The International Franchise Association (IFA) Annual Convention 2022 was officially opened today at the San Diego Convention center on 27 February. After the general session, the crowd split up and attended a series of educational talks.
Here is our roundup of the day:
Opening General Session
The opening session began with a general sense of glee and joy that the world’s largest franchising community could come together in person after such a difficult year.
Catherine Monson, CEO and president of Propelled Brands and chair of the board at the IFA kicked off the day’s proceedings with a great stat: 81 per cent of IFA members have retained their membership, signaling a clear vote of confidence in franchising.
Monson also spoke about the legislative issues the franchising world has been facing, namely the PRO Act, which was defeated by the entire franchising community, much to its relief.
She and the rest of the IFA are working on educating people about franchising and “telling our stories about generating generational wealth.”
Matt Haller delivered a speech to the convention too, and was especially focused on the legislative issues that the IFA has had to tackle, as a part of its ‘Enhance, Protect and Promote’ way of thinking. He was pleased to tell the franchising world that the IFA was instrumental in delivering PPP access, as well as defeating the PRO Act, which would have had the ability to render franchisees as corporate employees.
Haller pulled no punches on the FAST Act that has already passed the state assembly, saying “The FAST Act is essentially the PRO Act, but in California and on steroids.”
He made the point that labor activists and organizations saw the PRO Act fail at the federal level, and are now turning to friendlier states to push through what is almost exactly the same type of legislation as the PRO Act.
He also spoke on how the IFA is working with educational institutions to create world-class content to for the next generation of franchisors. Much like Catherine Monson, Haller was positive and upbeat about the state of franchising, and especially the IFA, saying “engagement in the Association is at an all-time high.”
Avoiding mistakes in international expansion
Ned Levitt, CFE, partner, Dickinson Wright LLP – Moderator
Roberto Litwak, CFE, chief operating officer, Feher Consulting – Speaker
Jim Goniea, general counsel, Self Esteem Brands – Speaker
International expansion is an area that can be fraught with danger, dealing with new countries, cultures and markets can be difficult to contend with. The speakers highlighted five questions that franchisors must ask themselves before considering international expansion. Litwak identified the five important questions: When, who, where, why, how.
“Ask yourself simple questions, like “Are my franchisees making money? Are they able to pay their employees well? Are my board of directors happy?” said Goniea.
“You’re about to add another stakeholder in the form of a master franchisee. Focus on the fundamentals before you even look at expanding internationally,” said Goniea.
International growth requires careful planning and an exhaustive knowledge of the market and internal teams before adding that extra pressure of international growth. Franchisors should be extremely selective about the master franchisees they pursue, a poor fit can lead to disaster in the long-run.
“In international expansion, the biggest mistake that you can make is picking the wrong partners,” said Goniea.
Choosing the correct market, and knowing it well is deeply important. Assuming that there is demand for the good or service is a dangerous assumption to make.
“Don’t underestimate the difficulties associated with language. There’s nuance in achieving success, and if you don’t have the ability to communicate those nuances, it can really slow things down. Language and cultural barriers are difficult to overcome,” said Goniea.
“The Great Retention” – How to retain your existing workforce
Jenna Hilb, director of field operations, Code Ninjas – Moderator
Christina Russell, CFE, CEO, Radiance Holdings, Sola Salon Studios, Woodhouse Day Spa – Speaker
John Kutac, vice president of operations, Code Ninjas – Speaker
The labor market has been challenging for franchisors ever since the pandemic started, with little end of the problem in sight. However, there are ways to keep employees happy and to retain them.
The session started with the presentation of a simple, but eye opening poll. It asked ‘what’s driving the great resignation’, and ‘no appreciation’ came first with 21 per cent, followed by ‘bad supervisor’ at 18 per cent. The thrust of this poll is to show that problems don’t always lie in salary and wages, but leadership and company culture. It’s important that franchisees and franchisors understand this, and don’t take the idea of poor leadership personally.
‘It’s the humility to realize, that it all starts with you as leaders. All the problems you’re having with retention start with you. You hired them and you lead them,” said Russell.
The panel cited an alarming stat, that 76 per cent of people say they work for a toxic boss, and would trust a random stranger over their superior. This ties in with the point Russell had made about commitments. Leaders must make commitments and stick to them. Forgoing commitments will erode trust and can eventually lead to a breakdown in communication.
“Is it the employee or is it you? It’s always one of the first things I ask,” said Dunaway.
Ultimately, leaders need to know where they are going, and what the goals are. They also need to break down those goals into actionable targets for smaller teams, so employees know what they are working towards. Culture matters too, and that has to be baked into everyday interactions as well as interviews, job postings, reviews and much more.
“It’s hyper-critical as leaders that we understand our why,” said Katuc.
Franchise development optimization through data
Dan Monoghan, CFE, managing partner, Clear Summit Group – Speaker
To prepare for his talk, Monoghan interviewed 14 thought leaders in the franchise industry, and came back with interesting results. One thing he was keen to make the audience understand was that “data is the blood that flows through people, lead, marketing and business in general.”
Attribution is a problem franchisors make all the time, they don’t understand exactly where their leads came from and as a result can pour resources into the wrong channels. He also noted that brands often measure the wrong things, and gave them misleading conclusions. Lots of leads can be generated for cheap, but the money and resources required to create a deal out of those suggests that spending more on qualified leads would produce better returns.
“Averaging benchmarks is a huge problem in franchising, different platforms will provide different results, taking Facebook leads versus a franchise developer as an example,” said Monoghan.
Brands can start their journey on a specific channel and sink a certain amount of resources over a time period and find no results. Naturally, many abandon that channel and all the hard work that was put into it. But there is a possibility the channel would produce returns in the near future, but there is the lack of historical data that tells a franchisor that it’s worth persevering; he said “You need a large data set to produce real predictions.”
Franchise development teams tend to work at optimum levels, too many leads and active candidates in the pipeline can become a paralyzing force. Around five to seven leads a day will lead to a reduction in performance of the team, and 25 active candidates is about the maximum a franchise manager can safely deal with in a month.
How do franchisors attract multi-unit franchisees?
Therese Thilgen, CEO and co-founder, Franchise Update Media – Chair
Cheryl Fletcher, chief operations officer, Tropical Smoothie Café – Speaker
Tim Courtney, CFE, vice president of franchise development, PuroClean – Speaker
Tray Doster, director of franchise sales, Zaxby’s Franchising LLC – Speaker
Franchisors are always on the lookout for experienced multi-unit franchisees, because they have a higher shot at success and can scale their operations quicker than single-units. Dealing with one person for five units, for example, is always preferable to dealing with five individual single-unit holders.
“Multi-unit franchisees are savvy and able to scale their operations quicker. It’s also one singular point of contact, which means that the franchisor can allocate resources better,” said Courtney.
Finding those multi-unit franchisees can be a slightly difficult task, but trade shows like the IFA Annual Convention are central to finding them – those multi-unit franchisees are always seeking to learn and connect with new people. Multi-unit owners eat, live and breathe franchising, which is why they consume trade journals and franchising magazines. They’re a strong way to reach out to multi-unit franchisees for a brand.
“Trade shows are a great tool, but there needs to be a direct approach laid out beforehand. The digital space is probably the main frontrunner,” said Doster.
It’s also key to see things from the multi-unit franchisees perspective, who undoubtedly sit above single-unit owners in terms of the attention required. They are also bringing a huge investment to the table, and that must be factored into the process they are made to follow.
“Multi-unit franchisees are investing a lot of money, so they want to be treated like royalty. They won’t want to follow your usual qualifying process and that can lead to frustration if they’re treated just like anybody else,” said Thilgen.
This was just a small taste of the excellent educational content that was delivered at the IFA Annual Convention 2022, we’ll be back tomorrow to report on the happenings in around the IFA Annual Convention 2022!