A lot goes into a creating a successful franchise system:
- Strong marketing
- Thorough training
- Memorable brand
- Repeatable systems
But all that is secondary to the most important factor:
Franchisee profitability
Profitable franchise owners invest in more marketing and build their teams to further grow the business.
They acquire low-performing locations and open new ones.
They tell their friends who, in turn, want to become franchisees.
They are brand champions since it’s changed their life and provides a foundation to build a family legacy.
What Franchisors Can (Should) Do To Increase Owners’ Profitability
It starts with making franchisee profitability (not their own) the #1 priority.
Franchisors’ long-term success is entirely predicated on profitable franchisees. A brand will soar like a rocket ship if franchisees have a predictable path to printing cash.
Many brands will say their care about franchise owner’s profitability but their actions prove otherwise.
Every initiative should start with “how will this make the franchise owners more money?”
Start by creating a profit playbook
This playbook teaches franchisees how to be profitable. Many franchise owners are first-time business owners. Owners need education on how to read, understand & implement changes based on the numbers:
Cash – how much cash do you have in the bank? What is your monthly burn? How much A/R do you have outstanding? Can you refinance any debt to a lower payment?
Payroll – the expense will make or break a business. What is your % of payroll to sales? Is it within budget or out of whack? If too high, are you overstaffed, overpaid, or don’t have enough sales?
Gross Margins – hard to make money if out of line. Are you estimating incorrectly or discounting too much? Do you need to raise your prices?
Next is monthly P&L reviews.
Have a trained coach review P&Ls with owners to look for trends & opportunities based on the playbook.
Compare to previous month & brand benchmarks. Set written action plans to improve.
Circle back in a month to check on progress.
Accelerate Your Cash Flow
The best way franchisees can improve cash flow is to surround yourself with people who’ve scaled their businesses, made mistakes, and are willing to help you avoid them.
This is why I created the 8-Figure Franchisee, a community for driven franchisees.
In this private community you can ask questions that you can’t ask anywhere else:
“Can you give me feedback on structuring this owner finance offer?”
“How do I handle this problem with my franchisor/employee?”
“Should I expand into another state?”
I host live calls multiple times monthly + a digital community to connect 24/7
Click here to learn more & apply.
Cheers!
