Unit Economics – Remember Last Year’s Talk?

Capital Area Franchise Association founder and well known franchise attorney Warren Lewis led the important panel discussion:

How to Improve On Your Franchisees’ Unit Economics, on July 16th, 2013.

Joining Warren on the panel were Gregory Plotts, CPA of Yount, Hyde & Barbour an expert in franchisor/franchisee audit, accounting and consulting services and John A. Gordon of Pacific Management Consulting Group an analysis, advisory, expert witness and business intelligence aggregator focused on the franchise restaurant sector.

 

1.  The Problem – Lack of Timely Reporting

There is great opportunity for better franchisee unit level performance reporting and corresponding franchisor support.

However, the audience concluded that less than 40% of franchisors get meaningful and timely reporting from franchisees.  

Warren also pointed out that in 35 years of franchising, he has never terminated a franchise agreement solely because the franchisee wasn’t reporting on a timely basis.

 

2.  Why it Matters Even More

John Gordon pointed out that the U.S. restaurant marketplace is overbuilt, yet  still growing.

So, the competition for sites is intense pushing rents up for prime locations and requiring franchisee and franchisor operators to be focused on unit level performance like never before.

Those franchise systems that are better at getting their data have a competitive advantage. Popeyes is out muscling KFC, for example.

Greg Plotts emphasized that creating dashboards with Key Performance Indicators – KPI- in as close to real-time as possible enables both franchisees and franchisors to be nimble and act on what the KPI reporting is telling them.

 

3.  The Opportunity for Franchise Systems

The audience asked how do you get to a point where a franchise system can get the reporting and KPI platforms built and adopted?

Every franchise systems need a Standard Chart of Accounts.  (Restaurants can start with the National Restaurant Association’s uniform chart of accounts.)

 

Here are the 6 takeaways from the experts and CAFA audience: 

A. Franchisors should:

1. Produce reports that are valuable to both the franchisor and franchisee.  Franchisors need to find out what reports their franchisees need.

2. Get the franchise field consultants focused on the franchisee’s unit level P&Ls. To have onsite in the field meetings without good numbers with franchisees is not the best use of franchisee and franchisor time.

 

B. Franchisees should:

1. Understand that some of them will want to know how they rank, and that group should be the first to work on a standard chart of accounts together with the franchisor and service providers.

2.  Understand that money spent on accounting platform now will pay off in future growth.

 

C.  Service Providers/Suppliers Should:

1.  Not push the franchise system to a cloud based platform or even dashboards until there is sufficient buy in by the franchisees.

2.   Understand the different needs for reports, by franchisee and franchisor and tailor the product accordingly.

 

CAFA’s next Lunch and Learn on Unit Economics will be Tuesday, July 15th, 2014

 

Stop Giving Everything Away & Start Making More Franchise Sales

The Franchise sales process has changed since I began over 20 years ago.

Back when I started out, people interested in franchises used the telephone to inquire and request information.

Because they saw our ads in the Wall Street Journal or some other important franchising magazine. 

We talked to them and sent our info packets out through the mail or UPS NextDay.  The sales process had begun.

But, today franchisors are building costly & elaborate franchise recruitment websites.

  • They give probable purchasers glossy franchise brochure PDF downloads.

  • They use higher-powered full-blown & expensive CRMs to move the probable purchasers through to a sale.

Yet, here’s the biggest complaint I hear today from franchisors.

Their sales teams can’t get people on the telephone. The leads will not call them back -or the phone number was fake.

Now that is a big problem. 

You cannot sell franchise to someone who won’t answer their phone or call you.  

Why aren’t they returning your calls?

You built a wonderful franchise “information platform”. These probable purchasers have all the research they need.  Don’t they?

But, they still won’t return your call.

Do you know why?

The probable purchaser feels as though he doesn’t need to talk to your franchise sales team members.  You have provided all the information.

You had the best of intentions. You wanted to make it easy for their sales team to sell franchises.  It is disappointing to spend all this money.

I know what the problem & I can fix it.

Because I have been doing franchise sales development for a very long time.

And Mike Webster knows a thing or two about how people really make franchise investment decisions.

So, when you need a combination of great practical skill and wonderful social science – which no other franchise developer group can give you- give us call and we will fix your sales process for you.

Bring Out Your Dead

Remember – “Bring out Your Dead? Well, you might be killing your leads too early, too. 

In the early 1990s,  I was in charge of US development for a top QSR franchise. 

At that time we relied on targeted marketing by DMA (Designated Market Area), trade shows and the display advertising to attract attention to our franchise offering.

Ours leads came in by telephone, brochures & applications were mailed and the follow up was telephone and FAX machine.

We were very good at managing our prospective franchisee pipeline using a basic CRM and Excel. We tracked conversion, diligently followed up with candidates until they bought or dropped out of the franchise sales process.

So we pretty much knew a lead was dead when it was dead. We had done our best with our qualified leads to maintain interest in our program but for some we couldn’t create that intense desire to buy.

We knew some of the leads might make other franchise investments and others would make no decision to buy a franchise.

Our brand was very well known. We invested heavily in lead generation and got a lot of leads every year. 

But we wanted to do more with the qualified leads who quit us and our process.

So we brought our sales team together to solve the problem of following up with someone who was no longer pursuing our franchise and may not be enthusiastic about talking with us.

We knew we had to have a solution that was thoughtful and easy for our prospects. We needed the qualified lead to respond to us and it was important that they do something that told us they wanted to re-activate their franchise application.

Here are the four simple things we did –

  • Created a well crafted an inviting sales letter to re-attract attention.

  • Used the best and fasted technology available – A FAX machine. 

  • Asked our dead lead one question – “Would you like to reactivate your franchise application?”

  • Gave them one thing to do to restart the process – Simply fax back this letter and we will get you back on track to developing your first restaurant”.


The program worked great!

We revived “dead” leads and sold more franchises.  How might you try that today?  Come to CAFA on Tuesday, May 20th and let’s chat.

 

If you only sell one franchise because of attending this Lunch and Learn, it will be worth it!

Time: Tuesday, May 20th from 11:45 – 2pm

The Tower Club in Tysons Corner VA 

Registration 11:45 – 12:15 – Lunch 12:15 – 12:45 – Round Table 12:45-2:00

Click Here to Pay and Register 

 

Two of the IFA’s Legislative Concerns

Two weeks ago, I wrote up an overview of How Important Franchising was to the US Economy, based on Steve Caldeira’s presentation to CAFA.

I have looked at the presentation further, to find out what the IFA was doing at on the legislative level.

Here is an overview of the IFA’s top concerns.

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Now, I found it very interesting that the IFA, which is mostly comprised of franchisors, would be interested in “Workforce Regulations”.  

My experience as a franchisor is that franchisors are very reluctant to discuss with their franchise owners anything do with HR compliance.  

Franchisors leave it to franchisee owner’s to obey all state and federal workplace laws.

Even more puzzling to me was this slide:

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Ok, I get why franchisors are worried about anything that extends the jurisdiction or reach of the NRLB.

But, why are franchisors worried about David Weil, “the nominee for Wage & Hour Division Administrator”?

Wage and Hour violations happen at the franchise owner level, unless the franchisor has significant units not in compliance.

The audience didn’t get an chance to ask Steve more about this, so I am putting this out there.  

Why should the franchisor be worried about more Wage and Hour violations, unless their own units are not in compliance?  

Why is the franchisee’s failure to comply with local state and federal Wage and Hour laws a concern for the franchisor?  I don’t get it.

 

Why Franchising Is Important to the US Economy – IFA Recap

Over the past three years it’s become an annual event for the Capital Area Franchise Association – CAFA to have Stephen Caldeira, President of the International Franchise Association – IFA get the new year started with his franchising outlook.

Until this year when unfortunately Steve was unable to make for CAFA’s January 2014 lunch & learn event. No worries however Steve made Scott Lehr Vice President U.S. & International Development at the IFA available to take his place. I have known Scott for as long as I have been in franchising and we were pleased to have him stand in for Steve. 

Well our unprecedented winter weather put the kibosh on CAFA’s January meeting at the very last minute. We had to reschedule. And when we did I received an email that Steve could speak at our March event.

For those of you who haven’t made it to a CAFA event attendees begin arriving around 11:30 AM or so to sign in, get their badges, talk with each other until the lunch service begins. Our featured speakers and panelists session begins at 1:00 PM, ends promptly at 2:00 PM and there’s post meeting networking as well.

One of the pleasures of being President of CAFA is every year I get to have Steve at my table for lunch every January and of course this year in March. Which is great and I look forward to it each year. 

Now something I learned about Steve 3 years ago was that when he speaks at a luncheon like CAFA as part of his game plan he forgoes lunch and pays all of his attention on his table mates. This year was no exception. And one of the things he shared with me was how much he enjoys the CAFA meetings each year. There’s one additional benefit to sitting with Steve, the table gets an extra dessert to share. 

Both Steve and I in our careers have worked for large QSR franchise systems and we compared notes on franchisee and franchisor relations and in particular working with franchisees to resolve troubled situations. Our experiences paralleled in that it was always more desirable to exhaust all efforts to work things out with franchise owners whenever possible. Franchising and the IFA is fortunate to have a leader like Steve who has hands on franchise experience and is so genuinely relatable and engaging.

In Steve’s presentation it was reinforced how vital franchising is to the US economy and livelihoods of so many people.

Here are some select slides that do a great job of showing the importance to and impact of franchising.

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IFA-2014 Franchise Industry Economic & Public Policy Forecast (Rescheduled)

“Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds”

As a result of the snow storm, we are delighted to have a twin bill!

Both Steve Caldeira, President & Scott Lehr, Senior Vice President, U.S. & International Development of the International Franchise Association to speak with us on Tuesday, March 18th 2014, Columbia Country Club, Chevy Chase MD.

Steve & Scott will explain & take quesstions on the IFA’s views on the following important topics.

How will the franchise industry grow in 2014?

Will there be additional changes to the ACA, like the definition of a full time worker?

What is IFA doing to combat the rise of state legislation targeting franchise relationships?

How is IFA going to play in the 2014 midterm elections?

Steve new photo.JPG Stephen J. Caldeira, President & CEO  IFA

Scott lehr.jpg Scott Lehr,  Senior VP U.S. & International Development, IFA 

 

 

 

Warren_Lewis.jpg   Warren Lee Lewis, Moderator 

 

Time: Tuesday, March 18th, 2014 from 11:45 – 2pm

Columbia Country Club, Chevy Chase MD

Registration 11:45 – 12:15 – Lunch 12:15 – 12:45 – RoundTable 12:45-2:00

Click Here to Pay and Register