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Tuesday 16th August, 2022

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Closing the franchisee performance gap

Insight

Closing the franchisee performance gap

Three areas in which franchisees can improve – and how franchisors can help

Three areas in which franchisees can improve – and how franchisors can help.

Franchise businesses are about replication. In theory, a hard-working, financially qualified person can adopt proven branding, marketing, and operational tactics, and by serving the right demographics, get the same results.

In practice, that’s not at all what happens. Within every franchise brand there’s a wide spectrum of results. Doing the same things in similar conditions, some franchisees are killing it while others are getting killed. And it’s not just because some work harder, have better locations, or do more marketing.

A deeper look at top franchisees, whom I call “wealthy franchisees”, reveals three areas where they’re particularly adept: how they think, how they lead, and how they serve. These human factors are what each franchisee brings to their own operation – things completely under their control.

A franchisor, however, can’t control these factors, any more than an automobile dealership can control how their buyers drive and maintain their car, though these things significantly impact performance. But franchisees can improve in these areas and franchisors can help. This improvement – on top of hard work, marketing and other operational necessities, will enable any franchisee with a marginally acceptable location to dramatically boost performance.

Let’s explore what improvement in each of these skills looks like:

How the franchisee THINKS

Franchisees don’t usually look in the mirror for answers, but often that’s where they lie. Many operate without self-awareness, not realizing how their thoughts impact their business. But this is important because marketing isn’t just about advertising; it’s about patience. Managing employees isn’t just about directing work; it’s about developing people. And customer service isn’t just about facilitating sales; it’s about making human connections. These philosophical differences are the difference-makers. Better work begins with deeper thinking.

Consider the contrasts in how wealthy franchisees and struggling franchisees approach the same issues:

These differences in perspective put wealthy franchisees and struggling franchisees miles apart. And most of what the struggling franchisee does in these examples is in complete accordance with the franchise agreement. There’s no contractual obligation to be positive, to work smart, or to uplift customers emotionally. Nor is there one that requires franchisors to encourage this approach to business. Franchisees are responsible for their own mindset.

Franchisors would be wise to devote more time and resources helping struggling franchisees think like top franchisees. It may not be part of the legal relationship, but it has everything to do with performance.

How the franchisee LEADS

Franchisees oversee two things: systems and people. How they manage both significantly impacts the business.

When it comes to systems, wealthy franchisees embrace brand standards. They didn’t buy a franchise to innovate. They leave the R&D to the franchisor. They’d rather mitigate the risk and stick to what’s proven. When they do have ideas (or concerns about the franchisor’s ideas), they bring them to the franchisor and collaborate to figure out what’s best for the entire network. Mostly, they just execute and find a way to lead within the lines.

Struggling franchisees don’t fully buy into the system. They believe they know better and try to outsmart their franchisor. Sometimes they succeed, but usually not. Ignoring good advice and doing things their own way weakens the brand and exposes them to more risk.

I’ve met and interviewed so many great franchisees over the years. When it comes to operations, they don’t do things differently. They do them better.

They’re also better at leading their teams. They understand that employees are the lifeblood of the business. They do most of the work, they have the most facetime with customers, and if trained well, they allow the business to become more of an investment for the franchisee instead of a job. A good use of money should yield more money. A good use of time should yield more time. That’s why wealthy franchisees hire slow, train slower, and fire fast. They build cultures. They know every new person will add or take away from the team. So, they’re careful about whom they recruit.

In addition to patient, selective hiring, wealthy franchisees continuously work to make employees great and work even harder to keep them great. They focus on their development rather than just their work. They want every employee to become a leader. That takes a little more time up front, but it saves time in the backend when their employees work more independently.

At the same time, wealthy franchisees appreciate that even the best employees slip backwards when they get comfortable, bored, or feel unappreciated. They need their fire fed. This isn’t a burden for top franchisees. It’s what being a leader means. It’s the most important work they do.

“I’ve met and interviewed so many great franchisees over the years. When it comes to operations, they don’t things differently. They do them better”

Struggling franchisees see how solid wealthy franchisees’ teams are and ask the same misinformed question: “Where do you find such great people?” They think good hiring is about locating a good fishing spot. They believe superstar employees are found, having no appreciation for the work top franchisees put into developing them.

Struggling franchisees just want the work to get done. They fill positions with people who are good enough. They grumble about the applicant pool. “People these days are so lazy and entitled,” echoing the same complaints of the generations of mediocre employers who came before them.

These franchisees also rush through training, moving through instruction way too fast. Wealthy franchisees remember that new team members are nervous, hesitant and overwhelmed. They support their mindset as much as their skill set. Struggling franchisees don’t consider the human side of onboarding staff. They just want employees to absorb the instructions and get to work. Consequently, their work suffers.

Both franchisees know that employees need motivation but approach it quite differently. Wealthy franchisees offer fair pay and outside incentives, but they also create environments that promote intrinsic motivation. They appeal to their employees’ inner desire to grow, to feel connected to their team, and to be part of something that has purpose.

Struggling franchisees rely exclusively on extrinsic motivation.

They buy their team lunch and occasionally give them gift cards. They offer cash incentives. They tempt them with carrots without understanding the internal drivers that inspire people.

Wealthy franchisees better understand the humanity of their team members. They tap into their feelings, which directly elevates their work. Struggling franchisees don’t lead well because they’re too busy being busy.

How the franchisee SERVES

This might be the most tangible difference between great franchises and everyone else. You can see it in their business and read it in their online reviews.

Wealthy franchisees remember that every aspect of the business revolves around the customer experience. All offerings, branding, and marking are about attracting and delighting people. When a customer who can be spending their time and money anywhere on the planet comes to them, that’s a big deal. So they do more than exchange a product for money. They work to elevate the customer’s emotions. Even if they’re just selling ice cream, they deliberately seek to make the customer feel just a little bit better. Because what people get matters less than how people feel. Wealthy franchisees want more than customers; they want repeat customers. They want more than people thinking good things; they want people saying good things. Every transaction is a marketing opportunity. So wealthy franchisees create memorable experiences customers love, talk about and want to repeat.

Struggling franchisees sell stuff. They’re in the “next in line” business. They see customers but not people. Their perspective is two-dimensional. They move through transactions robotically. They think it’s enough to be polite and give customers what they came for. Their service isn’t necessarily bad; it’s forgettable. Nothing about it gets noticed. Nothing about it distinguishes the experience from the competition’s. Nothing inspires customers to spend more, spread the word, or come back.

You can’t reproduce a meal unless you use every ingredient. To enjoy the same level of success as their wealthy counterparts, struggling franchisees need to replicate everything about them, beyond the obvious operational elements. Only then will they know the true value of their business. If franchisors are serious about helping them, their support needs to extend to how franchisees think, lead and serve. That’s their best chance to close the performance gap and become a peak performance brand.

THE THREE SUPERPOWERS OF WEALTHY FRANCHISEES

1. How they THINK

2. How they LEAD

3. How they SERVE

THE AUTHOR

Franchise expert Scott Greenberg is the author of The Wealthy Franchisee: Game-Changing Steps to Becoming a Thriving Franchise Superstar.

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