by Simon Lord

last updated 27/07/2012

Good English matters for franchisee success

by Simon Lord

last updated 27/07/2012

A study reveals that English literacy can have a major impact on franchisee performance

The recent Franchise Excellence Report addressed an area that had not been covered before in local franchise studies: the importance of English literacy on franchisee performance.

This is an issue that many franchisors are often unwilling to talk about – publicly, at least – for fear of being thought racist. While there certainly are some franchisors who say that, for example, they have found Indian or Asian franchisees unsuited to their systems, there are also many examples of franchisees from those regions who have achieved considerable (even award-winning) success.

The Franchise Relationships Institute stepped bravely into this area by including the topic in its 2011 research, which surveyed 1852 franchisees in Australia and New Zealand using an in-depth 210 item questionnaire. It also asked their franchisors to complete a confidential performance rating survey for each franchisee.

The survey found that franchisees who had English as a Second Language (ESL) performed significantly lower than franchisees with English as a First Language on all measures. ESL franchisees were rated 17 percent lower on the Delivery of Customer Service in their businesses. They also scored 9 percent lower on Financial Achievement, and were rated 5 percent lower by their franchisors on their Constructive Participation in the franchise. The length of time franchisees had been speaking English made no difference to their performance.

The report states, ‘Not surprisingly, franchisors were significantly less likely to want to select ESL franchisees again. Ironically, ESL franchisees were significantly more likely to want to invest in additional franchised units.

Immigrants important for franchise growth

Some 11 percent of the survey respondents were ESL franchisees. The report authors commented that this might be an under-representation, as their experience working with many Australian franchise systems suggested that the average percentage there would be over 20 percent. The figure may not be as high as that in New Zealand but is almost certainly higher than 11 percent, and new or recent immigrants make up a significant percentage of franchise enquiries.

Given the importance of this group, the Franchise Relationship Institute therefore examined the results in more detail and found that ESL franchisees had significantly lower scores on attributes such as:

  • Conflict Proneness
  • Reliability
  • Positive Outlook
  • Sales Orientation
  • Relationship Skills
  • Emotional Resilience

However, on the positive side, the ESL group also had higher scores on:

  • Family & Social Support
  • Intrinsic Motivation
  • Vigour

‘This means they probably work hard, are family-oriented and are largely driven by personal values and goals,’ commented the authors.

Lessons for franchisors

While the report warns against the dangers of over-generalising from these findings, it does conclude that English literacy levels have a significant impact on the performance of franchisees, particularly in profitability and the delivery of customer service. It suggests that franchisors wanting to achieve excellence need to consider how they recruit, train and support ESL franchisees.

This aspect is covered further in this article from last year. While dealing specifically with the challenges for Chinese immigrants entering franchising, many of the issues – such as client communication, sharing problems and participating in franchise development – are common to all immigrant groups. The article describes how some franchisors are addressing the challenges.

The New Zealand government recognises that language skills are vital to the success of new immigrants, and often requires them to pay English language tuition fees as a Migrant Bond before arriving in New Zealand as part of their residence requirement. But other research conducted by Northtec and language school English-To-Go has found that significant numbers of migrants have paid into the Migrant Bond but have not received English language tuition in any form. This may be an area where franchisors can encourage franchisees and their families and staff to improve both their language skills and their business performance.

But as Brad Jacobs of The Coffee Club pointed out in his recent address to the franchise conference, franchisors also have a responsibility to learn what they can do to help bridge the gaps in understanding with franchisees they have chosen to join the system. Brushing up language skills is just one part of that.

Read more about the Franchise Excellence Research Report.

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