6 Tips for How To Help Your Franchisees Battle an Industry Downturn
All industries will experience a downturn at some point. It's important for franchisors to know how to help their franchisees when they are struggling. Providing good support, especially for training and marketing, can help franchisees combat lower sales. Leadership and communication from the franchisor also are key to surviving an industry downturn.
Communicate with franchisees regularly
The key to any successful relationship is communication. Honest, open, and candid feedback might be painful. But ignoring facts, sweeping them under the rug, or distorting the truth are signs of weak leadership. If franchisees are struggling, you should communicate with them even more regularly. Update them on how the brand is doing compared with the industry overall. Explain your strategy and offer support. Brands that have been around for years have probably already weathered industry downturns and should be able to do so again. While you are going through it, reassuring your franchisees with facts can go a long way.
Focus on training
When there are fewer customers in your industry, making sure customer service is excellent is crucial. A key to great customer service is great training. It is the responsibility of the franchisee to properly train and motivate their employees. However, franchisors must provide franchisees with the tools they need to hire and train top-tier employees. Today's hiring environment for all employees is more competitive than ever, so it's important that the franchisor gives franchisees the necessary tools to compete for talent.
Don't compete solely on wages
In the fast -casual industry, restaurants are already paying $1 or more over minimum wage. During an industry downturn, operators have to watch their spending, so paying entry-level employees more and more isn't always feasible for the bottom line. Instead, a franchisor should encourage franchisees to create an attractive company culture. This culture should include a career path that offers advancement and opportunities within the organization. For example, at Penn Station we provide franchisees with My Penn Path, a career path program that illustrates how hourly employees can move up the ranks in a restaurant.
Provide a comprehensive training program
Training is a huge part of operations and should be covered extensively in your operations manual. Make sure you are providing franchisees with the tools they need to train today's learners. These may include more videos and games and fewer pamphlets full of long-winded copy. As a franchisor, it is up to you to train your franchisees well so they can take that same approach in their own business.
Spend your advertising dollars in the right places
Most franchises have a national advertising fund that the franchisor manages. If your industry is experiencing lower sales, it's more important than ever to make sure that money is spent smartly. Evaluate your marketing strategy, and make sure you are focusing your advertising dollars where today's consumers play. Three years ago, more people were watching TV and spending less time on social media. Today, people are fast-forwarding through commercials -- or skipping cable entirely -- and spending much more time on social media. Your advertising strategy should reflect that change. For example, it's amazing how many restaurant executives watch Netflix, which is commercial-free, yet continue to focus their company's marketing dollars on traditional television.
Maintain the quality of your product and employees
To save money during a period of lower sales, it is tempting to cut costs or quality, reduce portions, or cut back on personnel training and retention. These things must stay consistent or you risk losing the customers you have. Instead, evaluate the cost structure with each supplier. Don't just automatically accept a 2 to 3 percent inflation adjustment if the cost structure hasn't truly grown with inflation. Instead of making big changes to the brand, encourage franchisees to go through their P&L line by line and look for small savings that could add up.
The ability to help franchisees combat slumping sales is part of establishing a brand with longevity. By providing good franchisee support and communication, you should be able to help your franchisees survive an industry downturn - and thrive when the industry rebounds.
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