11 Ways to Keep Franchisees Growth-Minded

In this Tip I'll share 11 growth strategies to emerge from a franchise operations leadership breakfast we held on the topic “How to Encourage Franchisees to be Growth-Minded”.

Steve Rafsky, a former franchisee of Padgett Business Services, a 50 year old franchise network with 400 franchisees in North America, first spoke of how the company was facing serious financial problems after venture capitalists bought it and mucked it up. And how he had been asked to take over as CEO to lead a reinvention process which has resulted in record growth, especially in franchisee and franchisor profitability.

Illustration of series of growing trees

Sixty senior franchisor executives then discussed in small groups what has been working for them to keep their franchisees growth-minded. Here’s what they shared:

  1. Supplement sales ladders with growth ladders. Because franchisees are competitive by nature, many networks publish a sales ladder to recognise top sales performers. But a growth ladder that ranks franchisees according to their sales growth, or other growth metrics, is a more effective way to encourage, recognise and reward growth.
  2. Pick a specific growth theme for a defined period. Select a KPI or a theme that ties into your marketing or branding and make this the theme for the month, quarter or year. And use your internal communications channels to support this. For instance, sales of a new product, average transaction value, or percentage of returning customers.
  3. Use dashboards to make data transparent, fun and easy to monitor. Most data collection platforms such as Xero and Shift 8 can create colourful charts that enable franchisees to check and compare their progress on important metrics. More sophisticated platforms such as Power BI and Fathom can also combine different types of data from different databases into custom KPIs for your business.
  4. Reduce the complexity and number of promotional campaigns. Instead of a different marketing campaign every month, which can create noise and confusion in a franchise network, pick one strategy that has been proven to drive growth. Then focus on support and training to ensure this one strategy is properly executed to achieve maximum benefit.
  5. Set specific short and long term growth goals with each franchisee. To promote commitment and action, ensure these are meaningful for the franchisee and align with their personal aspirations. Also, that the franchisee has agreed to actions with time frames against each goal. Keep coming back to these in your regular catch ups with each franchisee.
  6. Tailor growth messages and support to different types of franchisees. For instance, new franchisees will want to grow sales, customer numbers and operational expertise, while more established franchisees will want to focus more on growing profitability and their business skills. Multi-unit franchisees may be more interested in growing more units and their leadership skills.
  7. Convert more leads into sales. Often franchisees are losing sales by not focusing on the opportunities under their noses. For instance, by improving follow up on customer enquiries or paying more attention to the experience of browsing customers, franchisee may be able to significantly increase sales with no additional marketing. Regular back to basics sales training to ensure franchisees and their staff are following your proven sales process can also produce dramatic results.
  8. Get franchisees to present sales case studies at regional meetings. Organise franchisees to present their own local sales growth plans to their peers, along with the results they’ve achieved and lessons learned. Allow 10 minutes per presentation and five minutes for questions and feedback from the group. This is likely to increase engagement — and results!
  9. Ensure your Franchise Advisory Council is solution and growth focused. Many FACs get bogged down focusing on operational problems and gripes. Ensure your FAC’s mission is solution-focused on growing network sales and profits, improving the customer experience, and protecting the competitiveness of the brand.
  10. Use benchmarking processes to promote a metrics mindset and prevent complacency. When people are given objective feedback on how their performance compares with others, it stimulates a desire to improve. When franchisees are provided with access to metrics and charts that display how their business’ KPIs compare against similar businesses, they also naturally feel motivated to take action to improve these metrics.
  11. Select franchisees with a growth-mindset. As part of your recruitment process, assess prospective franchisee’s proactivity and motivation to grow their business. For instance, ask them about past projects where they grew sales, or the performance of a team or business unit. Also ask them to describe their goals and growth plans for the franchise.

The spirit of collaboration that generated these tips is what I particularly value about the franchising sector. Thanks to Steve Rafsky for making a special trip to Australia to contribute to this event.
