It’s a question which often arises, perplexes many franchisors the world over, and never really seems to get solved. In the majority of franchise systems all things are equal. This includes the business model, the operations manual, territory size, territory demographics, training, support structures and marketing collateral. Nevertheless, many franchisors despair at the fact that the true opportunity for network growth is held back by underperforming franchisees. So, why do some become top performing franchisees while others struggle to keep pace? Understanding the factors behind this gap in performance is crucial for creating a thriving franchise ecosystem. In all likelihood, it’s going to mean revaluating what franchisee support looks like.
Here are the some of the most important and crucial reasons why some franchisees exceed expectations and others underperform
Strong Work Ethic:
High-performing franchisees are characterized by their unwavering work ethic and dedication. They go above and beyond, investing time and effort beyond the norm to ensure the success of their business. As a result, their commitment sets them apart, as they are willing to do whatever it takes to achieve their goals.
Whilst not all people are prepared to invest this level commitment, underperformers very often can be caught in the trap of not seeing the value of working a full day, focussed on the things which the franchisor has told them to do because their mindset has become one of ‘It doesn’t work’.
Changing the mindset will in most cases change the work ethic. But its not a quick fix. A lot of work must be put in by the franchisor to devel a plan of engaging with the franchisee, understanding their pain points and challenges. Then working with them to overcome the challenges. This process is very often more about changing an individuals perception around why they are not as successful as others.
Effective Leadership:
Leadership plays a pivotal role in any business success and it’s no different in franchising. Interestingly, top-performing franchisees very often excel in leadership. As they grow and take on employees they possess the leadership skills to inspire their team. Importantly, they foster a positive work environment, and delegate tasks effectively. Their ability to motivate and guide teams towards shared objectives is a key driver of success. Conversley, underperforming franchisees often tend to resist employing others claiming it causes too many problems and the legal challenges of employment make it difficult. As a result the business growth is stifled.
Customers are a Focus for Top Performing Franchisees:
The reality is that most businesses are ambivalent to their customers. This is why relatively few provide the levels of service and care which customers desire.
Exceptional customer service and, in particular, customer care is a hallmark of successful franchisees. Top performers will ensure their customers needs are completely met and the relationship with is strong to ensure value for both parties. The result is customer loyalty, customers who are willing to buy more and remain loyal for a long time. In many cases, top franchisees ensure they tailor their offerings to meet customer needs. It’s personal. By going the extra mile to delight customers, they cultivate loyalty and drive repeat business.
The franchise sector is incredibly well placed to bridge this gap. But it requires franchisor focus on this key area for success.
Financial Acumen:
Franchisees who outperform their peers demonstrate a keen understanding of business fundamentals. They possess financial acumen. These individuals are happy to produce monthly management accounts and analyse their revenues, expenses and profit levels. They want to be able to compare their numbers with others in the network to help drive their business success. Business planning and cash flow forecasting are tools which top performing franchisees have at their fingertips.
By leveraging data and insights, they make informed decisions that drive profitability and growth.
In contrast underperforming franchisees very often don’t understand how the numbers of a business work. The concept of profit being different from cash is challenging to grasp. Some find it difficult to see into the future to put a business plan together.
Not being able to grasp the financial aspects of a business is a sure way to stunt its growth. The underlying result of this lack of understanding is fear. Fear of losing everything. Consistent and comprehensive training in financial mangement will help franchisee make much better informed decisions for the growth of their business.
Continuous Learning is a Common Trait for the Highest Achieving Partners:
The quest for improvement is a common trait among high-performing franchisees. They embrace lifelong learning, staying abreast of industry trends, attending training sessions, and seeking feedback. This commitment to continuous improvement keeps them ahead of the curve.
High performers generally have a trait of reading business books, watching videos and engaging with like minded peers.
Creating this mindset is a tough task for those who don’t naturally possess it. Just telling people to read a book or watch a video won’t cut it. In a similar way we find new ways for young people to learn to suit their learning style or need, the same has to be sought out for adults. By tailoring to a persons preferred style will build a mind set of continuous learning.
Business evolves and changes, sometimes quite rapidly and daptability is key to survival. Successful franchisees are generally open to change. In fact, they are always looking for the next opportunity. They are agile and flexible. Being adept at navigating change and adjusting their strategies accordingly is part of the success formula. Their ability to pivot and innovate enables them to stay competitive in their local markets.
The opposite tends to be true of underperforming franchisees. They will often view change of service or products or the introduction of something new as a move away from what they originally bought into. Change will be resisted, resulting in slow or no growth. Some may even begin to suffer from shrinking revenues with a result of them becoming disillusioned with the brand.
Effective Communication:
Clear and open communication is essential for franchise success. Top-performing franchisees excel in communication, fostering transparency, and alignment within their team. They listen attentively to feedback, communicate expectations clearly, and cultivate a culture of collaboration.
Contrasting this, underperforming franchisees very often remain silent, do not attend meetings or webinars, can sometimes appear negative in their conversations or written communications. Franchise networks very often suffer this due to a lack of trust with the franchisor, sometimes due to a few less than ideal launches of systemwide initiatives. In these instances top performers will increase their communication, poor performers tend to retreat.
Franchisors must find ways of engaging with poor performers in a way which fosters a building of trust. Improving one way communication to under performing will open the door to reciprocal communication. Quality communication across a franchise network – franchisor to franchisee, franchisee to franchisee AND franchisee to customers are key to healthy growth.
Top Performing Franchisees Build Operational Excellence:
Efficiency and excellence in operations set top performing franchisees apart. They implement streamlined processes, optimize resource utilization, and prioritize quality control. By focusing on operational excellence, they maximize productivity and minimize costs. These franchisees understand the business of creating ‘margin’. And is often a result of their career background.
Those who have a had a successful career but not been responsible for departmental P&Ls, budgeting, business planning or supplier negotiation often struggle. This links back to a lack of financial acumen and can often be solved by investing in meaningful financial management training for small business owners. Doing so do will result in many underperformers becoming more profitable simply through business efficiency. Increased revenues often follow due to franchisees having more time to develop new sales.
In Conclusion
The success of franchisees within a network is influenced by a myriad of factors, from individual traits to business strategies. By understanding these dynamics and providing targeted support and training, franchisors can empower their franchisees to reach their full potential. By fostering a culture of excellence, collaboration, and continuous improvement, franchisors can cultivate a thriving franchise network where every franchisee has the opportunity to succeed.
Tim Morris has more than 30 years experience managing and supporting franchise operations around the world. He has a success record of driving sales and profits, managing multi-site units, as well as positively influencing individual franchise owners in franchise B2B and B2C environments. Tim has seen particular success supporting groups of high performing franchisees in peer group settings. He has managed teams developing and implementing sales and marketing strategies. With senior leadership experience, he has achieved 80% growth in net profit through motivation and development of teams. From assisting with the expansion of an international franchise brand to heading up the support functions of both national and international franchise systems, he has been instrumental in the growth of hundreds of franchisees. His proven success record comes with a passion for ‘360 business development’ and his unique perspective empowers franchisors and franchisees alike to get the very best from their partnership.