Franchise Update Magazine Issue II, 2011 | Page 40

By Joe Mathews

Grow Market Lead

How Strong Is Your

Valida

Satisfied franchisees
fuel franchise development

H

ow happy are your franchisees? In an honest and
lucid moment, would they
encourage other candidates
to invest in your franchise, or tell them
to run like the wind? If given the chance,
would they make the same investment
again or hightail it in another direction—and how would you know? Have
you anonymously contacted franchisees
to pose these questions, conducted a
franchisee satisfaction survey, or are
you just relying on a gut feeling?
If 80 percent or more of your franchisees do not indicate that: 1) they either are successful or expect to become
successful according to how they measure success, and 2) they would make
the same decision again today, then 3)
your franchise sales results will suffer.
Consistently positive franchisee
validation fuels franchise development
results. If franchisees paint a different
picture than the recruiter presents, or
dismisses the financial performance
highlighted in the FDD, then the franchisor (not the franchisees) will lose
credibility. Trust plummets and strong
candidates seem to enter what experienced franchise salespeople jokingly
call “the franchise candidate witness
protection program” and stop returning calls and emails.
Franchising is ultimately a twometric business: 1) franchisee unitlevel economics, and 2) the quality of
the franchisee/franchisor relationship.
If you do not possess a community
of happy and profitable franchisees
regardless of how many franchisees you

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Franchiseupdate Iss u e II, 2 0 1 1

are currently selling, your business is
already in decline.
Unpleasant truth

Recently, my company was hired by a
high-flying franchisor to create a breakthrough in franchise sales results. When
it came to franchisee satisfaction, the
optimistic CEO proudly proclaimed,
“We have the happiest franchisees in
franchising.”
When we conducted our research,
including mystery shopping the opportunity, we found that a majority of
franchisees, although initially happy with
their investment decision, were becoming
increasingly dissatisfied with the corporate culture. Franchisees posted strong
financial returns, but no franchisee we
interviewed enthusiastically stated they
would make the same decision again.
Many said the franchisor appeared to
have stopped communicating with them
and was more concerned with franchise
sales than franchisees’ profitability.
The franchisor was shocked by our
feedback, but to their credit, took immediate and positive action, creating an
outreach program to their franchisees,
and turned around what would have
been an increasingly negative situation. As a result, this franchisor continues to expand, even in the current
difficult market.
An “Aha!” moment

One of the biggest “Aha!” moments I
had about franchisee validation stemmed
from a conversation I had several years
ago with Eric Stites, president and CEO