From Founder to Franchisor: Performance Improvement Plans That Work

Performance issues are inevitable in a franchise system. The real question is whether the franchisor has a process that gives struggling owners a fair chance to improve without letting the problem drag on indefinitely.

A performance improvement plan should do more than document what went wrong. It should lay out what has to change, what support the franchisor will provide and how both sides will know whether the business is moving in the right direction.

“Commitment from both sides. It requires a franchisee to commit to changing behaviors and operating in a different manner,” said Brad Schneider, president of The Growth Coach. “It also takes a commitment from us to be empathetic. The plan has to have teeth to help someone get back on track, but it has to feel achievable with plenty of support to help an owner believe that a turnaround is possible.”

Start With the Real Problem

A weak performance improvement plan usually treats the symptom. A stronger one begins with a clear understanding of why the unit is underperforming in the first place. That requires franchisors to stay close enough to their operators that a performance gap is not a surprise.

For The Growth Coach, regular coaching sessions give the brand visibility into what is happening before the issue becomes more serious. In Schneider’s view, performance problems often begin when owners pull away from that support.

“For us, we have a strong indication of the root cause because we engage our owners in regular coaching sessions so we are never surprised when a performance gap arises,” Schneider said. “Usually, performance issues begin with owners disengaging with our coaching program. They usually do this out of fear or frustration because for many of them, this is the first time in their careers where they have not performed at a level that meets their expectations.”

That changes how the plan should be built. Instead of only telling an owner to improve the numbers, it should bring them back to the habits, systems and support that drive performance in the first place.

Make the Path Clear Enough to Follow

The plan itself has to be specific. It should define what must change, how progress will be measured and what each side is responsible for doing. In franchise systems, where the franchisor does not run the unit day to day, that level of clarity matters.

An effective plan must include both leading and lagging metrics, especially when the work being done now will not show up in revenue immediately.

“For our business, the work this month is what produces the revenue in the next few months so giving them clear targets to stick to when the results are not immediate is important to let them know that they are on track and that success is coming if they stick with the plan,” Schneider said.

Documentation is what keeps the process from becoming vague or personal. It should make the performance requirements clear, while also outlining the behaviors and support each side is expected to bring to the plan.

Without that, accountability can start to feel arbitrary. With it, the franchisor can hold the line while still giving the franchisee a fair opportunity to execute.

Know When Support Is No Longer Enough

A performance improvement plan should have a defined purpose. It is there to help an owner get back on track, not to keep extending the same conversation without progress.

That can be one of the harder parts for franchisors, especially when the relationship is personal or the owner has been part of the system for a long time. But the plan only works if both sides continue following the behaviors and support strategies they agreed to.

“In our network, our owners typically know when it is time and they will tell us so,” Schneider said. “It usually coincides with a breakdown in the agreed upon behavior and support strategies. If the disengagement arises again, we both know it is time.”

A strong performance improvement plan should make the next step easier to see. If the franchisee reengages and follows through, the plan may help reset the business. If the same disengagement returns, the franchisor is not left guessing about what needs to happen next.

For founders moving into franchising, that kind of structure is important. A good PIP gives the owner a real opportunity to fix the problem without asking the brand to relax its standards. It also gives both sides something concrete to come back to: the plan, the support offered and the follow-through.

Growing and selling franchises is difficult. Want to learn more about how 1851 helps franchisors grow their franchises with confidence? Visit www.1851growthclub.com and see what we can do for you.