Page 12 - August 2022

5 THINGS

Franchisors

Need to Know

By Carlos Gomez

s a franchisor, one should build a compre- truly helping the franchise brand and/or the franchisees’
hensive business model based on brand success. If certain KPIs are met one should give incen-
recognition and success the brand has tives to franchisees that perform at a higher standard
in the marketplace. With success in the through awards for top performers or with descending
marketplace, it may be difficult to adapt to license fees and royalty rates. With monthly or quarterly
A the needs of one’s customers, and at times, check-ins, one can understand the struggle franchisees
those difficulties can cause internal issues for which one may be facing and provide guidance or accountability.
is not prepared. This can negatively impact the financial Continually monitoring one’s franchisees’ progress is
health of a business and its franchisees as well as one’s
brand recognition.
Here are five thing franchisors need to know to
proactively mitigate the risk of brand repudiation in the
marketplace.

1 Know One’s Strengths
Think about how one monitors his/her franchisees’
performance, quality of service and/or products, and
customer experience. The financial performance measures
across franchisees when adjusting for local markets can
help identify the differences that can impact what turns
leads into new and returning customers. There are other
indicators one can use such as comparing seasonality and
household income trends of the area. To mitigate issues,
one should establish Key Performance Indicators (KPIs)
that meet the model mission statement and goals of the
franchise. Tracking KPIs of the franchisees’ success and
return rates can help determine if leads are adequately se-
cured and if the quality of work is sufficient with relation
to limited refunds, change orders, and/or reworks.

2 Know One’s Weaknesses
It is important to continue to do what makes a fran-
chise successful but it is just as important to strengthen
one’s weaknesses. To truly analyze one’s weaknesses, one
must understand what is and is not working. If KPIs
are in place but one isn’t monitoring sales/progress,
providing feedback, and/or incentivizing, then one is not

12 NBIZ ■ August 2022