Franchise Success: It Takes More Than An Investment!

Too often than not, franchisees are of the mindset that they’ve bought into a franchise system and just need to sit back and wait for the business to flow through their doors. Sometimes, it’s ignorance and perception that clouds their thoughts. Thinking that the brand name they invested in should be enough for instant business success at their location. But, most of the time, it’s just plain old arrogance that gets in the way. It’s the arrogance of having committed hundreds of thousands of dollars to buy a franchise as being the sole reason for success. It’s also the basis of feeling that with this level of financial commitment, the franchisor should be solely responsible for making sure franchisees succeed. Almost demanding a guarantee of success!

Well, it is not the franchisor’s sole responsibility, under any circumstances, for making sure that franchisees succeed. Sure, the franchisor must provide franchisees with a proven system and field-tested tools, that when utilized diligently and effectively, should provide them with the foundation to succeed. But, it’s just that, a foundation. And, the franchisor should have systems in place to monitor franchisees’ progress, provide additional training and guidance, and further the overall development of the brand which all contributes to solidifying that foundation. But, as detailed and comprehensive as all this sounds, it still is not enough for most franchisees to succeed without their own desire, drive and determination. And, not just words, but actual action.

Failure or Success?

Years ago, I was working with a franchise group on a complex marketing project. The project was ultimately a success and achieved most of the goals and objectives that were established prior to launch. Most of the franchisees embraced the strategy and were extremely instrumental in executing the plan. However, there were five franchisees that just couldn’t get out of their own way to realize the benefits of the plan, and did not realize positive results as their fellow franchisees had.

As with many of my franchise clients, the franchisor requested that I work with these franchisees, ascertain the root of their problems, and develop an aggressive plan of action to move their businesses forward. You see, the franchisor truly wanted to see their franchisees succeed! By the way, these franchisees represented the bottom of the franchise group in average unit sales. Definitely, that was no coincidence. Well, to make a long story short, the obvious problem in each case pointed back to the franchisees working “in” the business, as opposed to “on” the business. Mix in some procrastination, entitlement attitudes, and of course, total denial, and the recipe for total business failure was complete.

I was able to determine that these franchisees were compensating for their path to failure by being at the business location longer hours, spending more and more time taking care of customers, while spending less and less time on anything else. All claimed to be working harder than they had ever worked before. Was it because they had to cut payroll and do the job themselves? Ironically, that was not the case as I found employees standing around while the franchisee did their jobs. Often, I witnessed franchisees literally stepping in front of employees to take care of a customer. When I addressed the same with the franchisees, all were actually preparing for failure but didn’t want to be considered the actual cause of failure. All thought that by being seen at the business long hours every day and working non-stop behind the counter, no one would be able to say they didn’t work hard at making the business a success. Certainly, they wouldn’t be blamed for failure.

Of the five struggling franchisees, all but one was anxious to listen and make firm commitments to improve their situations. The remaining franchisee was thoroughly convinced he would fail and there was nothing he, or anyone else, could do to change the situation. He placed total blame on the franchisor, claiming they didn’t provide support, and strongly professed that he, himself, did everything humanly possible to succeed. When I asked what he was referring to, he pointed to the long hours every day. When I asked about marketing efforts, he claimed he shouldn’t have to do anything in that regard and pointed back to the franchisor. He ranted about how the franchisor should have spent money on his behalf in promoting the business and how he spent over $300K on build-out and equipment and that should have been more than enough to ensure his success. Further, he felt he should be able to open the doors everyday, and if the brand name was strong enough, success would occur in a relative matter of time.

As I indicated, four of the franchisees decided to move forward. Agreeing that failure was not an option, we developed and executed an extremely aggressive, yet cost-effective, plan of action centered around getting outside the business location every day to promote their business wherever and however they could. They all agreed they should have been doing this all along but always seemed to procrastinate in actually getting the job done. They attributed a big part of their procrastination to a strong sense of entitlement that the franchisor should be doing more because they, the franchisees, were the ones that already made an investment to grow the brand. As such, they had convinced themselves that any possibility of failure would fall firmly on the franchisor’s shoulders. In turn, they buried themselves “in” the business and were awaiting the inevitable.

After many hours of discussion and debate about vision, passion, drive and determination, all four franchisees decided to take responsibility for their actions and would hold themselves to a high level of accountability, to their business, employees, family, and themselves. Each was relentless in their quest to turn their businesses around. They spoke to whoever would listen about their products and services. They were tireless in their efforts to discover new groups and organizations that might listen and learn about what their business had to offer. They were almost to the point of being ruthless in their desire to ask for referrals and recommendations. They were all thinking outside the box, always asking themselves, “What more can be done?” and never accepting a “nothing” answer. Needless to say, their new attitudes became contagious and before they knew it, everyone seemed to be spreading the word. Nowadays, we would refer to that as a “viral” effect.

The Final Tally

One franchisee sold his business to an individual he met when spreading the word about his business. The new franchisee became a multi-unit operator and eventually sold the business for a significant profit.
Two franchisees took on partners they met in their efforts within the community. All are now multi-unit operators within several franchise systems.
One franchisee continues to operate her business and although happy to have survived, never had the desire to open additional locations.
And, the franchisee, who said he would fail… was absolutely right!

This post was originally published on this site October 2010


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How responsible are franchisees for their own success (or failure)?

LinkedIn logoI recently posted a question on Linkedin, “How responsible are franchisees for their own success (or failure)?”. The discussion was based upon an article posted on this site, “Get Off Your Ass for Business Success.”

Below please find several of the responses from a cross-section of non-industry professionals that I believe provides an interesting perspective. Certainly ones that may be different from franchise professionals that may be too far into the forest to actually see the trees, or of the franchisees that would rather point the finger of blame at someone else rather than at themselves. As I have done in the past, the names of the responding individuals will be kept confidential. Instead, they will only be identified by their Linkedin statement or profile.

The president of an HR consulting firm responded, “Franchising quickens the start-up of a new business operation with a systemized model. But in the end, a franchise is a business like any other. Each business owner is responsible for the success of their business. Drive, ambition, courage, determination and a keen focus on sales and marketing is critical. You reap what you sow.”

An operations manager from the telecommunications industry added, “I have the fortune of working with some great franchises in a manner where both the franchisees and the franchise are clients. As others have said, it is a combination of what is provided by the franchise and effort on the side of the franchisee. One could write a series of books on the subject, however I feel that proper guidance and training are more vital than even advertising when it comes to a good ratio of successful franchisees. Often I will see even the highest revenue producing franchisee left alienated by a brand, it is not uncommon for some franchisees to not even know who the current regional contact is for their brand until their is a problem. On the other hand I have seen franchises that provide complete packages for their franchisees including market research, technology like database, PBX, and websites, corporate trainers that are easy to contact and on a first name basis, and most importantly a feeling of partnership where the owner often makes contact for advice, ideas, and information. The right franchise provides two vital resources to a business owner: 1. Instant name recognition and consumer confidence. 2. Tools enough for a business owner to focus on growing his business and not burdened with reinventing solutions to common problems.”

Finally, an expert in the HR field stated, “They are totally responsible for their own success or failure. If the franchiser does not support them they have to remember they are the ones who made the decision to buy the franchise. They decided who to hire and to approve the location. If the system is not working then figure out what needs to happen and make it happen. When you buy a franchise you do not buy a job you buy a business. Would you let your employees blame it on you if they did not produce.”

Well, let’s not end the discussion here as I’m anxious to hear what franchise professionals and franchisees have to say. Please post your comments below. Thanks.

Be Aware Of The Downside

optimismThe following was my response to a recent post on Franchise Pick. The post was about franchisor, Curves International, and its actions when one of its franchisees fails and shuts down its location.

Joel Libava, The Franchise King, posted a question today on Twitter about whether or not a business plan is important when considering a franchise opportunity. My response was a firm yes, but the plan must include an exit strategy. That exit strategy must include a plan for predetermined events like retirement, as well as unforeseen events usually as a result of poor sales, employee theft, mismanagement, etc.

Unfortunately, it’s human nature only to look at the positives of a relationship, personal or business. How many couples avoid the issue of prenuptial agreements because they don’t want to start off on the wrong foot? Maybe they feel it will jinx their relationship or provide an out to the party not willing to work at the relationship? The same is certainly true in the franchise arena. However, in both cases, it is prudent to look at the potential downside and have all the issues outlined ahead of time. If nothing else, at least it keeps everyone focused on the potential consequences of failure. Something that may provide them even more incentive to succeed. I mean it is easier to fail, than it is to succeed!

In the case of franchisee failure, there’s no way it can possibly be a surprise to anyone. Trends become evident and it would take a tremendous amount of shear stupidity and ignorance for anyone to believe a franchise location closing is a surprise. I guess we could chalk it up to the “head in the sand” scenario?

My recommendation to franchisees and franchisors alike is to have a business plan in place at the beginning, complete with an exit strategy. Understand your mutual obligations upon termination. Communicate, communicate and communicate all the way from franchise disclosure to franchise closure. Notice the only thing missing is “dis.” To use the street slang of “dis”, make sure you don’t dis communications, don’t dis obligations, and don’t dis responsibility. For anyone that doesn’t know what dis means, it’s most easily defined as “ignoring and/or disrespecting.”

My advice to franchisees, don’t get all starry-eyed at your partner like you’re in love. Realize it’s a business relationship and make sure all parties to the agreement, including yourself, live up to their obligations. Further, when trouble is on the horizon, do not, I repeat, do not put your head in the sand. Keep in mind that when your head is in the sand, your most vulnerable ass-et, is exposed to the entire world to take advantage of.

To the Curves franchisor I say “Shame on you as you tarnish the good name of franchising and all the franchise bretheren because of your greed, unprofessionalism and lack of common, decent care for individuals. The very individuals that trusted you to take them to the altar.”