franchisee support right amount.ppt - international franchise … · 2014-12-23 · february...
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February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
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information– Tracks and analyzes more than 3,500
brands in 30 industries and 200 sectors– Manages SBA Franchise Registry
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• CONTACT LISTS– Franchisor Management– Single‐Unit Franchisees– Multi‐Unit Franchisees
About FRANdata
• Educate candidates about your brand’s historic performance
Can You Support Performance Claims with Data?
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2009 2010 2011
SBA Loan Failures and Real Business Failures
Cumulative SBA Loan Failure Rate since 2001
% units ceasing to operate as franchises through closure, non‐renewals, contract termination orreacquisitionReal Unit Failure Rate Sample of 59 food and 41 non‐
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Justifying Fees: Prospects Get what they Pay for
Higher IFF = greater number of initial training hours
*Sample of 41 brands across 11 industries
‐ 50 100 150 200 250 300 350
Lowest IFF
Highest IFF
Training Hours
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Can You Show off Your Initial Training?
*Sample of 100 brands (59 food and 41 non‐food)
Higher IFF brands generated higher AUR than lower IFF brands
Upfront Support = Better Performance
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
2009 2010 2011
Average Unit Revenues
Higher IFF
Lower IFF
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Your Message: Upfront Support Improves Success
*Sample of 100 brands (59 food and 41 non‐food)
Higher IFF brands generated higher franchised unit continuity rates than lower IFF brands
92%
93%
94%
95%
96%
97%
2009 2010 2011
Average Continuity Rates
Higher IFF
Lower IFF
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Your Message: Upfront Support Reduces Risk
*Sample of 100 brands (59 food and 41 non‐food)
Higher IFF brands had lower real unit failure rates than lower IFF brands
0%
1%
1%
2%
2%
3%
3%
4%
4%
5%
5%
2009 2010 2011
Real Unit Failure Rates
Higher IFF
Lower IFF
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Can You Show off Your Support Structure?
95% 96% 97% 98%
Peer Average
Below Avg Ratio
Above Avg Ratio
Continuity Rate by ZEEs to Field Support Staff
0% 1% 2% 3% 4%
Peer Average
Below Avg Ratio
Above Avg Ratio
Real Business Failure Rate by ZEEs to Field Support Staff
• The more field support staff per franchisee, the higher the continuity rate and the lower the real business failures
• Better support = better performance = better marketing to prospects
FRANdata research
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
What Does All This Mean for Development?
• Better informed franchise candidates demand better information Break free from the chains of FDD thinking
• You have an Item 19? Great, so do about 50% of mature brands. What is going to appeal to better informed and more demanding franchise candidates?
• Support any performance claim with clear examples in the context of your peers
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
HOW DOES SUPPORT RELATE TO LENDING??
Common questions from lenders:
• How do you support your new franchisees through Break – Even?• How does your training/support re‐sales to non‐franchisees? • What is your protocol in allowing a Franchisee to expand?
• Development Schedules• KPI Compliance• “Show me the Money!”
• How do you handle distressed situations?• Is the lender always a part of the discussion?• How do you measure stress in an operating unit?• Do you have a special support function to deal with distressed Franchisees?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
How does your FDD Communicate Training/Support• Franchisee Selection Process
• How does a non‐industry person learn your systems, processes and industry?• Do you require “aptitude” or on the job tests to ensure a good fit?• Do new franchisees participate in other grand openings before their own?
• Expansion Training• Is there a separate “multi‐unit” curriculum• Are basic management tools taught for single unit operators?• Is there a “manage by the numbers” guide used?
• Opening Support• What is Corporate’s position and basic procedure for support during a unit opening?• Is there a basic metric used to know it was a good or bad opening?• How do you follow up to ensure a good outcome?• How do you handle the “slow starters”?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Supporting Distressed Franchisees
• Is there a defined and documented process?• If so, what are the triggers?• How can the lender become a part of the discussion/solution?• Will you consider re‐marketing for a unit that needs to be transferred?
• Who in your organization is responsible for “fixing” distressed units?• Is there a SWAT Team?• Is the lender always a part of the dialogue?• Do you always know what a franchisee’s balance sheet looks like?• Do you tolerate “specialty” lenders into your system?
• Merchant Cash Advance• Other high interest/short amortization products
• How is this process communicated to the lending community, if at all?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
MAKING MORE POSSIBLE:
Compelled by a need to find care that was more —more dependable, more supportive, more complete — BrightStar was founded in 2002 as a family business to provide the full continuum of care.
LIFECARE: adult and elder care.
KIDCARE: newborn care, babysitting and nanny services.
STAFFING: for individuals, families and healthcare facilities.
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
KEY STATISTICS ‐ BRIGHTSTAR CARE
Number of Years Franchising 9 years
Number of Franchise Units 270
Franchise Unit Growth 71% CAGR (2006‐2012)
Number of Company Owned Units 2
FRANCHISEE AVERAGE INITIAL INVESTMENT $90,378 to $165,676
AVERAGE STORE SALES ‐ FIRST LOCATION ONLY $1,180,568 **
AVERAGE TIME TO BREAKEVEN 11.1 Months **
AGENCY ECONOMICS 2010 2011 2012 3‐Year CAGR Average Sales $856,322 $1,042,358 $1,180,568 17.4%
** 2013 Franchise Disclosure Document
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
* First Store OnlySource: BrightStar U.S. Franchise Disclosure Document (FDD), 2013
BrightStar Care® invests in higher‐quality, trained caregivers. As shown to the left, this investment in quality care is rewarded with excellent financial returns.
Outstanding Franchisee Financial MetricsFranchise Metrics from 2013 FDD Column1Franchisee Revenue*
1st Year Performance 366,716$
2nd Year Performance 929,569$
3rd Year Performance 1,197,479$
4th Year Performance 1,442,545$
5th Year Performance 1,685,601$
6th Year Performance 1,903,984$
Average for units open 1 year+ 1,180,568$
Average time to breakeven* 11.1 months
Average Gross Margin* 41.7%
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Average Location Revenue Trends ‐ 2012
Competitor B Competitor C** Competitor D** Competitor ECompetitor A**
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Focus on Franchisee Unit Economics
1. Training and Franchisor Support
2. Right Support at the Right Time
3. Focus on Metrics
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
2012‐2013 Training Improvements
• Training conducted by Subject Matter Experts who have real-time solutions based upon their experience
• Added a whole new day on Leadership, including Sales Manager Certification
• New emphasis on having Owners and Salespeople get a clinical foundation (“transform non-healthcare backgrounds into confident expertise”)
• Train all key roles with 3 separate “tracks”; Huge injection of Clinical knowledge, energy and leadership
• Added Goals Tool, Routines for Results and Action Plans
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Franchise SupportSpecialized Onboarding & Support Team
BrightStart/JumpStart/ReStart Dedicated staff to support new franchisees into the system along with franchisees needing additional support & focus to drive revenue.
BrightStart:• Enhancing the current BrightStar program to facilitate onboarding, agency openings and
quicker revenue ramp ups• 6 months program focusing on sales & operations
JumpStart:• 90 day program that includes intensive coaching and accountability primarily focused on
the sales function, however, there will be operational support as needed• Goal of the program is to move the agency beyond the revenue bench mark consistently
ReStart:• Designed for new franchisees entering the system through a resale• Similar program as BrightStart but accelerated due to existing operations
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Right Support at the Right Time• Top 2 Quartiles and/or Established Franchisees:
– Strategic Planning 2‐day sessions with CEO (groups of 10)– Multi‐unit performance groups– Expansion financing programs
• Bottom 2 Quartiles beyond 1 Year:– JumpStart Program– Resale– Up or out assessments
• Transfers:– ReStart Program
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
• Define Success Drivers
• Set Developmental Milestone
• Reinforce Performance Culture
• Framework for Staff Improvements
Focus on Metrics – Invest in Business Intelligence
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Investing for Excellence1. Investment in personnel/leadership and investment in technology (platform for franchisee to run their business (ABS2):
– Twelve full‐time field support employees, at a ratio of one full‐time field support staff per 21 franchised agencies and one per 14 franchisees. 1:3 support to franchisee ratio
– Weekly monitoring of performance– Team of five to focus on new franchisee launches, franchisees operating below break‐even and transferred
businesses. – Monthly franchisee coaching calls; quarterly goal setting calls (field support)– Best practices calls monthly; Town Hall calls quarterly (leadership)– How to measure? Franchisor contribution margin (royalty less support costs) and growth trend for franchisee
(revenue/week at point of incremental support to revenue/week after program); franchisee KPI – average and median for each field support (sales, GM, overhead labor and EBITDA; NPS)
2. Specific Process and Support to Address Struggling Franchisees– Systematic support system allows detection of any struggling franchisees. – Field support employees nominate struggling franchisees to be enrolled in the JumpStart program.– How to measure? growth trend for franchisee (revenue/week at point of incremental support to
revenue/week after program)
3. Business intelligence for reporting, benchmarking, and integrated coaching and Microsoft Dynamics Great Plains financial system with standard chart of accounts and reporting
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Effective Development of Your Franchise Support Organization
Keith Gerson, CFEPresident of Global Services
FranConnect
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
PATHWAYS to PROFIT
PATHWAYS to PROFIT
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
What’s the role of the Operations Support Consultant?
Drive Franchisee PerformanceDrive Franchisee SatisfactionEnsure Franchisee Compliance
Create alignment
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
What is your ratio of field consultants to franchisees?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
On average, how often do you conduct onsite visits at the local level?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
On average, how frequently do your ops consultants speak with their assigned Franchisees?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
So How’s That Working For You?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Is this communications & visit frequency enough to positively impact franchisee performance?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
How do you rate your franchisees ability to execute as compared to your competitors?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
What is currently your biggest challenge in helping your franchisees improve their performance?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
What Are Your Operations Consultants Bringing to the Party?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
CEO Strategic Planning, Engagement & ExecutionBain & Company Key Study on Organizational Change
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Comparatively, FranConnect’s CEO Survey Revealed:CEO Strategic Planning, Engagement & Execution
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
In short…
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Developing the Operations Consultant:AbilityWillingnessKnows What to DoKnows How to Do It
Drive Franchisee PerformanceDrive Franchisee SatisfactionEnsure Franchisee Compliance
Create alignment
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Do You Have a Formal Training Program for Your Operations Consultants & Field Staff?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
How much training do your Operations Consultants get in behavioral management & coaching for
improving performance?
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Key Drivers for Operational Success
“Coach the Coaches”
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
COACHING ANALYSIS"What is Influencing unsatisfactory Performance?"
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
"Steps of the Coaching Technique"Step 1
Get his or her agreement that a problem exists.
Step 2 Mutually discuss alternative solutions.
Step 3 Mutually agree on action to be taken to solve problem.
Step 4 Follow up to measure results.
Step 5 Reinforce any achievement when it occurs.
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Key Drivers for Operational Success
A Tiered Support System
Coach the Coaches
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Key Drivers for Operational Success
A Tiered Support System
Onboarding: “Days to First Dollar”
Coach the Coaches
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Key Drivers for Operational Success
Weight Franchisee Training For Customer Creation & Retention
New Hierarchy for EffectiveCommunications
Close the Loop on Open Tasks & Performance Gaps
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Track Open Tasks, Overdue Visits & Outcomes
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Case Study: Aurelio's Restaurants 4th Qtr. QCA Results
• QCA SECTION Avg. Score Avg. Score 90% is Goal3rd Qtr 4th Qtr
• Food‐Pizza Station Summary 78.07 91.73 ↑• Food‐Steam Station Summary 68.32 85.67 ↑• Food‐Salad Station Summary 74.35 90.71 ↑• Product Sampling Summary 68.74 84.39 ↑
• Complete Audit Summary 75.13 85.86 ↑
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Systems for Improving Communication/Focus
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
Key Drivers For Operational Success
Track Local Market Spending &ROI by Franchisee (67% don’t)
Validation & “Referability” (f‐NPS) (SAT)
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
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