Best Practices

Wisconsin is the latest state to push back against the overreaching National Labor Relations Board (NLRB) by passing a new law that affirms franchisor and franchisee employees are separate entities. Senate Bill 422 was just signed last week by Governor Scott Walker and applies to state enforcement agencies.
SB 422, which excludes a franchisor as the employer of a franchisee or of an employee of a franchisee for purposes of certain laws relating to employment, was signed in the wake of a decision by the NLRB to change 50 years of federal labor law and legal precedent.
Wisconsin is the latest state to enact legislation that provides clarity to the small business community. Nearly a dozen states have passed or are considering actions to protect local franchises against federal government overreach...

Franchising is full of creative entrepreneurs and marketers. With creativity, however, comes the desire to explain franchising in terminology that differentiates a brand from its peers.
Take for example a model FRANdata has defined for years as the Area Representative Growth Model. This model uses intermediaries (area reps) to sell and support franchisees in a territory, but those intermediaries do not contract directly with franchisees. We've come across at least 10 different names for this model, including regional director, regional developer, regional manager, regional services, master franchisee, master franchisor, area franchisee, area director, area developer, and area representative. This is a terribly confusing situation for prospective franchisees, lenders, suppliers, and the industry overall...

Organizational productivity is dependent upon teamwork, which I describe as two or more people working together for a common goal. Team can be expressed or implied, conscious or unconscious, but regardless, organizational productivity depends upon the effectiveness of interdependent, collaborative effort.
Teamwork can be fair, good, or great, but there really is no such thing as bad teamwork. If you think about it, bad-teamwork is actually an oxymoron. To further this point, the English language doesn't have one single word to describe the opposite of teamwork. We generally associate "the opposite of teamwork" with uncooperativeness, inter-organizational competition, backbiting, and under productivity.
Partners or families endeavoring to develop, manage, or grow a multi-unit franchisee organization often struggle with building strong collaborative teams...

One size does not fit all in today's environment
This column looks into the use of employee handbooks by multi-unit franchisees, particularly those originally drafted by the franchisor or by a third party operating in a different state from the franchisee's territory.
I begin by exploring the definition of "employer of record"--and how it can help shape expectations for a multi-unit franchisee, specifically relating to employer liability in an evolving regulatory landscape. Second, I summarize the rationale for why employee handbooks should come directly from the employer of record. Third, I offer a recommendation that could help mitigate potential vicarious employer liability and minimize the risks of future claims that parties acted as joint employers...

16 million kids in America don't know where their next meal is coming from. That's 1 in 5 children who face hunger in this country. The food service industry, including franchise brands, and research firm Technomic are trying to make a difference in helping to end this societal blight. One way is through participation in the annual Dine Out for No Kid Hungry campaign.
This past September during No Kid Hungry month, consumers helped over 9,700 restaurants across the country raise money simply by dining out at participating restaurants, purchasing select items, or making a small donation.
Technomic put their foodservice knowledge and expertise to use by conducting qualitative and quantitative consumer and operator research to help No Kid Hungry better understand and communicate the benefits of participation...

Don't just tell your employees to be present or to provide genuine hospitality without telling them Make it black-and-white, and make it measurable. One of my favorite hospitality systems for making a customer connection is the "5 E's": 1) eye contact; 2) ear-to-ear smile; 3) enthusiastic greeting; 4) engage; and 5) educate.

The IFA issued a statement applauding Congress last week on its efforts to enact the FY2016 omnibus spending package, which contains many provisions beneficial to small business owners. But the IFA said it excluded a bipartisan provision that would have temporarily halted the National Labor Relations Board's (NLRB) enforcement of its joint employer standard.
"The omnibus bill includes a delay of the Health Insurance Tax (HIT), which would have increased health plan premiums on individuals and employers, and it includes a two- year delay of the 40 percent excise tax on high-value health plans," IFA President & CEO Robert Cresanti stated in a letter to Members of Congress. "This, coupled with the passage of the tax extenders package, will have a salutary effect on small business growth and job creation...

Key managers are the bedrock for any size business. They shape the culture and provide the leadership to drive results in line with the vision, mission, and strategic goals of the organization. Due to the operational and leadership weight they carry, if a key manager leaves the business without a plan for a speedy replacement, the organization can be left incapacitated. As a result, the development of leadership and management bench strength is critical to providing for the continued success of the franchise business.
The process of bench building is relatively simple, however, discipline to implementation is where many organizations struggle. Adopting the following philosophies in your process will ensure your program is on the right path...

There are many misconceptions about how to go about valuing your business. In general, most business owners have a value in their mind that is usually several times more than the actual value a sophisticated, competent buyer ultimately pays. The process of getting from perceived value to sale price can be very, very challenging. Here is some helpful information to get you to a successful valuation and faster sale of your business.

Business valuation

A new calendar year is just around the corner. For the majority of small business owners, that means it is time to examine performance for the year that is past and adjust the vision and action plans for the year ahead.
Success does not happen by accident. If you want to reach your full potential you can't just "wing it." You have to have a clear and concise plan and be ready to take action on the first day of the new year. Anything less and you have missed an opportunity to be all you can be, have all you can have, and accomplish all that is possible for you and your business. Don't worry, it does not have to be complicated. Set aside a little time and simply:

Your people deliver the brand experience

For many years, our organization struggled to create a solid, stable team. We were guilty of hiring to fill spots rather than thinking of our people as guardians of our brand. We stepped back and decided to create a system. We started from scratch and asked, "What does the ideal employee look like?" Then we found a tool that profiles the work style of the employee.
The tool is not a personality test per se; it is an assessment of work style. We applied it to all our employees and found a consistent profile of our best employees. We were able to determine that when we were outside that profile, in general we had employees who did not fit well for us. In a sense, we were asking people who were "off profile" to work in a way that was inconsistent with who they were...

Socialmediatoday.com claims, "there are over 2.206 billion active users, a global penetration of 30%." With nearly a third of the world's population interacting on social media platforms, you'll be hard pressed to find a brand that isn't active on social media. Some key reasons a brand would be wise to commit to a strong social presence are:

Brand Recognition
Social media puts you right in front of the consumer's eyes at a fraction of the price of a paid advertisement. Creating social content that speaks in a brand's unique tone and voice goes a long way.

Inbound Traffic
Having a large social following means more consumers are engaging with your promotions. More people seeing these promotions means more people actually visiting your site to get a better feel for your product or service...

The difference between a weak and a strong franchise is often the alignment between franchisor and franchisees. Franchise Business Review's franchisee satisfaction research shows that franchise brands with strong cultures: 1) have extremely high satisfaction and engagement among their franchisees, and 2) outperform their competitors by a factor of 300 to 400 percent.
Great company cultures don't just happen. They are always the direct result of inspiring leadership and constant efforts to grow, learn, and improve. Trust also plays a crucial role: its absence creates a barrier to performance, while its presence, which promotes creativity and teamwork, accelerates it.
While many franchise brands pay lip service to building trust with franchisees, few actually do...

Culture is something that can't be measured by Google analytics. But it has inherent value and it makes a tangible difference. Creating, implementing, and maintaining a strong culture that reflects your values and beliefs can pay off in employee and customer satisfaction - not to mention the bottom line at your franchise locations. Creating a culture is just what Brent Collier has done.
He operates 14 restaurants from 6 different franchise brands along a 25-mile stretch in the tourist mecca of Pigeon Forge, Tenn., and faces a nice kind of problem: his restaurants compete for the same customers. But that's not really a problem, since the area draws more than 11 million tourists a year.
The way he figures it, most visit for an average of three days, which he translates into "nine meal opportunities...

What business are you really in?

Was I wrong when I said you should offer a price match guarantee?
This question was inspired by reading Jeff Shore's article on Entrepreneur.com, "Don't Wage a Price War. Win Sales by Eliminating Your Competition." A paradigm shift is needed from selling a commodity someone can get anywhere to selling an experience customers can enjoy only with your company.
Everyone in your organization needs to have this mindset: We are the ultimate experience provider. We will not be oversold. In fact, if you can find it more expensive somewhere else, we will raise our prices and match it.

Creating a great business and successful franchise is art and science, timing and luck. While luck and timing are largely out of your control, at Hwy 55 Burgers, Shakes & Fries we’ve learned a lot about the art and science of successful growth. Here are seven key elements and tools that have supported our expansion.

1) Build a great leadership team
A great leadership team is crucial to a franchise’s success. It is impossible for one or two people to do all the work themselves, so create leaders across the organization. Kenney Moore, the CEO and founder of Hwy 55, started the franchise with one location and $500 in his pocket, and went around re-opening closed restaurants. By the time he had opened four locations, he realized he was working himself to death and not making a lot of forward progress...

Throughout my career I have observed that a strong alignment of interests between two business parties usually leads to good outcomes for both. All franchisors with any marketing savvy will say they are strongly aligned with their franchisees. What is the evidence that a brand walks the talk?
There are many ways a franchisor can help its franchisees, starting with a full and high-quality support program, and including a disciplined prospect screening program, training that measures results, site selection and opening assistance based on proven criteria, and field operations and compliance that are effective.
Then there's transparency. Brands that have a meaningful Item 19, that have system dashboards that compare unit performance in real time, that support capital access through SBA eligibility and Bank Credit Reports (BCRs), and that seek system feedback through independent third parties are further examples...

Franchisees from across the country gathered this week in Washington D.C. to rally around the franchise business model and meet with members of Congress to emphasize the industry's importance. It's the 2015 International Franchise Association's (IFA) Franchise Action Network Annual Meeting, an event that helps get attendees excited and ready for meeting with elected officials on Capitol Hill.
"Not everyone understands the franchise business model and how legislative and regulatory decisions can greatly impact small franchised businesses," said Catherine Monson, CEO of Fastsings and a speaker during the event. "It is critical for all of us in the franchising industry to proactively develop relationships with our Congressional Representatives and Senators in order to preserve and protect the future of our businesses...

John Tschohl is a best-selling author, an internationally recognized service strategist, and president of Service Quality Institute - a leading customer service organization. He offers a concise and practical list of six essential customer service principles.
These "Personal Steps of Excellence" would go well in a frame on your office wall and those of your general managers.

1. Feel Good About Yourself. Employees do not go to work dreaming about how they can work exceptionally hard to make the company and the owner more money. Be realistic. Many employees have personal problems. The more we can uplift the self worth and self-image of employees, they become more productive and feel like there is a win-win relationship. In return they will deliver a higher level of excellence...

What franchisees want from corporate field support is pretty straightforward. Basic expectations include great products, marketing and brand support, ongoing training, site selection, purchasing power for goods and services, and participation in product and program testing. While those are the table stakes, what makes systems really successful and builds strong relationships between franchisor and franchisees is communication, consistency, and listening,
"For our organization, what's most important is for our field consultants to communicate the same message," says Spencer Smith, CEO of the Smith Group in Cortez, Colo., which operates nearly 50 Aaron's stores and 3 Rent A Wheel units across 8 western states. "We have 46 Aaron's locations, so we have 5 different field consultants from Canada to Mexico...