Secrets of successful franchisees

Franchising differs in some significant ways to other forms of commercial operations, and until fairly recently, not a lot of information was available that focused on the difference between highly successful franchisees and ‘average’ performers.

That is, franchisees that may not be overly successful – certainly not failures, but middle-of-the road achievers – despite, in some cases, working hard and long hours.

So what is the secret of high-performing franchisees? Some interesting new research provides insight into why some franchisees are more successful than others, highlighting some major contrasts between high and average franchisee performers.

It seems that high-performers exhibit a greater level of loyalty to the franchise system in which they are involved. They believe in the system that has been developed and follow it, whilst more average performers tend to want to do things a bit differently, because they think it is a better way for them (even when they are advised not to do it). In other words, higher-performers tend to think globally about the franchise network, rather than at the micro unit level.

High achievers are more proactive in growing their business, targeting future clients, and don't seem to mind cold calling to bring in more clients. High-performing franchisees seem to have greater success in generating value, rather than volume, of business. They more actively manage their loyal customers, and work at establishing a greater percentage of A-level clients.

They increase productivity by upgrading the proportion of quality clients over time – achieving a higher rate of return on the time invested. They also achieve higher rates of cross selling ('Would you like fries with that?') than their more average counterparts.

Moreover, high-performers are rigorous in watching costs and give more attention to inventory control. Average performers, on the other hand, often carry excessive stock, and sometimes not the most appropriate products.

High-performers are also more likely to use a detailed accounting system to control costs and use diaries to plan their cash flow expenditure.

On a personal level, high achievers display a strong drive to be good at all aspects of the business, are more driven by ambition, and enjoy setting and exceeding performance targets. They have more confident personalities, and are more likely to view setbacks as opportunities, rather than problems. They often act as mentors for other franchisees and like to share their knowledge, so tend to be involved in franchise advisory councils or similar. They don't see other franchisees in the system as competitors, but rather view them as partners.

However, the most significant finding seems to be that whilst average performers generally have a greater need for the full range of services provided by the franchisor, such as training, product advice, accounting and general management support, high-performing franchisees are more self-sufficient in these areas, and place much more significance on the marketing and brand support provided by the franchisor. As a result, these successful franchisees are much stronger in all aspects of marketing. This seems to be the leading factor in assuring their high-performing status.

Unexpectedly, the research also indicates that there appears to be a low level of awareness, by both franchisees and franchisors, of the significance and nature of a superior marketing system. It could, therefore, be surmised that greater levels of awareness and focus on this particular aspect may assist in the improvement of many franchise systems.

For further information regarding franchising, why not read about Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.