Chapter 15: Managing Franchise System Performance

Running a successful franchise system requires more than just good financials and a strong business model. Franchisors also need to be able to monitor consistent performance across the entire system of franchisees. 

From business coaches to key performance indicators (KPIs) to franchisee mentorship programs, there are plenty of ways for franchisors to successfully measure success and encourage a positive culture within their franchise network.  

Implementing Performance Measurement Tools and Benchmarks

When managing franchise system performance, there are several ways brands can implement performance measurement tools and benchmarks for franchisees. For example, business intelligence tools that aggregate franchisee data from a customer relationship management system can be helpful to assess overall business performance, noted Nick Sorgani, franchise business coach at Mosquito Hunters*.

“An important aspect of measuring performance is to dial in on the actions franchisees are taking to reach a certain level of performance, which can sometimes mean collecting anecdotal quantitative data from franchisees,” said Sorgani. “Tracking outputs like customers, revenue, callbacks and cancellations is critical, but sharing the inputs like hours spent, calls made and marketing materials distributed can also present the opportunity to correlate actions with outcomes.”

Examining both can provide a clearer picture of what specific corrective actions a franchisee needs to take in order to achieve the desired outcome. The franchise business coach added that leaderboards and contests based on the aggregated data can be powerful tools in motivating owners and holding them accountable.

And while occasionally uncomfortable, routinely sharing the leaderboard and benchmark comparisons in a public setting with groups of owners, if navigated delicately, can create an environment that encourages franchisees to hold each other accountable and share ideas and experiences to help others overcome challenges. 

Identifying Areas for Improvement and Growth

Dashboards that share all franchisees' KPIs can show owners the areas they need to improve in. However, some franchisees will need those statistics interpreted. 

“Coaches and performance groups can help turn the data into actionable plans specific to the needs of that franchisee,” said Sorgani. “Scorecards and auditing systems help a lot.” 

Once the KPIs are defined, the top franchisees, alongside the franchisor's goals, can help create a rubric upon which a coach can "grade" their franchisee in each category.

Encouraging a Culture of Continuous Improvement

Having a culture of continuous improvement starts with development and the tone that is set with candidates from the start. 

“If you want owners to have a mindset of continuous improvement, bring on owners that already have those values,” said Sorgani. “If that ship has sailed for a brand and current owners aren't identifying with this culture goal, it needs to at least start with a handful of franchisees that can become the example for everyone else.” 

Additionally, franchisees often look to each other for guidance, so creating mentorship programs is one way brands can reinforce improvement within a system. But whether or not a formal mentorship program is feasible for a franchisor, simply sharing the successes of top-performing owners gives other owners tangible results to look up to and identify with. 

“Featuring certain owners on group webinars or in short video segments blasted out to the system are great ways to create buzz around a topic or action you want others to replicate,” said Sorgani. “Some will naturally follow suit because they want to be like the top franchisees, but others will need more prodding and continuous reinforcement from their coach or mentor in order to take action.”  

Overall, franchisors should be transparent with their franchisees. Showing the inputs (actions) and outputs (results) of successful franchisees can help struggling owners determine what top performers are putting into their business to achieve such results. Sorgani noted that, although this can come from a coach, it can be much more powerful for an owner to see it themselves.  

“Coaching franchisees requires flexibility to adapt to the needs and personality of each owner,” he said. “Not everyone will resonate with all of the tools we provide, but the coach, through consistent structured conversations, will be able to identify the ways to resonate with an individual franchisee.”