By Vaughan Granier
Jeff Elgin, CEO of FranChoice Inc, says
“A great Franchisor has a strong brand that creates a clear picture in the minds of consumers, and takes whatever actions they can to continually reinforce and protect this brand”
Anyone with eyes and ears has watched some brands recently take a huge knock in the media, as the business practices of their franchisees are exposed for being substandard (and sometimes exploitative). It’s a risk that as a franchise grows, the distance between the franchisor and the franchisee grows. This can weaken a franchisor’s oversight over the franchise system and the brand protection that comes with this. While draconian oversight is unnecessary, unwelcome and contrary to culture in most businesses, SOME visibility across your system is needed and can have hugely positive results.
What are your franchise priorities?
Most franchise management systems focus on financials – of course, they do. Businesses are there to make money and be financially successful. But it’s a reality that any business – and that includes your franchisees – has competing priorities and will have to make judgement calls every day about what it will prioritise. There will usually – if not always – be a time in a business’s lifecycle where the money is tight, time is tight, employees are scarce (or underperforming), deadlines are looming, and the franchisee will have to make a call about how to get through that tough season. In those times the economic value of the brand, especially when it comes with a real and measurable financial cost, can be de-prioritised.
Prioritising values has significant impacts for your brand and your consumer trust
Sometimes a franchisor and franchisee can discover that they do not share similar values around a business concept or priorities; it can be integrity, workplace compliance, health and safety; communication, the concept of a team; the possibilities are virtually endless. This can develop into brand-damaging issues if there is no way to identify misalignment and try to realign franchisee values and priorities with the rest of the network. Finding and recruiting franchisees that share your exact value set is the holy grail of brand management, but it’s not as easy as it sounds. It is critical to be aware of, however, because your practiced values have a direct impact on consumer loyalty. Remember the financial devastation and brand damage caused by the emissions scandal of Volkswagen? Volkswagen said they were environmentally focussed, but their actions – their real priority – was money even at the cost of the environment. When behaviour and stated values diverge, so does consumer trust. Volkswagen’s customers voted with their wallets:
Source: Business Insider AU
Visibility over business decisions and practices across your franchise network can protect brand credibility
Unless the franchisor builds into the business model the kind of accountability and oversight that can be scalable and effective over distances, there will always be a lack of visibility. This can cause a delay in the franchisor becoming aware of business decisions or practices that can affect their brand credibility. Where those decisions are not directly financial, the question should be asked: “What systems and behaviours will create accountability and visibility so that the franchisor has real time awareness of business decisions and practices far away?”
The franchisor needs to develop or implement systems that support the franchisor to be effective in running a business, AND that provide the required brand protection for the franchisor. The key to this is not just by using financial systems; but also by adopting business management systems that enable deep analysis of variables so that the franchisor can develop business intelligence around what makes a successful franchisee and what doesn’t.
What you measure is what you get
Franchise KPI’s need to be geared towards generating and consistently maintaining the right long-term behaviour, not just the best short-term results. What good, we ask, is a KPI that measures financial success, if the franchisee achieves those by underpaying employees, or cutting corners on product quality, which will seriously affect your brand quality and reputation?
“Perhaps what you measure is what you get. More likely, what you measure is all you’ll get. What you don’t (or can’t) measure is lost” – H. Thomas Johnson
So how do you measure these “softer” metrics that deliver such hard lessons when the ball is dropped?
Our next article focusing on HR compliance in Franchising will explore this in more detail. Please share this this to anyone in your franchise network who you think may be interested.
Vaughan Granier is the National Workplace Relations Manager for HR Assured NZ. He has over 24 years’ experience in international human resources, health and safety, and workplace relations management. With over 10 years working in New Zealand and Australian companies, he provides in-depth support to leadership teams across all areas of HR, Health and Safety, and employee management.