5 ways to help struggling franchisees

Are some franchisees jeopardizing your franchise system? Here are some suggestions on what you can do to help them.

Your system is only as strong as your weakest franchisee so it pays to take preventative measures to avoid risk. Four franchisors tackled this topic at the IFA conference 2017 in Las Vegas.

Fundamental to a successful franchise is a compliant franchisee network. Franchisors who are starting out need to get this in place from the beginning, suggests Mike Rotondo, CEO of Tropical Smoothie. That creates a foundation to build on.

It’s inevitable that as you run your business you will become complacent about individual franchisee performance as you have so many aspects of business to worry about, he says.

So if you have franchisees struggling to keep up and build their business what should you do?

1. Consider investing more in marketing

“Sometimes for the right franchisee, we will put fees into marketing for their store. It’s very hard to get someone to say they don’t want you to invest in their business,” says Rotondo. But there’s a time limit on it. “We provide a 90 day plan. Document what’s happened and your solution.

“And if you’re doing something, you need something in return – talk to your lawyer, if you are doing something significant, consider getting a release.”

2. Focus on training and support

Matt Phillips, chief strategy and marketing officer, AdvantaClean Systems Inc says “I require a struggling franchisee to retrain, to make sure they are familiar with processes, maybe there are new manuals they’re not reading. If they are willing to dedicate the time, then ‘ll have the conversation with them about investing in them.”

Jonny Weber, area developer, Sport Clips Inc, echoes this. “Make sure your franchisees are working the system. Train, retrain and retrain. The support must be there, and you must live your values as a brand.”

3. Encourage continuous improvement

How do you keep franchisees’ energy and focus on their continous performance and ROI as the business grows?

Weber values internal communications and inspiration gained through conferences, great speakers, and sharing sales figures.

For Rotondo, the key is to look for potential roadblocks, to educate the franchisee about strategy.

“That’s what keeps them energised – thinking about what’s ahead. It keeps the franchisee engaged. If you don’t do that, they start to think of ways to change the brand. If you don’t provide it, they’ll go out and try and find it.”

Phillips points out that as they mature franchisees may reach a certain turnover and they’re happy. “They think, why go to $5m if I’m happy at $600,000?”

His solution is to provide leadership meetings for higher performing franchisees.

4. Pay for good BDMs

Phillips admits to a rookie error that had a direct impact on franchisee performance.

“One mistake I made early on was not understanding how important the business development manager was. I took all the phone calls myself, then realised I didn’t do enough.”

He has observed a big difference in the results achieved by BDMs paid a low wage as opposed to those well-rewarded for their efforts and experience.

“You really can’t not afford it. Find a way to afford a good BDM and it will save you money down the track” he says.

One way to incentivise is to pay a salary plus a bonus on same-store sales.

Your BDMs are on the frontline with franchisees and will set the tone for the relationship. They need to command respect, says Ralph Thiergart, vice president, franchise services, Choice Hotels International.

He suggests that BDMs have two out of the three requirements: franchising, business or industry experience.

“They have to be seen as a peer, not an employee, because they are talking to business owners,” he points out.

5. Get recruitment right

Get back to the basics and review your recruitment strategy.

“If you’re not taking time to think about prevention, you should,” warns Rotondo. Think about the process of recruiting and then working with franchisees as courtship vs marriage.

“Your sales team has to understand they date the people, the ops people have to marry them. Don’t bring someone to the altar you don’t want the team to wake up to every day.”

He also suggests setting a task for franchisees on discovery day: franchisees have to bring 250 business cards of people they have networked with.

“In the application process, if sales say they need to fill out an application but the prospect wants to talk about location, if they can’t follow the system while they’re courting and supposed to be putting on the best efforts, don’t follow it through.”