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 …
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On-Field Visit Focus
On-Field Visit Focus - Best Practice #58 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 …
Leadership Commitment to Understanding the Franchisee Perspective
Leadership Commitment to Understanding the Franchisee Perspective - Best Practice #57 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 …
Monitoring Total Systemwide Sales
Monitoring Total Systemwide Sales - Best Practice #56 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 …
Monitoring Comparable Sales
Monitoring Comparable Sales - Best Practice #55 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 …
Field Managers Skilled in Franchisee Business Planning
Field Managers Skilled in Franchisee Business Planning - Best Practice #54 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 …
Franchisor Representatives on Franchise Advisory Council
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 …
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 - Best Practice #52 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 …
Crisis Management Plan
Crisis Management Plan - Best Practice #51 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 …
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
Require Potential Franchisee Advice - Best Practice #50 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 …
Franchisee Business Planning Template
Franchisee Business Planning Template - Best Practice #49 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 …
Franchise Advisory Council Franchisee Representation
Franchise Advisory Council Franchisee Representation - Best Practice #48 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 …
Scientific Approach to Franchise Innovation
Scientific Approach to Franchise Innovation - Best Practice #47 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, …
Franchise Support Office Staff Surveys
Franchise Support Office Staff Surveys - Best Practice #46 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 …
Formalised Field Visit Output
Formalised Field Visit Output - Best Practice #45 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 …
Franchise Governance Meeting Regularity.
Franchise Governance Meeting Regularity by its very nature demands strong governance. Read this Blog post to find out more. As we state in other governance-focused best practices, franchising by its very nature demands strong governance. Franchise Governance Meeting Regularity - Best Practice #44 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 …
Potential Franchisee Focus on Profits and Returns.
Franchisee Profits and Returns are critical to determine the business success for the franchisor and business owner. Read this Blog post to find out more. Franchisee Profits and Returns Potential Focus. - Best Practice #43 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 …
Structured Field Visit Agenda
Structured Field Visit Agenda - Best Practice #42 Field visits should have a structured agenda that is known to both parties (i.e., franchisor and franchisee). 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 …
Review your Marketing Structure and Fees
Review your Marketing Structure and Fees - Best Practice #41 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 …
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
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 …
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 – Best Practice #31
Relevant questions for your next Franchise System Review. 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 …