Franchise Update Magazine Issue III, 2015

GROWING YOUR SYSTEM Market trends Measuring Outcomes Strengthening the franchise business model T BY DARRELL JOHNSON he franchise community, along with media, politicians, regulators, and others, are beginning to understand the importance of measuring outcomes in franchising as a basis for understanding a brand’s performance. Outcome measures have been led by lenders who assumed that a franchise system’s credit risk could, in large part, be predicted by measuring specific outcomes. Terms such as continuity rates, historical unit success rates, and recurring revenue self-sufficiency are becoming commonly used. This focus is having a profound impact on how franchise brands are being evaluated. That’s a good thing for the long-term strengthening of the franchise business model. After all, if we can’t measure outcomes, how do we improve them? Measuring outcomes is an essential first step. By using decades of performance information to develop, test, and refine definitions and create range standards, we’re making good progress in defining and measuring the right metrics. The next step is to begin to understand what causes outcomes to be better for one franchise brand than another. For instance, take two franch

Franchise Update Magazine Issue III, 2015 | Page 62