Click [here] for a copy of the full report Franchisors Brace for 2020 and Beyond Franchize Consultants (NZ) Ltd Media Release KEY HIGHLIGHTS Franchize Consultants’ January 2020 Franchising Confidence Index sets the stage for the next decade, with 24 franchisors providing a window into current and more long-term opportunities and challenges. Declines in positivity, apparent since 2015, continued to hold. Franchisors remained negative, on balance, in five out of nine measures. There were, however, important positives. In …
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Optimising Franchisee Owner Involvement
This best practice focus on the need to continually think about and plan the optimal use of franchisees time within the business. Franchisee owner involvement is an important success-factor for most franchise companies, due to their investment and incentives provided by their business ownership. Furthermore, the franchisee themselves will often have been recruited to match an ideal profile for the franchise, with that profile including background skills, experience, characteristics and other factors considered important for operating the business. It follows that it is …
Planned Multi-Unit Franchising Strategy
Franchisors considering or managing multi-unit franchising need to carefully plan a multi-unit franchising strategy, along with aligned infrastructure and support. Such consideration should be undertaken regularly, to ensure the right multi-unit franchising strategy (if at all relevant) is employed for the circumstances. There are multiple forms of multi-unit franchising employed by franchisors, aside from a more typical single-unit franchising model. Prototypical multi-unit franchising forms include sequential/incremental franchising, area development, area …
Complete Franchisor PESTLE Analysis
The new decade demands clarity of understanding of the business environment. Like the previous best practice (SWOT Analysis), a PESTLE Analysis is another strategic planning framework and process all franchisors should complete as part of their comprehensive franchisor business plan and for maintaining a strong governance focus on the future. Where else would you consider potentially impactful areas, such as artificial intelligence, government policies, changing social attitudes, new media, climate change, economic cycles, business laws and so on? The PESTLE Analysis, …
Complete Franchisor SWOT Analysis
A SWOT Analysis is a strategic planning framework all franchisors should engage in as part of their franchise system planning processes. This best practice is related to a franchisors need to complete a comprehensive franchisor business plan and maintain a strong governance focus on the future Strategic planning frameworks, like SWOT Analysis, are increasingly essential to franchisors given the need to navigate an established franchisor business (and aligned franchise network) through an increasingly dynamic operating environment with multiple disruptive forces areas …
Invest in Specialist Outside Advice
In franchising, especially, even small decisions can have a dramatic long-term impact for franchisors and franchisees alike – therefore increasing the benefits of investing in specialist advice. And today, in an increasingly complex, dynamic and uncertain environment, fields of advice are becoming even more specialised. It is our observation, based on 30 years of experience working with new and established franchising companies, that some companies strategically leverage a diverse range of outside advisors – adding considerable value and sustainability to their …
Local Marketing Expertise
Other best practices talk of the importance of reviewing franchise marketing structure and fees, franchisee business and marketing planning, as well as the need for field managers to be more rounded business consultants - helping franchisees develop their total franchise business (i.e., not just improve operations and compliance). An important area that franchisors, in our experience, do well to develop is local area marketing expertise. We say this because franchisees are often overwhelmed with choice (for their marketing spend), conduct quite disparate campaigns and …
Franchise Best Practice Handbook
The Best Practice Handbook - 40 Ideas for a Better Franchise 40 Ideas for a Better Franchise - The Best Practice Handbook is part of Franchize Consultants Best Practice 500 - a series of franchising best practices for franchisors and franchisees, alike. Written by Callum Floyd, the book documents the first 40 best practices (in the Best Practice 500 series), and covers practices spanning franchising leadership, governance, manuals, structure, planning, benchmarking, franchise recruitment, key performance indicators, and many other areas. Individually, the best …
On-Field Visit Focus
This best practice centres around the field manager’s attention on the particular franchisee and their business unit during the actual field visit. In today’s environment there are clearly many opportunities for distraction, principally via the field managers smart phone, tablet and/or laptop. It is an obvious point to make that the field manager should be fully focused on the franchisee and their aligned business unit during the visit. All of this means that there really should not be any interruption that might take away from the franchisee’s feeling that the field …
Leadership Commitment to Understanding the Franchisee Perspective
A recent meeting with a franchisor highlighted the sometimes-huge differences we see in leadership commitment to understanding the franchisee perspective. At one end of the spectrum, there are many franchisor leaders that will actively [and sometimes bravely] solicit franchisee feedback, no matter how confronting. At the other end (and a smaller pool, we’d suggest), some leaders really don’t want to know – or are too scared to ask. In a recent meeting, a franchisor leader indicated words to the effect of “why would we want to rip off the band-aid” in reference to a process …
Monitoring Total Systemwide Sales
This franchisor best practice of monitoring total franchise systemwide sales is simple and included for completeness. Please also compare with monitoring comparable sales, a separate best practice. We suggest it important to consider both metrics as important franchisor key performance indicators (KPIs) - as each offers important, but different insights. Total systemwide sales can generally be defined as all operating unit (whether franchised or company-owned) sales to customers. Clearly this definition is distinct from and will exclude other franchisor income sources, …
Monitoring Comparable Sales
Franchisors will typically closely monitor total systemwide sales as, for most, their primary income source (that is, a royalty based on sales) depends upon it. A less frequently measured and monitored, but equally important, key performance indicator, is comparable sales. While total systemwide sales reflects all sales to customers (by franchised and company units), comparable sales reflects only sales by those units that meet certain criteria. In particular, comparable sales refers to those sales by those units that were both established (i.e., typically with at least …
Field Managers Skilled in Franchisee Business Planning
Field managers are increasingly taking on more of a business advisory role in their support of franchisees. Related, other best practices in this series speak of the importance of franchisee business planning, having a franchisee business planning template, the need for field managers to take on a business advisory role, and focusing on franchisee profit and returns. This best practice centres on the franchisee business planning component from a field manager perspective. Here we see field manager understanding and capability around franchisee business planning as an …
Franchisor Representatives on Franchise Advisory Council
This best practice speaks to the need for senior franchise executives to be involved in a Franchise Advisory Council (FAC). A FAC’s purpose will often include the objective of taking both franchisor and franchisee businesses forward which, in turn, encompasses the whole franchise system. It therefore follows that a FAC should include franchisor representatives that are sufficiently senior so they can be impactful within the FAC environment. FACs will invariably involve both franchisor and franchisee representatives. A separate best practice talks of the need for …
Franchisor Sentiment Falls
Click [here] for a copy of the full report Franchisor Sentiment Falls Wednesday, October 23, 2019 At 05:18PM Franchize Consultants (NZ) Ltd Media Release KEY HIGHLIGHTS Franchisor outlook for general business conditions dropped after a brief rise in July (net 10%) to net negative 32%, the lowest seen in the history of the survey. Service Providers sentiment improved from net 0% to net 21%. Franchisor sentiment for franchisor growth prospects, was less positive from a franchisor viewpoint at net 4%, down from net …
Board Meeting Duration
Board meeting duration is an important governance dimension. Previous best practices have covered franchise governance structure fit, governance focus on the future and board meeting regularity. Key here is ensuring adequate time and focus is afforded to the many elements of governance in a regular board meeting. The governance role includes compliance, monitoring and controls, but it also includes responsibility for the strategy and direction for the business - including its fundamental purpose and values. It goes without saying that directors carry a lot of …
Crisis Management Plan
History has demonstrated the importance of having an active Crisis Management Plan. This should be regarded as a core franchisor responsibility. While some companies will clearly be more susceptible to potential crises, there are a myriad of situations that could impact any franchise organisation. Crises could be generated from customer interactions (e.g., food poisoning, poor staff behaviour or customer service etc), franchisees or the franchise relationship (e.g., poor employment practice, franchise disputes etc), the internal business (e.g., data breach) and a …
Thinking of franchising your business?
Thinking of franchising a business or improving an existing franchise network? We can help. We are New Zealand's leading specialist franchise and franchising consultancy, working with clients from all around New Zealand and overseas. We have worked with literally hundreds of franchise systems, and our strategic consultancy services have been employed by many of New Zealand's most prominent franchise brands. Let us help you make the right decision to franchising a business, your business! Considering franchising your business? Then call (09) 523 3858 or email us now …
Franchising and Licensing a Business Events
Franchising and licensing a business can be a very successful way of growing and improving an established business. Find out more in one of three dedicated sessions in Auckland, Wellington and Christchurch. Christchurch - Monday 4 November, 2.30 - 5.30pm Wellington - Tuesday 5 November, 2.30 - 5.30pm Auckland - Wednesday 6 November, 2.30 - 5.30pm The sessions for ambitious business owners are organised by Franchize Consultants, in association with MYOB and Westpac. For more information, or to book a place call or email Kayleen Smith: Telephone. 09 523 …
Require Potential Franchisee Advice
This is a best practice for both potential franchisees and established franchisors. We believe it is best practice for a franchisor to require potential franchisees to seek specialist legal and accounting advice, as a minimum, before signing a franchise agreement. There is research that demonstrates use of advisors to be associated with higher levels of downstream franchisee satisfaction and reduced franchisee-franchisor conflict. In a practical and logical sense, potential franchisee use of advisors will make for a more informed decision – and a more realistic alignment …
Franchisee Business Planning Template
As discussed in a previous best practice, we regard Franchisee Business Planning as a critical franchise system management process. We believe comprehensive franchisee business planning to be an important driver of both franchisee and, as a by-product, franchisor performance. Within this we regard a Franchisee Business Planning Template that is bespoke to the business as an important best practice. To be effective, the business planning template needs to be relevant to the business. It needs to address many areas; not least, key situation and background factors, …
Franchise Advisory Council Franchisee Representation
A Franchise Advisory Council (FAC) should involve good franchisee representation. That means that there should be a meaningful diversity of franchisee members on the council. In our view that diversity or representativeness will help facilitate achievement of the FAC purpose. Importantly also, we believe it will help franchisees (generally) see the FAC as a valid, productive and useful forum. A bad example of franchisee representation or diversity would be if large franchisees from a single city, within a nationwide chain, were the sole franchisee representatives on a …
Scientific Approach to Franchise Innovation
This best practice speaks to how franchisors approach the frequent need for change within a franchise system. Change is fundamental to long-term sustainability - and, in franchising, change invariably involves and impacts franchisees. Here we suggest a basic scientific approach to innovation that provides evidence for proposed changes. Franchisees own their own businesses and, while operating within a franchising framework, are often rightfully concerned about changes impacting on their strategy, processes and resources. Too often they will have witnessed, whether …
Franchise Support Office Staff Surveys
A franchisor business has many facets and can be complex and challenging to maximise the performance for both franchisor and franchisees, long-term. Not always, but invariably the franchise support office will comprise multiple staff - each with an important role to play in the functioning of the franchise system. Put simply, everyone employed has considerable potential to improve (or detract from) the performance of the franchise system. It goes without saying that if you are a franchisor you want capable, but also engaged and satisfied, staff. It follows that they …
Formalised Field Visit Output
Field visits are too expensive and too important not to have a valuable outcome. In turn, an important aspect of ensuring a valuable outcome is the development of a formalised field visit output. In general, the output of a field visit should encompass a completed and agreed action plan, as a minimum. In addition, we recommend that a written report is also developed, shared and ideally also confirmed as correct by the franchisee. In other best practices we have spoken of the need for a clear field visit purpose and field visit objectives. We also talk about regular …
Franchise Governance Meeting Regularity.
As we state in other governance-focused best practices, franchising by its very nature demands strong governance. All franchisor businesses require good governance, and more focused governance is typically needed to cope with the increasingly changing and complex environment their businesses face. Within governance, meeting regularity speaks to a level of focus and resource on franchise system governance. A franchisor needs to ensure enough and relevant (which may mean frequent) time is dedicated to this task. Recent research we conducted, indicated mature franchisors …
Potential Franchisee Focus on Profits and Returns.
This best practice is for potential franchisees. If you are considering purchasing a franchise, then we suggest you place great focus on the potential returns of any franchise you consider. It is important that you don’t get carried away thinking about the type of work of the franchise, without giving adequate attention to what the business will need in financial terms upfront - and what it could or should look like as it grows and develops. This is to help you understand the full range of potential and likely outcomes, and therefore attractiveness to you. By following …
Structured Field Visit Agenda
Field visits should have a structured agenda that is known to both parties (i.e., franchisor and franchisee), and organised to create the most value from the field visit. It is important for field visits to be productive because both parties depend on it, and field visits are costly to resource from a franchisor and franchisee standpoint. Regular field visits should at least include the following high-level types of areas within the agenda. But, of course, they can and should be a lot more prescriptive as well – depending on the field visit purpose and field visit …
Review your Marketing Structure and Fees
Has the marketing and communication landscape changed for your business? Has that impacted what you are or could / should be doing? Have you taken time to review your marketing structure and fees for the future? The last 20 years have taught us many things. One is that the world of marketing and communication can be turned on its head. Think about the advent and resultant impact of email, commercial websites and search engines in the 1990s and Social Media platforms in the early to mid-2000s. In each case, early adoption could be regarded as a gimmick. With time, …
Franchisor Sentiment Improves July 2019
Click [here] for a copy of the full report KEY HIGHLIGHTS Franchisor Sentiment Improves Franchize Consultants (NZ) Ltd Media Release KEY HIGHLIGHTS The Franchize Consultants’ July 2019 Franchising Confidence Index indicates continued subdued, albeit mostly improved sentiment. Franchisor outlook for general business conditions (net 10%) saw a lift from net negative 15% in April to be in positive for the first time since January 2018. Service Providers sentiment toward general business conditions remained neutral. Franchisor sentiment for …
Governance Focus on the Future
It is our view that franchising, by its very nature, demands a strong governance focus on the future; not least because 1) franchising involves long-term contracts, oftentimes spanning 15 or more years (in combined terms), and 2) the franchisor-franchisee relationship is complex to manage over time. Meanwhile disruptive forces such as technology advancements, market shifts, competition, societal changes and so on, provide a moving landscape requiring sometimes frequent business and franchise model adaptation. All of this means a franchisor has a need and a responsibility to …
Use of Unannounced Field Visits
Unannounced field visits can be a valuable tool for both franchisor and franchisees, albeit franchisees are less likely to see the positive side of an unannounced visit when it involves them. The key here is that the unannounced field visit or a surprise field visit should not be an unexpected field visit, with the inference being that an unexpected unannounced field visit is one that is totally out of the ordinary within a particular franchise system. Key also is the concept of developing a positive culture within a franchise system and understanding how that could …
Review Franchise Employment Compliance Structure
It is important franchisees comply with all laws. Compliance with employment law is particularly critical. Employment law is especially important because it involves people, one of the organisation's most important assets - if not the most important asset. Employment law compliance also speaks to basic human rights, and ensuring people receive their legal entitlements (as a baseline). In franchising, the franchisor needs to consider the structure for ensuring employment compliance within their franchise system. There may even be legal obligations to do so. There are many …
Prospective Franchisees Complete Pre-Entry Training
Anyone considering buying a franchise business should complete a pre- entry training programme, provided free of charge in many countries. In New Zealand, a free pre-entry training programme is provided online by the Franchise Association of New Zealand (FANZ). The programme covers many important areas critical to potential franchisees, like understanding franchising, the money side, franchise system structures, start-up support and training, franchise operations and ongoing support, and due diligence. The programme suggests a pathway for considering franchising …
Governance Structure Fit
Franchisors need a governance structure that befits their situation and plans. And franchisors need good governance, as 1) franchise companies are naturally complex businesses to lead and manage, and 2) all companies face an increasingly dynamic operating environment. Good governance according to New Zealand's Institute of Directors helps a company: Improve performance Have a defined vision for the future of the company Take a big picture view of the business separate from the operations Ensure there is accountability and oversight of operations Manage …
Formal Franchise Recruitment Process
Franchisors should have a formal franchise recruitment process, a process that is adhered to with all potential franchisee candidates. That doesn't mean all candidates will pass through all phases of the process, but it does mean that key steps are practiced in the right sequence to ensure a robust recruitment process. A formal recruitment process is needed for a number of reasons, not least the following: To provide a professional and systematic approach that impresses franchisee candidates To protect the franchisor from adverse legal liability, associated with …
Regular Access to Franchisee Financial Statements
Franchisors need regular access to franchisee financials so they can understand how franchisees are doing and how the unit-level business model performs in different situations. Access to timely franchisee financials is also critical so that a franchisor can tailor support for individual franchisees. Other important reasons include a franchisors ability to monitor performance and set strategy. Access to franchisee financials is also valuable for field manager goal setting and effectiveness measures. People involved in franchising will know that it is not uncommon, as …
Agreed Field Visit Agenda
Best practice field visit management means not only a structured agenda with clear objectives, but an agenda that is mutually agreed by the field manager and franchisee in advance of a visit. An agreed field visit agenda is beneficial and important for many simple reasons, not least: Field visits are for franchisees and the franchisor, so it is important franchisees have an opportunity to contribute to the agenda. Franchisees [quite obviously] appreciate knowing what the franchisor wants to talk about in advance, and vice versa. Both parties then have an …
Enter Franchise Industry Awards
If you have a desire to be competitive in your market, and with your franchising programme, then you will certainly benefit and learn from the process of entering franchising awards. In New Zealand, franchising awards are open to franchisors and franchisees, and there are both sector and supreme awards. Furthermore, there are awards for the all-important field managers - as well as special franchisor awards for community involvement, marketing, international development and digital technology. Franchisees are also encouraged to enter community involvement …
Franchise System Reviews
The world of business and franchising is changing rapidly. Accordingly, in our experience, franchising companies benefit strongly from a periodic franchise system review. Based on our experience, franchise system reviews have provided participating companies an important opportunity to put a stake in the ground and then move forward; taking stock of the situation and performance levels throughout the organisation, and the appropriateness of the current franchise structure and management approach of the time. The franchise system review also harnesses franchisee input, …
Managing Franchisee Tenure
Franchisee tenure is an important reflection of franchise system health and franchisee satisfaction. If franchisee tenure is short, particularly compared with similar businesses, this is clearly important to know. Short tenure is challenging for a franchise system because: Overall franchise system growth is constrained (as well as the benefits associated with economies of scale), as new franchisees are needed as replacements rather than fuelling greenfield development Valuable franchisor time and energy needs investing into managing the resale and onboarding …
Franchisors Confidence Remains Subdued
Click [here] for a copy of the full report KEY HIGHLIGHTS Franchize Consultants (NZ) Ltd Media Release KEY HIGHLIGHTS The Franchize Consultants’ April 2019 Franchising Confidence Index indicates continued subdued sentiment. Franchisor outlook for general business conditions (net negative 15%) dipped after a small lift in January sentiment at net negative 3%, whilst Service Providers sentiment negated the positive gains seen in January of net 19%, to indicate sentiment of net 0%. Franchisor sentiment for franchisor growth prospects, …
Maintaining Franchising Focus
Franchisors operate in two business arenas. First is the business that came first; namely the business associated with finding and satisfying customers - and all that entails from a resource, value proposition, profit formula and process standpoint. Second, is the business of franchising which, while integrating with, and enabling the first, introduces its own factors that need to be understood, configured, and executed to make the franchise system successful. This best practice recognises the need for an active and consistent focus on franchising. Both the business …
Clear Field Visit Purpose
Our research conducting comprehensive Franchise System Reviews and work with many franchisors, suggests an often-great opportunity to clarify the purpose of a field visitation programme. In turn, this helps create a platform for a more effective field visit programme – for the benefit of franchisors, franchisees, and field managers (themselves). Historically, it used to be common, mostly many years ago, that the main purpose of the field manager was to go visit franchisees and inspect compliance and operations. The field manager arrived, defensively, with a clip board …
Updated Franchisee Profile
Experienced franchisors know the difference between a 'Good' and 'Great' franchisee. More than 20 years ago, in my own research, a multi award- winning franchisor commented on the sometimes stark performance differential - even when controlling for other relevant factors: "The new owners took it from $660,000 to $1,890,000 in less than three years. We've got a number of examples like that; same site, same people (staff), same rent, same everything." Clearly, great franchisee selection is important - alongside a great business model and franchise support, of course. …
Being Detailed and Specific – Leadership
A franchisor leader needs to take care to be sufficiently detailed, consistent and specific in their communications and interactions with franchisees, whether by email, face-to-face discussion, presentation, agreements or follow-up. The formal nature of franchising means that detail and precision is needed. After all, franchise systems are governed by a formal framework, with the franchise relationship first defined by the franchise agreement. The legal franchise agreement framework is then complimented by a business system, typically captured within franchise manuals …
Long-Term Communication & Support Plan
Franchise systems need to have a franchisee communication and support plan that details what will happen and when. The franchisee support and communication plan should cover the multitude of elements relating to the franchise, like: Franchise conferences and regional meetings Field visits, ongoing training and business reviews Business and marketing planning and approval dates Audits, assessments and awards Franchise newsletters and updates The communication and support plan needs to be sufficiently planned, and structured, but ideally, in advance (i.e., …
Working With Valid Data
"Garbage in, garbage out" or 'GIGO' is the phrase and acronym originating in Computer Science to explain the only too-common phenomena of outputs or arguments being flawed if their original premise or data was wrong. Best practice franchisors will ensure data collected for use is valid. Franchise systems and other chain organisations can benefit hugely from data, analytics and business intelligence. The replication of a business model in multiple locations with, in turn, hundreds or thousands of customers and associated business, financial and customer data, lends …
Franchise Support Office Structure Aligned
Franchisors operate in a range of industries, and even those within the same sector can pursue a different strategic approach. That legitimately means the exact Franchise Support Office structure for one organisation may well differ from that of a direct competitor (of a similar size) - and for good reason. Notwithstanding, we know from our work planning, reviewing and improving many franchisor companies, of all different sizes and backgrounds, that there can be a gap between a franchisor's situation and plans, and the structure and operations of the Franchise Support …
Field Managers as Business Consultants
Field managers need to wear many hats and fulfil multiple roles. We have for many years been helping franchisors transition their field visit purpose and field manager capability toward adding a ‘Business Consultants’ role, capable of engaging with, and positively influencing, franchisees at a ‘business’ level. It is a generalisation but also a fact, based on our experience reviewing and improving many franchise systems, and training many field managers, that the field manager role has historically focused more on compliance and sales development than a holistic view …