulfil these obligations.
“On a basic level, it tells your franchisees what you expect of them. It gives them all the information that you’ve accumulated while operating your franchise,” says Peleva. After familiarising themselves with this manual, franchisees should know how the information can be used to build their own business up to be as successful as the original store.
What an operations manual will do for your business
When all your franchisees know what’s expected from them as they run their respective locations, the entire brand is then able to provide a cohesive, coherent customer experience, which is crucial to your success as a franchisor.
A good manual will also help you build better relationships with your franchisees as they won’t need to constantly contact you to clarify aspects of the business they’re not sure of. If they’re applying the information in the manual, they should know everything you know about how to run this type of business, meaning they’ll make good profits – for you and themselves.
“One of the steps most potential franchisees make before signing an agreement will be to contact your other franchisees. A strong manual will help your current franchisees return positive feedback,” adds Peleva.
How to decide which elements to include
Obligations detailed in your franchisee agreement will have to correspond with steps on how to achieve them in your franchise manual. As a new franchisor, you cannot be expected to have a manual as thick and wordy as your established counterparts.
Peleva suggests covering aspects such as:
- How to set up a franchisee location and start trading
- How daily operations will be conducted
- How development or expansion will be controlled.
“Your operations manual should always include as much detail as possible regarding operational practices that are to be followed,” says Peleva. “A simple list item that states ‘this obligation must be fulfilled’ is not helpful. Looks always to the ‘how’ of the issue and you’ll cover everything you need to.”
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