Benchmarking helps franchisors manage franchisee performance

A franchise won't flourish unless the franchisor is setting goals for franchisees and supporting them along the way

Benchmarking helps franchisors manage franchisee performance

One of the things that successful franchisors need to do on a regular basis is monitor their franchisees. This could involve weekly, monthly or even daily capture of data, possibly direct from tills or through accounting software. But that shouldn’t be the end of the process.

The best franchisors know exactly what good looks like for their franchisees – both in terms of sales and overheads – and they will benchmark their network to check that franchisees are on track. Doing this ensures that as soon as a franchisee’s figures deviate from the plan, action can be taken to help them understand why things are not quite where they should be.

But what exactly is benchmarking? According to Wikipedia, it is the comparison of a business’s processes and performance metrics with industry bests and the best practices of other companies. This translates really well into a franchising environment, where a franchisor can gather data from all its franchisees, recording the key performance indicators over a period of time to identify how the whole network performs. It is then an easy matter to review individual franchisees against the average and divide the network up into the strongest performers, those in the mid-range and the ones at the bottom who are not performing as planned.

Benchmarking can also ensure that support is directed to the right franchisees at the right time. Sometimes this might be for the underperformers: maybe sales are down, so one of the field staff can go out and help the struggling franchisee get back on track. Alternatively, if costs are too high, benchmarking can help a franchisor understand exactly what all the franchisees are reporting in terms of costs as well as top-line sales figures.

Franchisors also need to ensure that the top-performing franchisees are looked after, not just the underperformers. Maybe they need some help taking on additional staff or premises to support their growth. Or perhaps they require assistance on improving profitability as well as turnover. The most successful franchisors will provide a range of support and assistance to all of their franchisees that is tailored to their needs in terms of performance and future ambitions.”

Good franchisors know that a weak link can adversely affect the rest of the network, so it is important to check that franchisees are maintaining standards and following the system. Sometimes this means that a franchisor has to get tough with a franchisee but that is part of making sure that the whole network is pulling together and no one is letting the side down.

Policing the brand and the standards is therefore an important part of building and running a highly successful network of franchisees.

Cathryn Hayes
Cathryn Hayes