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Four Questions Franchisors Should ask Their Franchisees
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A major benefit of a franchise model is having a network of committed business owners operating a franchise under a common brand. Most franchisors have a network of franchisees in various parts of the country running a business they purchased and capitalized. This relationship presents a significant opportunity for franchisors to leverage marketing power and branding. Unfortunately, not enough franchisors take advantage of this opportunity. The main reason is because they don't ask the right questions on a regular basis.

Here are four questions that franchisors should be asking:

  1. Are my franchisees profitable? As more franchisors elect to do an earnings claim (Item 19 disclosure) more franchisee's financial results will be available. However, since the majority of franchisors don't make an earnings claim they probably don't have this information. Its important for franchisors to know how their franchisees are doing financially. If these were corporate owned locations they would have to know!
  2. Are franchisee customers satisfied with the product? Franchisees are a good vehicle for evaluating customer satisfaction. They can be used in a focus group or to poll their individual customers. Franchisors should establish a method for tapping in the franchisees contacts with their customers in order to determine if the customers are satsified.
  3. What are competitors doing? Use franchisees to survey their competitors on a quarterly or more frequent basis so that the franchisor and it's franchisees have good competitive intelligence. It's difficult for a company to make decisions on marketing and products without know what their competitors are doing. This is a way to spot trends or new strategies being used by your competitors.
  4. Are we doing the best we can. When former, New York City Mayor Ed Koch met a constituent he would always ask: " How am I doing?"  Franchisors need to ask the same question of their franchisees using surveys, webinars or third party firms. The best way to measure performance is to get the facts and act accordingly.

There are four questions that franchisors should be asking their franchisees on a regular basis. Expecting the franchise to operate on auto-pilot without having key intelligence can lead to problems. If a franchisor is reluctant to ask these questions they are making a major mistake.

Posted on December 5, 2011 at 10:18 AM
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