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Closing the performance gaps in franchising

Closing the performance gaps in franchising

FranNet’s Gary Prenevost has identified the unique traits that bring operational excellence, and has shaped them into a set of guiding principles

I often get asked: “After a career in franchising spanning more than 30 years, what drove you to write this book now?”

I don’t have a specific answer for that, other than to share that on 27 December 2019, I looked at Lindsay and said, “I think it’s time for my book to get written.”

I’d been a top-performing franchisee at FranNet for many years, even achieving number-one status a couple of times. My team and I have helped over 2,000 people seriously consider their franchise ownership options. We’ve worked with hundreds of franchisors and many of our clients have become top-performing franchisees in their respective systems – but some haven’t. In the months leading up to December 2019, several questions kept repeating in my head, the biggest one being: “Why do so many franchisees struggle with driving incremental, year-over-year progress towards operational excellence in their own businesses?”

Regardless of industry sector, size of the franchise, and whether it’s founder-owned or private equity-owned, every single franchise system had a wide performance gap between their top quartile franchisees and the rest. Having helped build and run a national human skills training business with over 100 licensees in Canada over 10 years, this phenomenon nagged at me. I also began wondering why, despite the nature of interdependence that comes with franchising, no one sought in earnest to find answers to these questions. During a breakfast meeting with one of my lawyer relationships, Frank Robinson of Cassels said to me: “Gary, if you can find an invisible thread that’s ubiquitous across most franchise systems, then you’re really onto something.” So, I went looking for that invisible thread.

As I reflected on my approach to researching and writing this book, I posed this question: “Is there a set of guiding principles that can be applied to improving operational excellence in the franchise industry, specifically, at the franchisee ownership level?” Part of my research involved interviewing industry thought leaders, over 30 CEOs (of some of the biggest franchise systems on the planet as well as fast-growing franchise systems), and some of their highest-performing (top four per cent) franchisees. In the end, I didn’t find one invisible thread – I found seven!

The Unstoppable Franchisee identifies the traits and habits that the top four per cent of franchisees demonstrate. It’s not all about achieving top performance – instead, it’s about helping franchisees achieve their next-level growth, regardless of where they sit on the franchisee performance bell curve.

Growth can be operational or revenue-related – more often than not it’s about skills growth and personal growth for the franchisee and their team members.

Using practical tools and pathways, existing and future franchise owners can improve and realize their own next-level performance in their franchise. These can be likened to ‘power-ups’ in video games, where the first power-up adds strength and/or protection, and where each additional power-up creates a multiplier force. In other words, when any one of the drivers on their own gets implemented in a franchisee’s business, the franchisee permanently strengthens their business. As they implement each additional driver, the multiplying effect occurs and moves the franchisee closer to sustained top performance.

The overall intent is to help franchisees across all categories incrementally and continually improve their success, which also drives greater success for franchisors and will ultimately strengthen the franchise industry at large. The advice is equally applicable to franchisee owners and their unit manager employees. It is my give-back to the industry that has given me so much over the last 30-plus years.

The following seven drivers ‘crack the performance code’ of operational excellence, presenting a new model of looking at how highly successful franchisees grow and scale their businesses, called the Growth Helix. This model is unique to the franchise industry.

Growth catalyst

A growth catalyst is when the individual comes to an awareness point that their current situation is no longer tenable, and where the pain of doing nothing is greater than the pain and sacrifice of making a significant change in their life or career.

Most franchisees will relate to this concept because it’s what lead them to the decision to buy a franchise in the first place. When you can acknowledge and accept that a current situation is no longer tenable, you are able to engage fully in applying the seven growth drivers.

Driver 1

Grow a next-level mindset

The first driver is about how to grow a next-level mindset—it’s the ‘how’ in scaling a business. It includes encompassing two critical dimensions — operational management and leadership — and we explore each of these in subsequent driver chapters.

Driver 2

Grow your awareness

The second driver is growing awareness. Awareness can include many things – external, as in what’s going on in the franchisee’s community or region, or beyond, that can affect their business, or internal, such as staff and systems. Top-performing franchisees (TPFs) have learned how to master their sense of awareness and keep it acutely tuned to identify opportunities and challenges that they’ll encounter in their businesses. When you begin to apply the practices that TPFs use to leverage their focus, energy and resources to continually identify, assess and capitalize on the best opportunities that land on their radar screens, you’ll see results much faster.

A next-level mindset and awareness are closely linked. A next-level mindset enables the franchisee to decide what goals to pursue. Meanwhile, awareness enables them to prioritize where to bring their time, money and resources to bear — and where and when to reallocate when necessary.

Driver 3

Grow your operational management skills

The third driver is about helping the franchisee to improve their operational management skills. My interviewees spoke at length about how they improved customer satisfaction, tightened up their operations and found efficiencies to reduce costs.

Driver 4

Grow your people

The fourth driver is about helping the franchisee to grow their people, and in doing so, grow their own leadership skills. Top-performing franchisees, thought leaders and successful CEOs all agree that it’s their team, not the customer, which is their first priority.

A team that’s committed, energized and accountable, provided with the right training and environment, will thrive. Leaders who live their values and invest in their people can and do scale up their businesses. The team members develop additional talents and take on more responsibilities, driving more growth and improvements.

Driver 5

Master the system

The fifth driver is about mastering the system. This isn’t just about mastering the basics, though. It’s about being constantly focused on incrementally improving systems and processes and being willing to share this knowledge with the franchisor and peer franchisees. Innovation is not removed from this process; it’s refined to fit within the system that it benefits. Once you’ve mastered the basics, then get onto the next level and master the basics there. TPFs leverage the collective brain trust of the entire franchise system, implementing some of these strategies into their own businesses.

While this fifth driver may seem similar to the third, improving operational management skills, it’s actually very different. The third driver is about strengthening management skills; this one is about learning how to execute the business model brilliantly. Developing management skills is just one part of system mastery.

Driver 6

Grow your interdependence

The sixth driver focuses on helping franchisees to recognize the critical importance of growing strong interdependent relationships, which is the sign of a maturing and successful franchise business. When researching my book, I discovered that the richest relationships enjoyed by franchisees are a result of evolving from independence to interdependence. I also discovered that many franchisees simply don’t evolve to this final stage. The importance of transitioning from independent to interdependent was one of the major themes that emerged from the research. Without exception, every single top-performing franchisee I interviewed demonstrated and espoused the mindset and all the qualities of having an interdependent relationship with their franchisor. The evidence of the link between a franchisee’s sustained growth and interdependence with their franchisor and with peer franchisees is undeniable.

Driver 7

Cultivate the neural network of your business

The seventh driver is about activating and strengthening key performance indicators (KPIs) and other performance measurement systems of the franchisee’s business. It’s the old adage that you never know if you’ve achieved a goal if you can’t measure it. The measuring of success was a robust part of many of my interviews, though interviewees were unanimous that before anyone can measure success, they have to know what they are aiming at. Every top franchisee is acutely goal-directed, and those goals are aligned with business purpose and values.

To be successful, franchisees need strategies that they and their teams can utilize to precisely chart their course, track performance and make mid-course corrections. Suffice to say, there are many insights in measuring growth and steps to take to fix challenges and knock down barriers to growth.

Next steps

Which of the drivers should you start working on first? That is entirely dependent on where you currently are in your own growth journey. One of the cool things about The Unstoppable Franchisee is that there’s no particular order that the reader must progress through. The book is designed to meet the reader where they are – in other words, whichever driver they identify as their biggest opportunity/challenge/priority becomes their starting point. Once they’ve addressed that, then they come back and choose their next priority focus, and so on.

7 core growth drivers

1. Grow a next-level mindset
2. Grow your awareness
3. Grow your operational management skills
4. Grow your people and your leadership skills
5. Master the system
6. Grow your interdependence
7. Measure success

The growth helix

The Growth Helix is an entirely new model of looking at how highly successful franchisees grow and scale their businesses. This model is unique to the franchise industry because the core of the Growth Helix is the base operating methodology of the franchisor, also known as ‘the system’. It works like this:

  • The franchisee learns and masters the basics of the system, and builds enough business by executing those basics as prescribed
  • Meanwhile, they experiment around the edges, succeeding at some things and failing at others, but constantly seeking the lessons of both, improving incrementally until they’re ready to get to the next level of performance or growth
  • They then climb to the next level and repeat this pattern, before escalating to the next level, repeating again, then climbing again. With each new level comes more opportunity to implement additional drivers, and to achieve more desired results

The author

Gary Prenevost is president of FranNet, Southern Ontario and Eastern Canada, and author of The Unstoppable Franchisee: 7 Drivers of Next-Level Growth.

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