Back to Basics: Faithfully delivering on your brand promise

Successful executives focus on the basics every day regardless of the internal or external circumstances of their business or the world at large. In franchising, focusing on the basics is crucial. A franchisor’s main goal and obligation is to ensure that franchisees effectively deliver on their brand promise to consumers without the added level of control that corporately owned locations allow. The most effective franchisors have a well-defined understanding of their core brand promise and what support franchisees need to best meet that standard. From that base of understanding, a franchisor can then branch out and identify areas of the business that need to be specifically addressed or adapted and areas that should stay the course without much adjustment. 

This focus on basics is crucial during periods of sustained success and during challenging times. While each difficult situation is different, there is frequently a clear and avoidable thread that runs through the troubled systems we have seen. Difficulties often become more pronounced during times of economic uncertainty.

Successful companies, whether in franchising or not, understand that breaking through and achieving sustainable success as a brand requires a laser focus on three basic elements of their business:

• Identifying, prioritizing, and maintaining brand standards at each location
• Intelligently growing to scale in the relevant markets to ensure brand recognition
• Maximizing the unit economics across your system, chiefly through achieving economies of scale

The difference between doing well and struggling almost always stems from whether management has continued to focus on and prioritize these basic issues. As franchise systems grow, they often place greater emphasis on strategies to drive franchisee recruitment than on the health of the actual franchise system and unit-level operations. That neglect can sometimes go on without creating a noticeable impact during periods when things are otherwise going well. However, those problems can create systemic issues that rear their ugly heads should other challenges occur that stress the brand in other ways.

Beyond symptoms

Take a step back from the immediate issues your franchise system faces today and look closely at the reasons underlying your problems–not just the symptoms. Recognize that some of the issues are caused by structural decisions made in the past that need to be corrected. Often in franchising, many of those decisions were caused by a focus on growth and not the needs of sustainable growth management. Too many franchise strategies are built to emphasize selling franchises and, unfortunately, not making the franchise system viable for the long haul. It is far easier to sell a franchise than to sustain a franchise system, and that is a dangerous trap for a franchisor of any size or experience to fall into.

Ask a franchise executive, “How’s business?” You are likely to get one of two answers. Experienced franchisors will talk about same-store sales, franchisee performance, new product development, and issues focused on system sustainability. Less experienced franchisors will generally talk about the number of franchise sales in the pipeline, and frequently, when probed, do not know anything about the unit economics at the franchisee level. 

When asked how frequently a franchisee is visited, inexperienced franchisors will measure frequency by the calendar. Experienced management will talk about a visitation schedule based on unit performance measures, the requirements of ensuring quality operations, and the plan for each unit visit. Focusing on the basics doesn’t mean you should not have a nuanced process for supporting your franchise system. 

Franchise systems need to have a balanced approach, and that means fees need to be set to allow for the proper training, support, brand evolution, relationship development, and return on investment required to deliver a consistent brand promise to consumers. Franchisees today may require additional or different support than traditionally provided, new product development to meet consumer demand, and brand marketing to achieve their financial goals. Equally important, decisions based purely on a franchise salesperson’s desire to overcome prospective franchisees’ concerns can put long-term stress on the system. Balancing marketability with the needs of the unit operations is an essential part of the decisions to be reviewed in ensuring sustainability at each level.

Make sure to include your franchisees in the process as their support in executing any systemic change will be essential. Create clearly identified and measurable KPIs to measure and manage the performance at the unit level. Communicate and train your franchisees on how those KPIs will impact their business. Get feedback from them on whether meeting those KPIs is having a positive impact on their business. Consistently evaluating your KPIs will provide the tools needed to manage and evolve your system’s goals and objectives.

When the going gets tough, get back to the basics of your franchise system. Focusing on the three basic elements above will allow you to understand the unique requirements of your businesses and enable you to modify your strategies appropriately.

Andrew Seid, CFE, is senior consultant at MSA Worldwide. Contact him at [email protected] or 860-604-9189.

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