How to Define Your Franchise Positioning, With Joe Mathews of Franchise Performance Group

Joe Mathews is the founder and CEO of Franchise Performance Group*, a franchise-development firm that helps brands define their positioning to maximize their potential within their segment. Mathews has been in franchising for 35 years, starting fresh out of school as a recruiter for Subway, back when the sandwich shop had just 350 units. In 2002 he founded Franchise Performance Group as a think tank to “help franchisors do for themselves what they do for their franchisees,” said Mathews. 

Through Franchise Performance Group, Mathews has created a suite of services to help franchisors scale and perfect their business practices, assisting brands with everything from recruitment and lead generation to marketing and content development. The firm also provides management and advisory services, bank partnerships and private equity funding. 

Talk to anyone in franchising, Mathews said, and one of the first things they will point out is the unique nature of the business. 

“In our parlance, we would say every franchisor is in two businesses: the consumer-facing model, and the franchise itself, which is an investment opportunity that has its own target market and value proposition as an investment program,” Mathews explained. 

For this reason, brand positioning for franchises can’t be a one-size-fits-all process. “The brand has got to know what its value is and who would actually see value in the brand,” Mathews said. “That’s only half the equation. The other half is do they have what it takes?”

When defining their franchise positioning, Mathews said that brands need to take several things into consideration. 

“Brands need to ask themselves, What is our value position as a franchise opportunity? That includes not only what they can provide to a market that 4,000 brands already aren't, but also what can they provide to the franchisee that the market is ignoring,” said Mathews. 

Once a brand has established its value as both a consumer product and an investment opportunity, the next step is finding the right marketing and lead-generation strategy. 

“Our definition of lead generation is intersecting people who want what you have at the point of interest,” said Mathews. “If you unpack that definition, you have to have your value prop clearly articulated, you have to know who is already looking for you, and then you have to intersect that person on the web, and that’s your lead gen and content strategy.”

The truth is, Mathews said, not every franchisor can be worthy of investment. “If a brand is a higher investment they have to produce higher returns. There are brands that are high-investment and high-risk with low returns,” said Mathews. “With those, I would say take a good hard look at your model and find creative ways in the short run to increase ROI and find a way to mitigate risk.”

To Mathews, risk mitigation can mean any number of things, from investing in grand openings to allocating more personnel to first-year ramp efforts to getting people in the market to drive sales to creating performance guarantees and getting people invested in marketing. 

“Overall, franchisors need to look at enterprise value over short-term cash flow,” said Mathews. “With shared risk models, franchisors can end up making more in the long run. There are existing franchisees that are looking to expand and invest, if you’re a franchisor you have a proven operator, give them the cash. If you run the numbers, most franchisors will see a three-year payback and double or triple their money in equity.”

Mathews advises franchisors to look at their value proposition as an investment, with the same level of detail that they look at it on the consumer side. 

“The average franchisor should really reassess what they’re providing,” said Mathews. “We’re in a market now where the franchisors have to be lower risk than the job market and the stock market and yet produce higher returns. That’s not going to happen unless they take the time to look at their opportunity through the eyes of an investor.”