Governance Focus on the Future - Best Practice #40 How much future focused governance time do you need to ensure your long-term franchise system sustainability? Does your governance resource dedicate enough time currently and, if not, what changes do you need to make? 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 …
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Use of Unannounced Field Visits
Use of Unannounced Field Visits - Best Practice #39 Do you make use of unannounced field visits and, if so, for what purpose? Are any unannounced field visits unexpected in the context of your franchise system? 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 …
Review Franchise Employment Compliance Structure
Review Franchise Employment Compliance Structure - Best Practice #38 Relevant questions: How confident are your directors in knowing your levels of employment compliance? What is your franchise system approach to ensuring employment compliance? What, if any, changes are needed to ensure better employment compliance (and/or provide greater confidence) into the future? 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 …
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). Before Buying Franchise Business Training - Best Practice #37 Relevant questions: Have you completed pre-entry training as part of your franchise purchase process? What questions will you ask of yourself, target franchisors (and their existing franchisees), and the advisors you may engage, as part of the …
Governance Structure Fit
Governance Structure Fit - Best Practice #36 Relevant questions: How would you describe your current governance structure? How optimal is that structure for your business in 1-3 years’ time given your plans and growth trajectory? 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 …
Formal Franchise Recruitment Process
Formal Franchise Recruitment Process - Best Practice #35 Relevant questions: How rigid and formalised is your franchise recruitment process? When did you last review the steps, content and process of your 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 …
Regular Access to Franchisee Financial Statements
Regular Access to Franchisee Financial Statements - Best Practice #34 Relevant question: How regularly do you have access to franchisee financial statements, and on a comparable basis? 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 …
Agreed Field Visit Agenda
Agreed Field Visit Agenda - Best Practice #33 Relevant questions: How is field visit agenda setting handled? Do your franchisees input sufficiently into the process? Do your field managers approach it similarly? Are your field visit agendas mutually agreed in advance? 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 …
Enter Franchise Industry Awards
Enter Franchise Industry Awards - Best Practice #32 If you have a desire to be competitive in the 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 …
Franchise System Reviews
Franchise System Reviews - Best Practice #31 Relevant questions: What benefits could an independent and unbiased review of your franchise system (by franchise management consulting specialists) bring to your franchisor and franchisee businesses – long-term? What benefits could be gained by involving franchisees in a comprehensive franchise system review process, including feedback and insights? How could a comprehensive franchise system review help you to engage franchisees on a path to future improvements requiring input and efforts by both franchisor and …
Managing Franchisee Tenure
Managing Franchisee Tenure - Best Practice #30 Relevant questions: Do you track and set targets for Franchisee Tenure? What areas are you working on (or could you work on) to improve Franchisee Tenure? How could improved Franchisee Tenure improve both your franchisor and franchisee businesses? 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 …
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
Maintaining Franchising Focus - Best Practice #29 Relevant questions: What actions are you undertaking to ensure you maintain a focus on franchising developments and trends? How engaged are you with your franchise association, including attending regular events and conferences, and entering franchise awards? Do you regularly seek consulting or legal advice on your franchise structure and management, including how it can be optimised for the future? Franchisors operate in two business arenas. First is the business that came first; namely the business …
Clear Field Visit Purpose
Clear Field Visit Purpose - Best Practice #28 Relevant questions: What is the underlying purpose of your field visit programme? How well do your Field Manager roles and training align with your Field Visit Purpose? Do you have a Field Manager Toolbox, containing the right tools, to help your Field Managers achieve your underlying 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 …
Updated Franchisee Profile
Updated Franchisee Profile - Best Practice #27 Relevant questions: What characteristics and attributes do you look for in potential franchisees? What are your negotiables and non-negotiables when it comes to selection? Are you taking forward learnings from your top and bottom franchisees? 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 …
Being Detailed and Specific – Leadership
Being Detailed and Specific - Leadership - Best Practice #26 Relevant questions: Do your franchisees regard you as being detailed and specific, versus vague and imprecise? Are you sufficiently detailed in your communications with franchisees? Are you frustrating your franchisees by making broad statements, lacking underlying detail and justification? Are you specific about what needs doing, and do you follow up accurately by doing what you said you would do? A franchisor leader needs to take care to be sufficiently detailed and specific in their …
Long-Term Communication & Support Plan
Long-Term Communication & Support Plan - Best Practice #25 Franchise systems need to have a franchisee communication and support plan that details what will happen 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 …
Working With Valid Data
Working With Valid Data - Best Practice #24 “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. Relevant questions: Do your Field Managers have access to valid (and comparable) franchisee performance information increasingly needed in their roles as Business Advisors? Do you as a franchisor have sound information on which to build a business case for any proposed franchisee change initiatives? …
Franchise Support Office Structure Aligned
Franchise Support Office Structure Aligned - Best Practice #23 Relevant questions: Is your franchisor team of a size capable of completing all necessary Franchise Support Office functions, activities and tasks? Do you have an over-reliance on one person, who takes responsibility for almost all Franchise Support Office functions and tasks? Has your organisation defined all of the key Franchise Support Office functions, activities and tasks essential to it, and what is required to execute them? Franchisors operate in a range of industries, and even those …
Field Managers as Business Consultants
Field Managers as Business Consultants - Best Practice #22 Relevant questions: What is the purpose for your Field Visits, and are you or your Field Managers capable of fulfilling all necessary roles to achieve it? As a Field Manager, are you focused on driving improved franchisee performance and profit? As a Field Manager, are you comfortable engaging with franchisees on their total business, including the preparation of a comprehensive [and ultimately franchisor approved] Franchisee Business Plan? Field Managers need to wear many hats and fulfil multiple …
Clear Field Visit Objectives
Clear Field Visit Objectives - Best Practice #21 Relevant questions: If you are a Field Manager, do you know your specific objective/s for your visits in advance? Do your Field Visit objectives alter throughout the year, or to suit specific needs? Are Field Visit objectives aligned with the business strategy? If you manage multiple Field Managers, are their core objectives aligned to ensure the company is providing co-ordinated and consistent support? Field Visits need to have clear objectives to maximise their potential and drive impactful outcomes. …
Franchising 2019 Starts With a Hint of Optimism
Click [here] for a copy of the full report KEY HIGHLIGHTS Franchize Consultants (NZ) Ltd Media Release KEY HIGHLIGHTS The Franchize Consultants’ January 2019 Franchising Confidence Index demonstrates cautious sentiment in some areas whilst neutral in others. • Franchisors sentiment toward general business conditions, whilst still negative, improved to be similar to January 2018 results with Franchisors at net negative 3% and Service Providers at net 19%. • Franchisors sentiment for franchisor growth prospects also saw improved sentiment after dropping …
Measure and Manage Customer Satisfaction
Measure and Manage Customer Satisfaction - Best Practice #20 Customer satisfaction is critical for business and franchise networks. The importance and logic could not be more clearly stated than by the late Sam Walton, founder of Walmart: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” It follows that measuring customer satisfaction should be a high-priority for franchisors. Understanding customer satisfaction at the franchisor or group level and the franchisee …
Franchise Technology Plan
Franchise Technology Plan - Best Practise #19 Today technology is such a vital and important area today with the power to inform, innovate, improve, power or even disrupt a business – as those in video rental, book retail and photo development businesses would attest. Consider the following technology areas as examples: Accounting, E-Commerce, POS, Analytics, CRM, Apps, Benchmarking, Artificial Intelligence, Augmented Reality, Voice Recognition, Social Media, Phones, Computers/Tablets, Vehicles, Printing, Security and Search. Accordingly, as we identified in a …
Demonstrate Strategic Thinking Leadership Characteristic
Demonstrate Strategic Thinking Leadership Characteristic - Best Practice #18 Great franchisors need to demonstrate a number of important characteristics as part of their leadership. We believe Sound Strategic Thinking is one such critical leadership characteristic. Franchisors should strive to provide franchisees with confidence in this area. While one could argue strategy and change (given today’s dynamic environment) have never been more important, research also tells us that one of the aspects attracting franchisees to buying a franchise is the concept of having …
Economic Model Review
Economic Model Review - Best Practise #17 A periodic review of a franchise system’s economic model is important – to ensure it is optimal, for both franchisor and franchisees alike, for the future. Examples of key fee areas or sources of revenue under consideration should include: Initial franchise premiums or fees Franchise royalties Wholesale margin and/or supplier rebates Local marketing fees Group marketing fees Renewal fees Assignment / transfer fees Other fees, such as conference levies, technology fees, and so on. Decisions on …
Regular Performance Monitoring and Review Cycle
This best practice speaks to the importance of establishing and managing a regular performance monitoring and review cycle. Regular Performance Monitoring and Review Cycle - Best Practice #16 Management thinker Peter Druker famously said “If You Can't Measure It, You Can't Improve It.” What he was understood to mean is that you can't know whether or not you are successful unless success is defined and tracked. The corollary for franchising, as for other forms of business, is while it is important to measure a range of KPI’s, they are of limited use unless they are …
Franchising Right From The Start – Best Practise #15
Franchising is a long-term business strategy, from the franchisor and franchisee perspective. Both parties are bound by a long-term contractual agreement, meaning early decisions on the nature of the franchise structure go on to have long-term consequences. For some companies assessing franchising properly in the first place means they don’t franchise at all. For others that do franchise there can be a big difference between those who prepare and plan properly as compared to those who take shortcuts. In our experience, the following are typical shortcomings when vital …
Regular Action Planning – Best Practice #14
Franchise systems are complex organisations where active Action Planning throughout is much needed, and for many reasons. Not least, franchisors and franchisees have obligations and performance standards relating to one another - that need to be met. Franchise systems are the perfect environment where there is a need to get a whole lot of stuff done, involving multiple people, departments and entities. Consider franchisees with their objectives, the franchisor, field managers, suppliers and so on. Plus, everyone needs to be coordinated – and in franchise systems there …
Good Franchisor Presentation Skills
Good Franchisor Presentation Skills - Best Practice #13 Using conferences as a case in point, we note the importance of franchisor staff presenting well. We have been involved in numerous conferences and have seen a wide variation in abilities, including from some very senior business people. The difference in presentation skills really can mean the difference between a compelling conference and a flat / negative conference. On occasion, we have noted some senior staff not being as impactful as they …
Present & Discuss Benchmarking Results
Present & Discuss Benchmarking Results - Best Practice #12 Many franchising companies will benchmark certain areas of the franchisee’s business. They may benchmark a little, for example. just sales results, or they may benchmark a lot - covering a multitude of sales, sales composition, labour, gross profit, expense areas and have a wide range of productivity and profitability metrics. Customer satisfaction indicators should be and often will be within those metrics. In our experience, sometimes this information (or selected information within) will be available in …
Long-Term Brand Positioning
Long-Term Brand Positioning - Best Practice #11 Many people think of franchise systems as marketing machines. Yet many franchising companies do not have a clear brand positioning strategy and struggle to gain franchisee engagement and confidence in both brand and marketing execution. Issues often manifest in group marketing fund discussions where, to franchisees, decisions maybe questioned, planning appears short-term, and reporting maybe infrequent or light. In our experience, a step back is often needed, to think about what sits behind both marketing and franchisee …
Join Your Franchise Association
Join your Franchise Association - Best Practice #10 As a franchisor you should be a member of your local Franchise Association, for the benefit of your franchisees, the franchising business model and, as a by-product, the long-term value and sustainability of your own business. Joining your country’s Franchise Association is especially important in self-regulated countries like New Zealand, where (among other functions) the Franchise Association plays a vital role in establishing, developing and protecting franchising standards. In New Zealand, all members are …
Group Marketing Fund Reporting
Group Marketing Fund Reporting - Best Practice #9 I will never forget a small franchise network’s conference when the marketing report was delivered and discussed. The report covered the opening balance, the income and expenditure, and the closing balance. Basically, the fund received and spent $150,000 in the same year. The expenditure was explained: $50,000 on radio $50,000 on Google Ads $50,000 on print advertising The number of inquiries, resulting jobs and the ad spend/job were presented alongside each spend. It was abundantly clear where the …
Franchisor Business Sentiment Challenging
Click [here] for a copy of the full report KEY HIGHLIGHTS The Franchize Consultants’ October 2018 Franchising Confidence Index continues to suggest a challenging outlook, as perceived by responding franchisors. Franchisors’ sentiment towards general business conditions dropped, after lifting very slightly last quarter, from net negative 9% to net negative 22%. Service Providers sentiment showed a mirror effect dipping to net negative 23% from a net negative 7%. Franchisor sentiment toward franchisor growth prospects remained in positive …
Comprehensive Franchisor Business Plan
A Franchisor Business Plan is different from a conventional Business Plan because there are a number of additional and unique elements associated with being a franchising company. Comprehensive Franchisor Business Plan - Best Practice #8 A franchisor needs to have a comprehensive ‘Franchisor’ Business Plan. Think of the need to consider the following: Franchisee performance and its importance and potential contribution to the franchisor and franchise system performance, and potential scale efficiencies and value-add. Franchisee satisfaction and sentiment and …
Consistent Field Visit Visitation
Field visits are an important part of a franchisor’s communication, support and development plan. Within this plan, established franchisees should receive a consistent level of field visit visitation. Consistent Field Visit Visitation - Best Practice #7 We identify the concept of consistency in terms of visitation. Because it is not unheard of for us to observe field visit frequency based more on close proximity and friendliness (coupled with an appreciation for drinking coffee) than practical need and equity. At its most extreme case, we have observed a …
Franchisee Business Planning
We regard franchisee business planning as a critical franchise system management process and it is a process with references in many Franchise Agreements. Franchisee Business Planning - Best Practice #6 Yet, not many franchisors encourage or engage in comprehensive franchisee business planning with all of their franchisees. In other best practice points we talk about a Leadership Focus on Franchisee Profit. Franchisee Business Planning is hugely central to this franchisee profit focus. That is because you cannot have a meaningful focus on franchisee profit, if the …
Comprehensive Franchise Advisory Council Constitution
Comprehensive Franchise Advisory Council Constitution - Best Practice # 5 Franchise Advisory Councils (FACs) are an important communication form and mechanism for developing a co-operative franchise relationship. Operating well, FACs can strongly contribute to good franchise relations and an advancing business model for franchisor and franchisees alike. FACs, however, often vary in their effectiveness from both a franchisor and franchisee point of view. We find a common pattern of issues around FACs that are partly rooted in a short and/or poorly written FAC …
Regular Franchisee Satisfaction Surveys
It is important for a franchisor to know how franchisees feel individually and collectively. Regular Franchisee Satisfaction Surveys - Best Practice # 4 This is important because franchisee satisfaction has the power to help build or destroy a franchise system, depending on whether it is positive or negative. Much should be done throughout the year in personal interactions and otherwise to know where franchisees are at. But nothing focuses attention nor can provide a professional measure, like an independent franchisee satisfaction survey of all franchisees …
A Common Chart of Accounts for Franchisees
Franchise systems need a common basis for understanding and comparing franchisee performance. A Common Chart of Accounts for Franchisees - Best Practice #3 A common Chart of Accounts is essential for these activities. A common Chart of Accounts is referring to the practice of having the same account breakdown for all revenue, expense, asset, liability and equity items. This practice should also extend to other financial and non-financial metrics that are relevant to the particular business model. Then franchisees, and franchisor support staff, have a powerful basis …
Up-to-date Franchise Manuals
Franchise manuals help formalise aspects of the business model, and thus include important information on how franchisees are to operate the business. Up-To-Date Franchise Manuals - Best Practice #2 Franchising is about the transfer of a successful business model and the protection of a valuable brand. Franchise manuals also help franchisees understand how they are to operate within the franchise system. Franchise manuals need to be useful and cover operational information that is relevant and practical to franchisees. That information needs to be up-to-date. If …
Leadership Focus on Franchisee Profit and Returns
Leadership Focus on Franchisee Profit and Returns - Best Practice #1 This is something which we have written and spoken about a lot. Franchisee profit is a principal focus in our work with would-be or established franchisors. When evaluating a company contemplating franchising or reviewing an established franchise system. The crux of the point here is that a franchisor needs to understand and help franchisees drive performance in a total sense; not just sales performance, but also profit performance – and profit in relation to their total investment. The …
Franchize Consultants Launch Franchising Best Practice 500
This is a new series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses. About the Franchising Best Practice 500 Series We have termed this series the Franchize Consultants’ Franchising Best Practice 500, because there really are that many Best Practice areas and aspects in franchising. In franchising there are best practices …
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. 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 3858 Email. [email protected] Auckland - Monday 27 August, 2.30 - 5.30pm Wellington - Tuesday 28 August, 2.30 - 5.30pm Christchurch …
Franchisors Report Mixed Sentiment
KEY HIGHLIGHTS Franchisors and Service Providers report a mixed sentiment with decreasing confidence in general business conditions. Availability of suitable staff remains a key challenge. Franchisor sentiment for access to suitable locations drifted slightly in April, whilst Service Providers confidence increased substantially. Franchisor and Service Provider sentiment towards franchisee sales levels lifted to remain an area of strength. Franchisor growth prospects sentiment also showed strong increases from both Franchisors and Service …
Franchising 2018 Starts With Subdued Economic Outlook
The Franchize Consultants’ January 2018 Franchising Confidence Index demonstrates cautious sentiment. Click [here] for a copy of the full report Key highlights include: The latest results indicated neutral franchisor (net 3%) and Service Provider (net 0%) sentiment toward general business conditions. Franchisor growth prospects dipped slightly (net 23%), down 5% from the previous quarter. Service Providers reported similar sentiment movement at net 0%. Franchisors sentiment toward accessing financing were neutral at net 0% up from net negative …
Franchising New Zealand 2017 Survey Highlights
Franchize Consultants were delighted to be a sponsor of the 2017 Survey of New Zealand Franchising. Conducted by Massey and Griffith Universities on behalf of the Franchise Association of New Zealand. Franchising New Zealand 2017 Survey New Zealand franchising needs up to date information, particularly the quantification of franchising's total size and contribution. This information is especially valuable when explaining franchising's importance and value to key stakeholders, including government. The information is also helpful for franchisors, …
Franchisors Cautious of Economic Environment
KEY HIGHLIGHTS Franchisors and Service Providers demonstrate a strong shift in confidence levels, with changes prevalent in sentiment toward general business conditions and growth prospects Availability of suitable staff along with suitable locations showed increased sentiment. Previously these were viewed as key challenge areas. Franchisor sentiment towards franchisee sales levels dipped, although remains strong. Click here for a copy of the full October 2017 Franchising Confidence Index Report The Franchize Consultants’ October 2017 Franchising …
Strong Franchisee Sales Outlook Continues
KEY HIGHLIGHTS Franchisors and Service Providers demonstrate a continued increase in confidence levels across many areas, particularly, general business conditions, franchisee sales levels, and franchisor growth prospects. Both Franchisors and Service Providers were positive in their outlook for general business conditions. Availability of suitable staff were a standout challenge, and positivity toward franchisee profitability levels diminished. Franchisor sentiment for franchisor growth prospects continues to remain stable. Service Providers perceptions …