It is normal for the founder or leader of the company-owned locations to prepare the training curriculum and then train the franchisees, but this may not be your best option.
AVOID THIS PITFALL:
In retrospect, I was not the best person to develop the content and train my franchisees because I knew it so well that it was second nature to me.
I probably took it for granted that my franchisees understood the necessary terminology, the responsibilities, and the very basic processes of how the business worked. To the founder, everything is second nature: Compare this to golf. Often the founder is like the professional golfer who plays on the tour, a great performer. But professional golfers may not be great teachers, and that is why we have golf professionals who are not tour players but are better teachers of the game.
In chapter 5, you read about the importance of hiring an external company to assist you in developing your operations manuals and training procedures. We learned that while we could outline what to do and why it was important, only an outside consultant could identify what we were leaving out and ask the right questions. Moreover, an outside resource, a consultant, is much better initially from a cash-flow standpoint, because you can bring him in only when you need him. Once you begin selling franchises every month and are training monthly, you can consider hiring an internal resource for the training who can wear other hats when training is not going on. In addition to assisting with training, the outside resource could shadow your new internal resource until she is ready to lead training on her own.
Now we will walk through some of the major decisions that you will need to make to build a strong, sustainable foundation for on-boarding and supporting franchisees. I will try to shed some light on the competing factors when choosing the best tool versus a tool that may merely suffice until you see the system grow.
Support from Signing the Franchise Agreement to Opening
Every moment a franchisee spends prior to opening his business, he is burning through cash without an ability to earn revenue. In turn, you as the franchisor cannot earn royalties. Let’s look at the steps you can take to get franchisees open as fast as possible and in a way that prepares them to hit the ground running.
Quick Introduction and Point Person
As soon as a franchisee signs the franchise agreement and parts with a large sum of money, it will be natural for anxiety and buyer’s remorse to set in. The faster and more thorough you can be in welcoming the franchisee into the family and seeing to it that she has a point person—we call this position a preopening concierge—to reach in case she needs anything, the quicker her anxiety will turn into positive energy and a desire to work together for a successful start. When you first start out, you may not have one person who handles these franchisee relations, but the sooner you can afford to hire a person dedicated to this purpose, the better for you and your franchisees.
As you read in chapter 4, we added a preopening concierge in the beginning of 2007, when we had about 15 franchisees. Before then I was the primary point person.
AVOID THIS PITFALL:
Franchisees become accustomed to having the founder or CEO as the main point of contact, so breaking this connection may be difficult for them.
It’s better not to establish that connection in the first place. Though the direct CEO-to-franchisee arrangement may be necessary in the beginning to conserve capital, the sooner you can shift the point person role from the CEO to someone else in the organization, the better, and the smaller the number of franchisees who also have to adjust.
The head of field support needs to have visibility to the performance of franchisees during the preopening phase. The regional field support person should be introduced early and have monthly meetings with the preopening concierge and franchisee to validate progression to an on-time and successful launch. If there are concerns over the franchisee’s sense of urgency and/or abilities, the earlier this is identified and proactively and directly communicated by the regional field support director to the franchisee, the higher the likelihood to get the franchisee on-track before the “issues” cause a slow start. All identified issues should be documented in writing and an action plan developed that is acknowledged and committed to by the franchisee.
Training Programs
The moment you decide to franchise and become a franchisor, you are in the business of recruiting, training, consulting, and coaching to produce high-performing franchisees.
AVOID THIS PITFALL:
We learned early on that training programs should be administered by people who know how to develop business curriculum and understand adult learning principles.
That was not us; we were busy learning and doing other things. If you don’t have that particular range of training expertise, you would be well advised to do what we did and hire someone who does. Similarly, if you do not understand business consulting techniques, get trained. And if you do not understand performance coaching to continually add value to high performers, I repeat—get trained.
When we first started, our training program took one week and included both the materials franchisees needed to get ready to open and the information they would need to run the business. We had been following this process for about 18 months when a franchisee suggested over lunch that we divide the program into two parts. The franchisee suggested that there be just a couple of days within 30 days of the franchisee joining the system to cover what a franchisee needs to know to understand the business, hire key employees, and get the business ready to open. Then, after a new franchisee had his team in place and the business was ready to open (probably 60 to 90 days after the first training), the team would come back for training in running the business. This matched what the franchisees needed to know with when they needed to know it, and they weren’t overwhelmed with too much information at once. The change to two training sessions was a large improvement and probably cut down on a lot of frustration among franchisees and support personnel.
BRIGHT IDEA:
Our next largest breakthrough was the implementation of a learning management system (LMS) that allowed us to deliver training materials before the franchisees and their teams were in the classroom.
This pretraining was very effective in getting the franchisees to a certain level of knowledge, so that they all had similar quantities of information and could learn at the same pace. Similarly, this allowed each franchisee’s team to learn the business, key terminology, customer types, etc., online and at their own pace before coming into the classroom. Once a student falls behind, it is nearly impossible to catch her up, and if you do try you hold everyone else back, it frustrates them, and ultimately you fail to cover all of the material thoroughly. We have continued to add to the curriculum and now have almost 100 hours of content.
I have discovered that many franchise systems do not train the franchisee’s core team, even though they know how critical the team is to the franchisee’s success. We always train the core team. We thought it was an unreasonable expectation that a new franchisee would learn all of this information about a new industry and be able to teach this content effectively to a new team. The new franchisee will not be an expert in the industry and how to run the business for quite some time, and it is unfair to put him in the position of having to train a team on information that he is not yet comfortable with.
The number of days and the number of times per year that we offer training has changed over time. Our classroom training includes three days of new-owner training and an additional five days of opening training for the franchisee and core team. This is approximately 64 to 72 hours of classroom training that we supplement with about 100 hours delivered through our LMS.
AVOID THIS PITFALL:
It took me a while to realize that I could significantly control costs and efficiency by not offering training every month.
I found that franchisees fared better when they started as part of a group, in which they could share their best practices and keep pace with one another’s progress. As for Item 11 on the FDD regarding your training agenda (see chapter 2), you are allowed some flexibility regarding the number of hours for each component of training and the number of times per year that the training is offered. For instance, you are free to offer each training module a certain number of times per year or when a certain minimum number of franchisees can attend as long as you disclose that in Item 11.
Franchisee Support Team after Opening
Once the franchisee is ready to open, there is a subject matter expert (SME) transition from the preopening concierge to the BrightStart sales coach as activities transition from focusing on opening the business to growing the business. While the SME that is assigned to a franchisee may vary over time based upon the stage of the franchisee or a particular need, the primary relationship and oversight should be with the regional field support director (we didn’t have this consistency in the beginning when we created the preopening role or the BrightStart team and the lack of holistic knowledge and accountability to a franchisee through field support was a glaringly missing component).
In the beginning, you and your team will wear multiple hats. One critical point to remember, however, is that your first 5 to 10 franchisees have to be successful. You need to be prepared for the 24/7 commitment that it takes to support them adequately. Ensure that you build in regular check-in visits to ensure that the franchisee has what he needs and is progressing according to plan. If he is not doing well, an early warning signal lets you step in with extra resources in time to get him over the hump.
Our support personnel model has changed dramatically over time, and we feel that we have finally optimized the model in terms of who we hire for each of our support teams. In fact, I think that understanding how to hire and use support teams is the aspect of franchising in which we have learned the most and evolved the most, and continue to do so.
Like many franchisors, BrightStar initially looked for field support personnel who walked on water. We needed them to be great at both sales and operations, in addition to having strong financial acumen and leadership ability. We would still be looking for these superhuman individuals today, or settling for a realistic subset of skills, if we hadn’t transitioned to building multiple teams that had different backgrounds and skills and provided different services to the franchisees. It took us time to get it right—leveraging SMEs to assist field support by stepping in and providing a particular service for a specified period of time or for a specific skill set or function. The process is one of evolution.
Let’s explore the three teams that we evolved and how they work together to provide the support franchisees need, when they need it. In the beginning, you won’t have three support teams; as franchisor, you will build the separate roles over time. In the beginning, you can clearly define what two roles each person is handling and what the person’s primary role will be (so you can hire to it) as you grow. Our three support teams are BrightStart, the support center, and field support.
BrightStart
I described the purpose of the BrightStart program in the prior chapter: to assist franchisees with ramping up through a dedicated team that has a strong focus on sales results. The BrightStart team, under the direction of field support, handles the ramp-up of a new franchisee for the first 17 weeks of operation, and it supports through a boost program those franchisees who are underperforming in light of their revenue goals after approximately nine months in operation. We seek personnel with a track record of sales success for the BrightStart team. This is critical because those support personnel who may be great at operations and finance will likely not be strong in sales, and vice versa.
Once we identified that we needed BrightStart focused on sales and field support focused on operations and leadership, we were able to develop job descriptions that actually represented real people rather than a make-believe superhuman who could conquer all areas.
BrightStart is designed to assist owners with building sales by providing weekly touch points for their first 17 weeks after opening, and to support owners in either an operations role or a sales role. We added new resources, including a salesperson on-boarding guide, to coach a salesperson hired by the franchisee, so franchisees could choose an operations role. BrightStart is a comprehensive training and coaching program that combines a preopening focus on developing a franchisee’s operating system, market and industry knowledge, and selling skills with a postopening support team to build sales competencies and provide back-office operations support. Preopening activities include classroom training, webinars, sales system technology, market knowledge, preselling the market, sales strategy, marketing planning, simulations, and role-playing. Postopening, activities include one-on-one phone coaching, in-person market visits (minimum of two), back-office operations support provided by the support center, and weekly performance reports highlighting progress to goals related to sales activity, referrals, new clients, and revenue.
The heart of the BrightStart program is the BrightResults sales process, which combines BrightStar’s proprietary customer relationship management (CRM) technology with reporting, selling strategy, and mastery training. In addition to a full team of subject matter experts and trainers during the preopening process, the BrightStart sales specialist works with a new franchisee to guide her through the specific tasks and learning related to the sales process. These activities include training and implementation of BrightStar’s CRM technology, preselling the market, identifying top sales prospects, zoning the territory for efficiency, ensuring training requirements are met, recruiting and on-boarding a sales manager, and progress reporting.
This incremental level of support also allowed us to expand the universe of prospects that could fit our model as franchisees. Prior to BrightStart we were only looking for franchisees who could sell. With the investment in this new program to assist franchisees in ramping up, we could expand to screening prospects with either operations or sales experience. It allowed us to focus first on the leadership abilities of a prospect. One of the side benefits of the BrightStart program is that having a franchisee start in the operations role makes him more effective as a multi-unit owner because he never needs to replace himself as the primary salesperson and avoids salesperson turnover in his market.
In addition to the implementation of BrightStart in 2009, we identified that our field support and BrightStart teams were getting a large number of back-office questions. We recognized that we could hire individuals with less but still relevant experience (at a lower salary) to handle these administrative questions and evaluated the launch of a new support center team in 2010, which we will discuss further in the next section.
Support Center
The launch of the support center had multiple benefits, many of which we didn’t foresee at the outset. We improved franchisee satisfaction because franchisees no longer had to figure out who to call for assistance because every administrative and technology question and/or need was directed to the support center. We could also identify opportunities for improvements in training, technology, or communications on the basis of the frequency of questions. By incorporating a system for franchisees to request support online, we improved our efficiency for handling requests, with improved visibility and accountability for timely responses, as well as for tracking them. The support center handles all technology questions related to our proprietary system and ancillary systems such as the financial software. The support center also handles all questions related to finding marketing tools, vendor contacts, and rate or contract information online. If a particular office asks excessive questions, field support is notified so that the franchisee can be coached on her selection or training of her staff members. Sometimes a franchisee becomes dependent on turning to the support center for everything, and field support needs to address cutting the cord. They might suggest that the franchisee have one of his staff members attend training again or hire another team member, or we might implement a plan to charge per call above a certain number to recover our costs. One of the side benefits of having the support center for the franchisees who handle the sales role is that it allows them to remain out in the field, making sales calls instead of getting sucked back into the office by their branch personnel. The support center provides a safety net in the beginning for the franchisee’s branch team by walking the team through processing payroll, billing clients, placing a recruiting ad, etc. The key to success for this extra layer of support is to establish the support center as a bridge to building competency so that the franchisee’s team becomes self-sufficient in a reasonable period of time—normally within three months.
The average cost of the team is far less than for BrightStart or field support because the background needed does not require extensive sales or leadership experience. It is, however, a great area for team members looking for advancement to build general knowledge of the system.
Field Support
The field support team is commonly the lifeblood of a franchise system, because it is the team closest to the franchisees and is responsible for working with the franchisees to improve their businesses and to set goals. Typically, a normal job description for field support includes an overwhelming array of expectations of leadership, operations, sales, and financial acumen. Over the years, however, I’ve learned that the most critical skills needed in field support personnel are leadership, the ability to establish mutual respect and trust with the franchisees, and the ability to have difficult conversations with franchisees.
We have found it is much more cost-effective to direct questions and small requests to the support center so that the field support team is available to review a franchisee’s operation and work with her on an action plan to achieve her goals. With the addition of BrightStart, we no longer had to seek strong sales acumen in our field support. We hire members for the field support team who focus strategically on performance improvement initiatives, enabling our franchisees (and us) to achieve breakthrough performance and to grow into future brands. We provide the resources for field support to call upon such as BrightStart as the sales SME or the franchisee financial services director (discussed below) as the financial SME to enable the field support director to be the primary party accountable to maximize franchisee performance, leveraging the skills and services of others.
But we still had a need for field support to have strong financial acumen. In a tight credit market, there is a growing need to help franchisees access the capital they need to grow and to understand the financial impact of pricing and hiring on their cash flow and profitability. This requirement was difficult to find in every field support person, so we originally searched for either candidates who were generalists with modest skills in a variety of areas, such as operations and finance, or candidates who were strong in operations and leadership but did not have the financial acumen to support franchisees. This need for financial acumen and capital access support caused us to identify how much more efficient field support could be if the field support director had a resource to engage to help franchisees with finance-specific needs.
Fortunately, my senior vice president of operations at the time identified the need for a dedicated franchisee financial services director (FFSD). This position would help franchisees meet their needs and tighten the hiring protocol for the field support team. This position has been one of our best additions in years.
Because many franchisees do not have financial acumen, providing them with the FFSD-developed financial training sessions takes on significant relevance. The sessions show them how to set goals, understand the cash flow impact of the decisions they make, and calculate and understand their breakeven. In addition, the FFSD meets one-on-one with each franchisee to assess the franchisee’s cash flow, breakeven, and needs for accessing capital. The FFSD reviews the financial position of each franchisee periodically and serves as the primary conduit to accessing outside capital programs.
Our field support team refers all franchisee cash flow and capital access issues directly to the FFSD. The franchise sales team, as needed, can also seek help from the FFSD. We found that it was helpful to have someone in this role who understood operations from the financial metrics and cash flow standpoint. We also discovered that former bankers had the ideal experience to fill this role. They understand what the banks are looking for, and they can be an effective intermediary between the banks and the franchisee in seeking (and accessing) capital.
Our last breakthrough was the addition of facilitated performance groups for franchisees at similar stages (years in business, multi-unit, etc.). I learned about this from the great senior team at PostNet, and we floated the idea by some of our franchisees (those beyond two years in business) to see if they would prefer this type of support in lieu of a field support visit. In every case, the franchisees found that this would be a great enhancement, and they were eager to trade their normal one-on-one support visit with a facilitated group interaction with their peers to share best practices. These types of sessions were also the most attended and highest rated sessions at our annual franchisee conference.
Likewise, technology can play a major part in simplifying the franchisee on-boarding process as well as enabling the franchisees to share information, access information, and collaborate in a “community.” The next section describes how best to use technology solutions to simplify the on-boarding and support processes for your franchisees.
Technology Options to Simplify On-boarding and Support Processes
We discussed in the earlier sections of this chapter the processes that need to be in place and the resources necessary to successfully on-board and support franchisees. Technology can assist in automating and/or streamlining these processes. However, there are trade-offs between cost and capability that must be considered.
Since you don’t know how many franchisees you will have when you launch a franchise, you will need to make a big decision between selecting a franchise support system that can be implemented for under $5,000 per year and one that costs up to 10 times that amount. The ideal solution is to find technology that is built on a sophisticated technology platform that will meet your needs for the long term. The trick is to find the vendor willing to partner with you to provide this type of technology platform at a reasonable per-user price, so that the cost corresponds with the size of your system as it grows. We used an inexpensive system for our first three years (and first 100 franchise units) that was a solid system for what we needed at the time.
As we grew and wanted to integrate capabilities with our core system, it was apparent that we needed more. We wanted to build a multiyear road map for the technologies we would use to (1) track support with solid communication across all support departments, through to the last contact with a franchisee; (2) on-board franchisees and track where they were in the preopening process; and (3) provide franchisee access to all information and resources through easy searches and enable franchisee-to-franchisee collaboration. During the transition period, we tried out tools that did not require a long-term commitment, allowing us to evaluate the capabilities we needed. We were investing in getting all of our technology pieces to “talk” with one another, and we found that technologies outside the franchise space aligned better with this goal. We moved our collaboration spaces and LMS to a WebEx tool, which documented and consolidated all of our information into one place to prepare us for the migration to SharePoint.
Franchise-specific technologies are used by some franchisors. These technologies provide the tools for tracking franchisee support and allow franchisees to collaborate. We made the decision to invest in SharePoint (once we had nearly 200 franchise units sold) for (1) warehousing all resources, including operations manuals, since the whole site is searchable; (2) enabling franchisee collaboration with other franchisees; (3) extracting key information to populate dashboards for our franchisees as to their performance; and (4) automating and/or streamlining end-to-end processes, from franchise sales to on-boarding franchisees to supporting them after they are open. This is a strong addition to our system and aligns with our vision for all of our technology to be integrated, enabling us to eliminate data entry duplication, achieve better reporting, and streamline process flows. When the technology is easy to use and has a consistent look and feel and functionality, it is easier for franchisees to learn and ramp up.
BRIGHT IDEA:
The selection of technology for on-boarding and supporting franchisees is an important one. You need to balance initial cost, recurring cost, and the underlying technology platform that the systems are built on.
I recommend that you allocate the resources necessary to do it right in the beginning or as soon as you are financially able.
Closing Thoughts
The on-boarding and training of franchisees and the support of franchisees over time are critical components in the success of a system. The lessons shared in this chapter have been my greatest breakthroughs in improving revenues, year over year. On-boarding and training franchisees so that they can open fully prepared to grow their businesses quickly will maximize the franchisor’s revenues. Developing an organizational structure for the support team allows employees to be hired with the specialized skills needed without their having to be great at everything (which is unrealistic). Our organizational structure allows BrightStart to be focused on sales, the support center to be focused on administrative needs, the field support team to be focused on leadership and operations, and the FFSD to be focused on financial acumen, all coordinated by field support to ensure one group
has the ability to drive franchisee performance by leveraging others but also so one group has clear accountability for results. This allows us to hire the right people for the right positions and pay, based upon the primary skills we need. Technology can enable greater scale and efficiency to the on-boarding and support process as well.
· · ·
So far in this section we have discussed the programs and tactics to drive franchisee performance and in turn maximize franchisor royalties. In the next chapter, we discuss how large an impact culture has on achieving the desired results from these programs and tactics. It is not enough for me, as CEO, to focus on how to continuously improve franchisee results; my entire organization must be aligned with the same mission and be able to see the vision for the brand and how each person fits into and enables it. Likewise, franchisees must be selected for their culture fit.
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