The Hidden Truth of Franchising
There’s a hidden truth in the franchise world. Most people think that when you buy a franchise, you get everything you need to be successful, but that is not the case.
When you buy a franchise, ideally, you get a proven brand. The Franchisor invites you to a corporate store or a Franchisee’s store where, for a couple of weeks, you experience the brand and are trained on the product, the service process, and the image. In the end, you feel totally qualified to run that business.
Another thing they can do to support you is have a consultant accompany you through the opening process, help you train your team, and maybe even stay with you for a week or two after you open so you can gain confidence running the unit.
However, throughout this time, you receive only training on the brand systems to duplicate that brand and its product, service, and image. If you duplicate those systems exactly as designed, they will generate revenue.
- But that alone is not enough to be successful. To ensure profitability, you need to understand how to build, grow, and manage an organization, as well as how to manage costs and people, and reduce waste to a minimum.
This blog post will cover just that! We’ll go over the Franchisor training gaps that exist between what they provide and what real franchise profitability requires.
Plus, you’ll learn the leadership, management, and financial skills you need to develop as a Franchisee to be able to grow your organization, not only with great volume but also profitably, and then achieve the time and financial freedom that you want and deserve.
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The Leadership Gap
One thing is to learn how to run the brand and handle its day-to-day operations, which is what will get you revenue. But to be truly successful, you, as the leader of the organization, need strong leadership skills, especially if you're growing a multi-unit enterprise.
- These leadership skills are not only about hiring and retaining your people, but about inspiring and motivating them to be exceptional every single day.
While this is critical, your franchisor will not teach you how to develop this skill.
They're not going to give you the knowledge or training on how to be caring, manage conflict, communicate well, be inclusive, provide direction, or solve situations beyond day-to-day operations.
So, you have to find ways and resources to develop these skills for yourself so that you can be the best possible leader for your organization.
The Financial Gap
The Franchisor is not going to teach you how to read a profit and loss statement or how to understand your financials and make better business decisions based on what your numbers are saying. It’s not that they don’t want to; they can’t because of many reasons, among them legal liability.
That’s why you need to take responsibility for yourself and develop the financial skills you need to be able to manage an enterprise.
This goes beyond just reading a P&L. It also includes understanding how to achieve true take-home profit, how to plan for future capital needs, and how to ensure that the cost of that capital won’t hurt your business.
Don’t miss: 6 Key Financial Insights for Multi-Unit Franchisees
The Management Gap
Yes, you get an operations manual to duplicate the brand, which outlines what you need to do to open the unit, prepare the store, get the equipment ready, manage the product, or provide the service to the customer. But management goes beyond that.
It's about building a culture that people want to work in and understanding how to manage business expenses, minimize waste, and maximize profitability. It also includes all the systems, processes, procedures, policies, forms, and templates that have to be in place so you and your team can manage the business profitably.
Those business management skills are not part of the Franchisor training you receive when you buy a franchise.
As a matter of fact, I venture to say that even if you have a business degree (which, by the way, I have), that doesn’t teach you how to run a small business.
Most franchisees learn these skills either through prior experience or by doing the work every day, facing issues, pains, and challenges, and then creating whatever they discover they are missing. However, that’s usually a very long learning curve.
In case you missed it: Operations Manual or Management Manual, Which One Do You Need?
How to Reduce the Franchisor Training Gap
To evaluate where you are in these gaps, ask yourself these questions:
1. Do I have low turnover? This would reflect on your people not leaving the organization, but being motivated and excited to belong, and them giving you their discretionary effort, not because you're paying them, but because they're truly loyal and caring for the company.
If that’s the case, then you have a great leadership style, and you probably have awesome leaders in your company.
2. Am I profitable, and do I know exactly what to do to make a profit? If you are fully aware of where you stand in your business's financial picture and know exactly what you and your team need to do to correct the issues, then you have sufficient financial knowledge.
But if you are not meeting the franchisor's profitability targets and you're concerned about not knowing how to improve your results, there are financial opportunities that you must address.
3. Are my people depending on me? You need systems and processes in place so they know exactly what to do every single day without calling you all the time. You must have them not only defined, but also documented, trained, and properly delegated to the leaders. If you don't even know what those are, then we may have a managerial gap in your organization.
Now, if the answer to either of these two questions is ‘No’, I would like to encourage you to find a mentor or business coach, or to reach out to an organization like the American Franchise Academy, where you can develop the leadership, financial, and management skills you are missing.
Many franchisees know their profits are not where they need to be, but do not know what to do or how to address the issue holding them back from achieving their goals. If that’s your case, consider the COMMAND Program.
This is our Multi-Unit Ownership Certification that provides you with everything you need to complement what the franchisor has already provided. Inside COMMAND, you’ll get all that business acumen and knowledge to be confident and competent enough to manage your organization and grow into a multi-unit enterprise successfully.
Reflections:
- How would you rate your delegation skills?
- How much time could your business survive without you?
- Do you have leaders you can trust?
- How much is your freedom as a business owner worth?
