It’s pretty tough out there. Costs continue to rise, eroding margins and franchisees and franchisors need to work harder than ever to succeed. However, the title of this article from two quotes combined – from authors Denis Waitley and Lee Child: “Hope for the best, plan for the worst and expect to be surprised,” offers a way forward.
Planning across key franchise areas will help ensure you are ready for the unexpected, especially in a challenging marketplace. And if I really had to prioritise, I would focus on cashflow, culture and staff.
Cashflow is king
Realism around cashflow is a critical success factor, so be prudent in relation to reserve planning. This is particularly the case if you are looking to buy a franchise. Plan for worst case scenarios.
Using an experienced business planning partner who knows the franchise industry will help with accurate forecasting and it may be critical to secure finance through the banks. Franchise consultants generally plan over five years while banks look at a three year plan. Ensure any borrowing is based on evidence of performance of the network. For a van based franchise I was once taught a good rule of thumb: if the Franchisor who set up the business can make £150k per year, a typical franchise will make 50% of this. Therefore, ensure planning is based on realism over optimism.
For franchisors looking to grow, remember to factor in regional differences. A successful pilot in London may not perform as expected in other cities, so test the concept thoroughly before ploughing ahead.
Franchisees need to understand a survival budget and ensure they have enough funds in reserve to make a go of the business.
Culture eats strategy
Once your ducks are in a row in relation to finance, then culture needs attention.
I love the quote attributed to Peter Drucker: “Culture eats strategy for breakfast”. It explains in just a few words how and why things can go wrong. You can have the best concept but if the boss sucks and the culture is suspect, then staff will be undermotivated and this will filter down to the front line. Customers will notice and go elsewhere.
The best company cultures are thoughtful and highly communicative. Take the big boss who ‘walked over’ the information promised to me earlier in the day, or the fast food shop that serves tasty snacks to queuing customers. A thoughtful approach goes a long way to building staff and customer loyalty alike.
One franchise company offers potential franchisees choice from a sandwich menu, puts up a welcome board and sets aside a parking space when they visit. This shows they are listening and that they care. It’s the same for staff interviews. Try and create a positive experience that will be remembered: a love affair with the brand. If the support office staff culture is right this will translate into delivery.
Another great example is the Seriously Good Swim School. At the end of each half term, they would arrange a free for all, after the swimming lessons. Teachers would dress as pirates and join in. It was seriously good fun for the kids and showcased how the franchise delivered culturally on its promise in front of those all-important paying parents.
The quickest and easiest way to test company culture is through a blind survey. Be sure to evaluate and act on feedback.
Staff
Not only do you need the right people on the bus, they need to sit in the right seat.
Be aware that people quit bosses not jobs, but also remember that every employee will leave eventually so preparation can soften the blow.
I completed a mountain skills course on Yr Wyddfa and another experienced participant took three pairs of gloves to my one. I soon found out why: performing an ice hack arrest with wet gloves in freezing conditions wasn’t ideal! Always have a backup plan.
The equivalent is the franchise CEO who keeps five or six potential CVs in his draw for each of key position in the business, just in case. Succession planning needs to happen constantly to ease the pain when a good staff member does move on.
Nailing the financial planning, culture and staffing of your franchised business will go a long way towards solving some of the common challenges from securing finance to avoiding the loss of key accounts or team members and even poor customer reviews. Action taken to address any issues will ensure your franchise is in the best position to take on challenging economic times.
If you are interested in learning more about this topic: Profitable Partnerships: Improve Your Franchise Relationships and Change Your Life is an excellent book by expert on how to work through the people challenges in franchising, authored byGreg Nathan.
