how to measure franchise performance

How to Franchise: 5 Things to Measure to Grow Your Franchise Business

Full Answer

What is the importance of franchisees?

What is the main driver of franchise profitability?

What is NPS in franchise?

What is the importance of being aware of your shortcomings as a franchisor?

What does rapid pace of change mean for franchisees?

What happens if franchisees don't improve?

Why is it important to be a successful franchisee?

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How do you measure the success of a franchise?

Focus on These KPIs for Franchise SuccessGross Sales. This is the most basic measurement of a business. ... Rankings. These numbers are only good for two reasons, and there's only one that truly matters. ... Profit. ... Growth Rate. ... Customer Satisfaction. ... Customer Count. ... Ticket Average. ... Employee Satisfaction.More items...•

What is a KPI in franchising?

Key performance indicators (KPIs) are tightly integrated with franchise business planning because business plans contain key results (KRs). KPIs are a subset of these key KRs, which the franchise uses to measure its performance.

How do you monitor a franchise?

7 Ways to Track Your Franchise SuccessSales Revenue and Growth. You will probably know this number easily. ... Expenses. ... Cost of Goods and Pricing. ... Customer Numbers. ... Employee Sales. ... Customer Reviews. ... Profit.

What are the five qualities of a good franchise?

5 characteristics of a good franchiseeAbility to follow instructions. The foundation of the franchise model is that all franchisees follow the same system, offering the same products and services in their respective territories. ... Adaptable to change. ... Driven. ... Similar qualities to franchisor. ... Forward-thinking.

What are the 4 main KPIs?

Anyway, the four KPIs that always come out of these workshops are:Customer Satisfaction,Internal Process Quality,Employee Satisfaction, and.Financial Performance Index.

What are the 3 performance indicators?

These types of indicators include: employee engagement, satisfaction and turnover. Studies show that higher employee engagement is linked to higher customer satisfaction. When employees are happy at work and believe in their product/company this comes across to customers.

What are the four elements of a franchise?

When it comes to the new opening process, franchisors should consider four key elements that contribute to success:The importance of following the system,growing with the right franchisees,establishing a successful opening process, and.assisting franchisees with support teams.

What are the six steps in investigating a franchise?

How to Investigate a FranchiseStep 1 – General Information. ... Step 2 – The Franchise Disclosure Document. ... Step 3 – Franchisee Calls and Visits. ... Step 4 – Review the System Documentation. ... Step 5 – Meet the Franchisor. ... Step 6 – Make a Decision.

What are the three elements of a franchise?

In short, a business arrangement meets the FTC Rule definition of a franchise if the business arrangement involves: (i) the grant of a trademark, (ii) the franchisor exerts or has the authority to exert significant control or assistance over the operation of the business, and (iii) the franchisee pays the franchisor or ...

What are the strengths of a franchise?

Franchisors usually provide the training you need to operate their business model. Franchises have a higher rate of success than start-up businesses. You may find it easier to secure finance for a franchise. It may cost less to buy a franchise than start your own business of the same type.

What makes a strong franchise?

What makes a good franchise is an agile yet strong and supportive infrastructure. All franchisees need initial training when they start. Even if they have experience, they'll still need to learn the ropes of your operating model. Providing ongoing training ensures standards are maintained and benchmarks are met.

What are the weaknesses of a franchise?

There are 5 main disadvantages to buying a franchise:1 - Costs and Fees. ... 2 – Lack of Independence. ... 3 – Guilt by Association. ... 4 – Limited Growth Potential. ... 5 – Restrictive franchise agreements.

What is an example of a KPI?

SMART KPI examples are KPIs such as “revenue per region per month” or “new customers per quarter”. Iterate and evolve. Over time, see how you or your audience are using the set of KPIs and if you find that certain ones aren't relevant, remove or replace them.

What is the role of the KPIs for dealership?

Measuring your Key Performance Indicators (KPIs) is crucial to running an effective and profitable dealership. These metrics will help you better understand how well your dealership is doing as a whole, what areas need improvement, and how efficient each of your departments are.

Does Mcdonalds have KPI?

McDonald's places massive importance on sustainability and environmental consciousness when communicating its high-level KPIs. And the company is very specific.

What should a KPI include?

KPIs can be quantitative or qualitative in nature. Quantitative KPIs include metrics such as sales revenue per employee, number of customers served by each call center agent, or revenue. Qualitative KPIs, on the other hand, may include customer satisfaction scores, quality ratings, or product reliability rates.

Will a franchisor help me to source a good location?

Alan Wilkinson writes: If you are joining a property-based franchise, be that retail, food and beverage, or... read more

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What is the importance of franchisees?

One of the critical attributes of any top performing franchisee is the ability to implement and stick to a routine. Successful franchises require order, and this order can only be established if there are regular processes and procedures in place. A well-organised franchisee will have many different routines, each spread over a different period. For instance, they'll have different daily, weekly and monthly routines, all of which are written down in an ordered ‘to do' list or timetable.

What is the main driver of franchise profitability?

A main driver of franchisee profitability is wages and salaries. This often varies quite drastically between different franchise locations of the same brand. Keep an eye on the different labour costs of the different locations to see if you can make any improvements to benefit the franchisees and brand overall.

What is NPS in franchise?

The NPS is a measurement that indicates how prepared customers are to recommend the franchise’s products or services to someone else. It therefore measures the customer’s overall satisfaction with their experience with the franchise and their loyalty to the brand.

What is the importance of being aware of your shortcomings as a franchisor?

As well as playing to your strengths as a franchisor, it's vital that you're aware of your shortcomings and actively strive to compensate for them. The same goes for the business as a whole. High performing franchisees are aware of the limitations of their franchise and work to improve its performance and minimise the influence of these weaknesses.

What does rapid pace of change mean for franchisees?

The rapid pace of change in modern business also means that high flying franchisees also need to reassess their recent performance, goals and objectives regularly. As events in the industry and market can have drastic effects on your business, it's necessary to keep abreast of what's happening around you and adjust your operations, plans and targets accordingly.

What happens if franchisees don't improve?

If they don't, their performance and abilities quickly stagnate and begin to decline. In the modern business environment, where the pace of change is astoundingly fast, any drop in determination and drive is punished by competitors who will leave you lagging behind.

Why is it important to be a successful franchisee?

A successful franchisee surrounds themselves with other top performing professionals and ensures that they regularly communicate and listen to their advice. As a franchisee, your management team will be privy to information that you won’t necessarily receive. They’re one step closer to the action, more in tune with the day-to-day running of the franchise and able to offer a different perspective. This is incredibly important when it comes to ensuring that you’re fully informed on the latest developments in the business .

Why is business performance important?

It is also a priority area we look at when working with multi-unit franchise owners in developing a succession strategy because a core component of succession planning is looking at overall business operations.

Why is performance mediocrity not an option in succession?

Performance mediocrity is not an option in succession because the predictable influences and distractions associated with transferring ownership and management challenge the survival of an average or struggling operation.

Why is underperformance a threat to succession?

Underperformance is a threat to succession because performance success is the predicate to succession. Kendall Rawls knows and understands the challenges that impact the success of an entrepreneurial owned business.

What is capitalization in business?

Businesses depend on capitalization—in the form of cash, receivables, equipment, facilities, etc., to deliver goods and/or services. A lack of deliverables prohibits performance and succession. Capitalization is the engine of the business machine.

What is the key KPI for franchisees?

Another key KPI for our franchisees is loyalty system participation. This helps coffee shop owners understand whether they’re growing their customer base and if their existing customers see and internalize the business’s value proposition.

What is a consultant in franchise?

In other words, the consultants are on-site working hand in hand with our franchisees, get to know the owner and spend time getting to know the rhythms of their business on a highly localized level.

What is labor percentage?

Labor Percentages – This number showcases how much of a coffee shop owner’s revenue is going toward paying employees. The percentage is labor divided by sales, and it helps you understand if you’re over or understaffed during specific day parts and resolve a variety of other staffing questions.

What is a performance management measure?

A performance management measure is a set of proactive methods and practices organizations can use to track production. In this process, management, staff members and stakeholders agree upon a specific set of performance measures or objectives, and then a management team measures the progress towards those goals.

How does performance measurement differ from performance management?

Performance measurement and performance management are complementary to one another, though are different in intent and execution. Here is a review of how measurement and management differ in these key ways:

5 methods for measuring performance management

Here are five methods to consider when attempting to collect data or create a structure for measuring performance management:

How to set performance management measures

Performance management measures can help you evaluate how effective your strategies and systems are. Creating and executing performance management measures that are understandable, efficient and clear is the goal of any performance management program. Here are six steps for setting effective performance management measures:

What is the importance of franchisees?

One of the critical attributes of any top performing franchisee is the ability to implement and stick to a routine. Successful franchises require order, and this order can only be established if there are regular processes and procedures in place. A well-organised franchisee will have many different routines, each spread over a different period. For instance, they'll have different daily, weekly and monthly routines, all of which are written down in an ordered ‘to do' list or timetable.

What is the main driver of franchise profitability?

A main driver of franchisee profitability is wages and salaries. This often varies quite drastically between different franchise locations of the same brand. Keep an eye on the different labour costs of the different locations to see if you can make any improvements to benefit the franchisees and brand overall.

What is NPS in franchise?

The NPS is a measurement that indicates how prepared customers are to recommend the franchise’s products or services to someone else. It therefore measures the customer’s overall satisfaction with their experience with the franchise and their loyalty to the brand.

What is the importance of being aware of your shortcomings as a franchisor?

As well as playing to your strengths as a franchisor, it's vital that you're aware of your shortcomings and actively strive to compensate for them. The same goes for the business as a whole. High performing franchisees are aware of the limitations of their franchise and work to improve its performance and minimise the influence of these weaknesses.

What does rapid pace of change mean for franchisees?

The rapid pace of change in modern business also means that high flying franchisees also need to reassess their recent performance, goals and objectives regularly. As events in the industry and market can have drastic effects on your business, it's necessary to keep abreast of what's happening around you and adjust your operations, plans and targets accordingly.

What happens if franchisees don't improve?

If they don't, their performance and abilities quickly stagnate and begin to decline. In the modern business environment, where the pace of change is astoundingly fast, any drop in determination and drive is punished by competitors who will leave you lagging behind.

Why is it important to be a successful franchisee?

A successful franchisee surrounds themselves with other top performing professionals and ensures that they regularly communicate and listen to their advice. As a franchisee, your management team will be privy to information that you won’t necessarily receive. They’re one step closer to the action, more in tune with the day-to-day running of the franchise and able to offer a different perspective. This is incredibly important when it comes to ensuring that you’re fully informed on the latest developments in the business .