by Eric Chester
last updated 30/08/2017
Finding the pot of gold - the three legs of franchise success
by Eric Chester
last updated 30/08/2017
A recent article by US expert Eric Chester on what top-performing franchisees do differently was so clear and simple, we asked Eric for permission to reprint it with comments from four award-winning New Zealanders. Our panel comprises Shiraz Hajee (2005 Westpac Supreme Franchisee of the Year); Ivy Joe (three times Supreme Winner from 2012 to 2014); current Supreme winner Michael Ash; and double award-winning field manager Sangeetha Shaikh. Here’s Eric to start.
As the keynote speaker for more than a hundred franchise conventions and meetings over the past decade, I believe I’ve uncovered the underlying reason for the huge chasm between those franchisees who are getting wealthy and those who are barely hanging on.
While the economy, geography, and increased competition are big factors in a franchisee’s success, such factors are out of their control. But even in the most challenging market conditions, it’s astounding how some franchisees are able to thrive and prosper while their peers operating the same brand in the same (or similar) market continually struggle, or worse, go under.
Every franchisee goes into their business fully expecting a pot of gold at the end of the rainbow. After all, they’ve invested in a concept and system that somebody else has created and made profitable and it’s a business that others have cloned with success. So they decide to jump in expecting that they, too, will find gold.
But regardless of the franchise concept, the industry it’s in, the brand’s history, or even the strength of its financial backing, success in franchising is never guaranteed.
From my vantage point, I’ve discovered that those franchise partners who experience the greatest rewards year after year know that their success is not actually a pot of gold at the end of a rainbow, but rather a three-legged stool they must continually strengthen.
The 3 legs of franchisee success
The three legs of franchisee success are:
Let’s look at each of these with some comments from our local winners.
When it comes to their brand, successful franchisees are ‘all in.’ They wear the team colours with pride and are loyal to the concept, the system, the training, the marketing, the product, and the franchise agreement – to a fault.
When issues and problems arise, they don’t panic and rebel against the brand. Instead, they roll up their shirt sleeves and work cooperatively with the brand to bring forth mutually beneficial results. After all, it is a partnership.
Ivy: It’s important to share knowledge and experience. On Saturday I’ve got the new franchisee from our neighbouring store coming to chat – she’s been open 6 months and wants to discuss new staff and building her business now she has learned the basics. The Coffee Club encourages franchisees to share experience like that – if you have a little problem, it’s good to ask others how they handle it.
Shiraz: As a franchisee with Jesters Pies for 14 years, I am fortunate enough to have been elected to the Franchise Advisory Committee as well as the New Product Development committee. In making marketing or operational recommendations we must be mindful of the demographics and situation of our fellow franchisees – one size can never fit all, but if a franchisee friend has an issue I try to help find a solution that is workable for both the franchise office and my friend.
Michael: I have always felt comfortable to ask questions or raise any problems I may have with the Mister Minit team. I believe it is of the utmost importance to all be on the same page. Any franchisee should be proud of their franchise or they have simply bought it for entirely the wrong reasons. I have been a proud Everton FC supporter for well over 30 years; my pride in them will never diminish, regardless of the team’s performance each season. It is similar with my business and my franchise brand; most franchises only exist because people in the past have worked hard to get them to that position.
And Sangeetha points out that sometimes the partnership can require schooling in a whole new approach to life. One of the franchisees she supports, Bo Yang admits that when he joined Paramount five years ago, ‘I was very defensive. I got a bad relationship with the customer. First time in my own business. I had to change or I would have lost everything. The most important part Sangeetha taught me is how to live and work in New Zealand. Now the customer is happy and I am happy.’
Successful franchisees put back as much into their community as they take out. They sponsor little league teams, 5K runs, and high school musicals. But the support they give is more than financial. They’ll take a turn at the dunking booth at the county fair and volunteer to speak on career day. They’ll coach a soccer team and go door-to-door to collect cans for the local food drive.
Instead of relying solely on paid advertising to bring business their way, they continually build their reputation as a solid uplifting partner of the community that’s always ready to lend a hand. Along the way, they emerge as their community’s #1 choice for the products and services they offer. But that is the by-product of their commitment to the community, not the driving force behind it.
Shiraz: Jesters has just launched a new fundraising tool which is proving popular with scout groups and schools, selling six-packs of frozen pies. It’s a healthier option than chocolate. I get my staff at the store enthusiastic too so they end up talking about it and giving a flyer away to any parent who comes into the store with a child in uniform.
Ivy: We connect with lots of local schools, too, with free kids’ meals for Player of the Week in sports teams, vouchers for school galas and so on. The Coffee Club is also a popular place for off-site meetings, so we make sure to support the teachers too with offers like ‘Buy One, Get One Free’.
Michael: My franchise is right in the heart of the community. I visit the local schools, churches, and sports clubs on a yearly basis and enjoy good business relationships with them. We donate time and discounts on products like trophies, and sponsor the Local Community Patrol with torches and any keys necessary. One of my employees has two severely handicapped children, so we sponsor them each year to take part in activities within our local and wider community.
Sangeetha: Paramount supports charities including Ronald McDonald House, Westpac Rescue Helicopter, CureKids and North Shore Hospice. We don’t just donate money – our staff and suppliers get out wearing red bibs and rattling buckets for the Ronald McDonald annual street appeal. We also encourage franchisees to support local events – for example, Jignesh Soni and his team donated their cleaning services for the Cancer Society’s Relay for Life fundraiser in South Canterbury.
The most successful franchisees I’ve encountered all share a common love – one that prizes their people above all else. They don’t pay the minimum wage because they want above-average people and they know those people are in demand elsewhere. They take hiring seriously and they don’t make snap decisions. They train their people at every level and do so relentlessly, even if that means building them to the point they’ll leave for greener pastures.
Great franchisees know their people outside of their job titles and they care about their families, their secret dreams and career goals, and even their hobbies and special interests. The franchisees that grow the richest are those that grow their people the tallest.
Michael: My business involves months of training at three levels: Training, a Certificate of Proficiency, and a Diploma of Excellence. A Training wage starts above minimum wage at $20.50 per hour. We also pay bonuses based on budgets achieved. I look for enthusiasm and a willingness to learn. I like to enjoy work so I like a happy personality.
Shiraz: Fast food franchisees are advised to keep labour costs at the recommended percentage, which unfortunately have often been calculated at minimum wage. But once a store reaches the ‘critical mass’ of weekly sales, profits grow. At this stage the franchisee may choose to enjoy a better quality of life, which means appointing a manager who will receive a higher wage to do part of the franchisee’s job. If you have employed good staff and treated them well, you have those people in your business already.
Ivy: I always pay above minimum wage level and try to be fair according to experience. Our staff stay much longer than the average because they love their jobs. I try to give them the hours they need, respect what they do and always encourage them to look at the next level up. Train people to be multi-skilled and they are more satisfied. I say, ‘I want you happy when you come to work and happy when you go home.’
Sangeetha: Because cleaning is such a competitive business, franchisees will often start new cleaning staff on the minimum wage but will increase this as staff members learn the ropes. Good cleaners are valuable and franchisees will pay them as well as they can while still maintaining a reasonable profit margin.
Eric Chester’s points about the three legs of franchisee success clearly struck a chord with our four panellists. They’ve learned through experience what works and what doesn’t when it comes to building an award-winning team, and they’ve put it into practice in their own business. Many franchisees do the same.
As Eric says, ‘Franchising is a widely proven business model that has worked for millions of people all over the world.’ He ends, though, with a word of warning: ‘Those that believe that they can simply buy a franchise, hire a manager, and then shift their business into cruise control while the dollars flow in are fools in the making.’
Or, as our panellists would say, ‘You only get out of a business what you’re prepared to put into it. Work at it, and develop the three legs of success, and a franchise can bring you considerable rewards.’
This article was first published in Franchise New Zealand magazine Year 26 Issue 01, 2017
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