By Sasha-Lee de Bod

“Learn to look after your staff first and the rest will follow” – Richard Branson.  The words of Richard Branson can also apply for a franchisor/franchisee relationship the more you give as a franchisor, the more you will get out of your franchisees.

A franchise network cannot grow without franchisees.  Franchisors are starting to realise that growing the franchise network requires looking after franchisees as this can result in either the success or the failure of the franchise network.

1. Are franchisees making a satisfactory return on investment (ROI)?
In the current economic climate, a good franchise investment would give a franchisee a return on investment within about 3-4 years, after the franchisee has drawn a market-related salary.  It is important for a franchisor to reflect accurate financial projections and ROI for franchisees as the economic condition shifts i.e. take variables into consideration that will affect the ROI timeframe.

2. Are franchisees made to feel important – do you listen to them?

It is very important for a franchisee to know that they are being listened to and their questions and concerns are being heard.  Franchisors need to welcome input and suggestions from franchisees as the franchisees will see this as a willingness to listen and to support them.  Franchisors need to recognise, praise and reward performing franchisees and provide additional support to underperforming and struggling franchisees

3. Is the communication to the franchisees perceived to be good?

It is crucial to effectively engage in two-way continuous communication to ensure the success of the franchise network.  Effective communication can help build and maintain good, solid relationships with franchisees.  Communication can take place in various formats which can include personal interaction visits, electronic interaction via email, operations manual portals, etc.
4. Do we encourage franchisees to develop a business plan with our help?

A business plan is a very valuable tool to assist franchisees in growing their business, developing business objectives, strategically planning ahead and to prepare accordingly., Most importantly it provides holistic reflection and an overview of the current state of the entire business. It is not advisable for a franchisor to develop a business plan for each franchisee in the network, but they should however provide assistance and guidance relating to strategic plans that need to be implemented in the business, financial projections or forecasts and  any other information that they believe will allow franchisees and their advisors to carry out the planning process. All information provided include a disclaimer to limit liability for any incorrect information.

5. Do we have a defined company culture in place and is it passed down to franchisees?

Culture is all about perception, it is the brand, the feeling of the company, how we treat people and how we act, it is all about values that mean something.  When a franchisor recruits franchisees, the culture needs to resonate with prospective franchisees and be instilled in a franchisee’s daily operations.

6. Do we have an extensive training programme?

Franchisors need to develop a training programme for new and existing franchisees to ensure that franchisees are equipped to run the business successfully. Initial training inducts franchisees into the business and trains them on how to operate the business according to the franchisor’s guidelines as per the operations and procedure manual.  However, this is not enough, and franchisees require continuous and ongoing training modules/ programmes to ensure that standards are maintained, and the franchisees are familiar with the latest operational procedures and processes available.

7. Do we have a well communicated marketing plan?

The franchisor is responsible for strategic thinking and developing a marketing plan for the network, whereas franchisees are the implementers. Therefore, franchisors need to communicate marketing plans and initiatives to franchisees so that they can prepare accordingly and execute plans effectively in the required timespan.

8. Do we review and add value to franchisees financial performance monthly?

Franchisors need to be aware of the financial health of all their franchisees and assist them to become more efficient and ultimately profitable.  Franchisors need to implement benchmarking exercises as this is of immense value as it equips the franchisor to call on the franchisees and advise franchisees based on business benchmarks.

9. Do all our staff treat the franchisees with mutual respect?

Franchisees are independent business owners that rely on the support and assistance of the franchisor’s support office structure. They need to be perceived and acknowledged as business partners, not employees and be treated fairly.  Respect is a very important value for a franchise network and relates back to effective listening and communication skills.  A respectful atmosphere results in more engaged franchisees with a willingness to build and nurture a long-term relationship with the franchise structure.

10. Is there a fully utilised, operative operations and procedure manual in place?

An operations and procedure manual contains information on the workings of the franchise and detailed guidelines for the routine operation of the business.  This eliminates the need for franchisees to call the support or head office at every turn.  The manual is also used as a training aid during initial franchisee training.

11. Do we have well qualified Field Service Consultants in place who add value?

Field Service Consultants offers guidance and support to franchisees – they are the coaches/mentors of the business. They should visit franchisees regularly and conduct structured and valuable visits with a clear outcome.  The outcomes include,

  • reviewing of financial statements,
  • administration,
  • equipment,
  • marketing initiatives,
  • staff,
  • operations
  • as well as offering quality evaluation and in-store training.

12. Do we pass on all our procurement benefits to the franchisees?

A franchisor has the ability to negotiate better prices and benefits with suppliers and service providers for the franchise network.  These benefits need to be passed on the franchisees, it cannot be held back for the benefit of the franchisor.  Even rebates need to be disclosed, and franchisors need to find alternative ways to benefit franchisees if rebates are part of the procurement offering from suppliers e.g. reduce royalties or allocate rebates to the marketing fund or further development of the network.

In conclusion

Something to think about for all the franchisors – if you know what you know, would you purchase a franchise in your own business?

If you want to discuss a review of your franchise offering or a franchisee satisfaction survey, contact us

Franchising Plus