This is the home of the Franchising Best Practice 500 series of franchise best practices. Franchize Consultants is sharing and publishing these best practices weekly for building great franchisor and franchisee businesses. 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 from a franchisor and franchisee point of view, and there are best practices from a pre-entry to an operating standpoint – from both perspectives. In turn, some best practices are very specific (e.g., ensure your royalty is optimal or have all franchisees operating to a Common Chart of Accounts) to more conceptual (e.g., demonstrate a leadership focus on improving franchisee profit). Such is the nature of franchising.
It is fair to say that the main focus of the Franchize Consultants’ Franchising Best Practice 500 will be from a franchisor point of view and in terms of what a franchisor could or should do. But the intention is that that is of good mutual benefit to franchisees. It might even, dare we say this, help some franchisees push their franchisors to improve a bit. Accordingly, we think any franchisees that view this series will quickly see that we have a strong focus on franchisee returns.
Franchising is an area where you never stop learning. Like anything, the more you learn about a particular area the more you typically realise you don’t know. Franchize Consultants is in it’s 30th year of operation and yet we continue to develop new franchising insights daily.
Whether you are a franchisor or a franchisee, a service provider, a student or have another interest in franchising, we hope you find the Frachize Consultants’ Franchising Best PractRead more on [joining your franchise association]ice 500 valuable.
Franchising Best Practice 500
Best Practise #12 Present and Discuss Benchmarking Results
This requires the franchisor, normally through their well-trained field managers, taking an active role in presenting and discussing benchmarking results with franchisees. Together then, both parties can identify trends, issues, areas of strength or weakness, consider improvement opportunities, priortise objectives, updates plans and make SMART actions for implementation.
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Best Practise #11 Long-Term Brand Positioning
A clear brand positioning strategy is important for explaining to franchisees who the business is, what it is trying to achieve, what the brand elements are, how the brand is positioned in the market, and how everyone needs to market and operate to execute in unison to achieve the desired positioning.
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Best Practice #10: Join Your Franchise Association
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.
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Best Practice #9: Group Marketing Fund Reporting
The group marketing fund report should include information that is meaningful to franchisees, both in terms of marketing fund sources of income and expenditure. A good group marketing report will provide a useful and insightful breakdown of actual marketing expenditure and, ideally measures of associated effectiveness.
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Best Practice #8: Comprehensive Franchisor Business Plan
A franchisor business is involved and complicated and the work is never totally done. A comprehensive Franchisor Business Plan is important to ensure there are clear objectives, covering impactful and important areas unique to a franchise system, along with prioritised areas of focus.
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Best Practice #7: 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.
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Best Practice #6: Franchisee Business Planning
We regard franchisee business planning as a critical franchise system process and it is referenced in many Franchise Agreements. Yet, more franchisors could encourage comprehensive franchisee business planning with all of their franchisees. Franchisees must be receptive, too.
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Best Practice #5: Comprehensive Franchise Advisory Council (FAC) Constitution
An FAC is an important communication and development mechanism and involves a lot of franchisor and representative franchisee effort. It therefore follows that it is worth ensuring that the basis for the FAC (i.e., the constitution) is structured in an optimal way for the business.
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Best Practice # 4: Regular Franchisee Satisfaction Surveys
Franchisors need to know how franchisees feel individually and collectively. This is important because franchisee satisfaction has the power to help build or damage a franchise system, depending on whether it is positive or negative. We would recommend an annual or biannual franchisee satisfaction survey conducted by an independent party.
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Best Practice # 3: A Common Chart of Accounts for Franchisees
Franchise systems need a common basis for understanding and comparing franchisee performance. A common Chart of Accounts is essential for these activities – and refers to 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 of the particular franchise.
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Best Practice # 2: Up-to-date Franchise Manuals
Franchise Manuals help 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. They need to include information that is relevant and practical to franchisees and they need to be up-to-date.
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Best Practice # 1: Leadership Focus on Franchisee Profit and Returns
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.
Read more on [leadership and franchisee profit and returns]