FEBRUARY 2006 FRANCHISING WORLD 21

I N T E R N AT I O N A L F R A N C H I S E A S S O C I AT I O N ’ S A N N U A L C O N V E N T I O N

Imagine tha t yourfranchisees calledtomorrow, a l l o f

them, one after another,and to tell you that theyhave a potent ia lpurchaser for the i rlocation. You however,know that you have an

excellent, proven franchisee who wants their terri-tory. You have two choices, you can either allowthem to sell their location or you may try to convincethem to stay.

Whose offers would you accept and whowould you try to convince to stay? Let’s try the same question another way. If youcould go back in time…how many of your existingfranchisees would you still invite to becomemembers of your franchise family? We have askedthis question in survey form to hundreds offranchise executives and find that for mostfranchisors the answer is an average of 33 percent.This is very representative of comments made bybusiness author and guru, the late Peter Drucker.

The only place that batting .333 is

acceptable is either in baseball.

When asked about the selection and perfor-mance of employees, Drucker was quoted inHarvard Business Review saying:

“Executives spend more time on managingpeople and making people decisions thanon anything else—and they should. Noother decisions are so long lasting in theirconsequences or so difficult to unmake.And yet, by and large, executives make

poor promoting and staffingdecisions. By all accounts,their batting average is nobetter than .333: at most one-third of such decisions turn outright; one-third are minimally effec-tive; and one-third are outright failures.”

Where in franchising, would batting .333 beacceptable? What if your customers were satisfiedwith your services only one-third of the time? Whatwould happen if only one-third of our customerspaid for their services in full and on time? Wewouldn’t be in business very long. The only placethat batting .333 is acceptable is either in baseball orperhaps as a sales-closing percentage.

What does this have to do with franchising? Ithas everything to do with franchisee selection, theiremployee selection and their value to their franchisesystem.

Problem StatementA franchisor was studying their franchisee base anddiscovered that not all of their franchisees wereperforming at the same level. They all paid thesame franchise fee, they all had virtually identicalbuild outs, similar locations and they received thesame training. Then why were some performing ata much higher level than others?

Desired OutcomesThe franchisor wanted to determine and establishthe right metrics so it could:

• Impact the selection of the right franchisees,• Impact the performance of existing franchisees,• Determine the opinions of franchisees,• Develop an action plan to improve overall opera-

tions at both the franchisor and franchisee levelsas well as those of the franchisee’s employees.

If You Can’t Measure It…You Can’t Manage it.Matching the right behaviors to the right actions equals favorable results.

By William F. Wagner, Keynote Presenter, Women’s Leadership Conference

(Continued on page 22)

ApproachThe franchisor measured the perfor-mance of all franchisees and dividedthem into groups based on royaltygeneration, number of customers andtime in business. A franchise “OwnerOpinion Survey” was created and givento all franchisees. The survey consistedof 70-plus questions and was designed toprovide the franchisor with an indicationas to the franchisor’s organizationalhealth or potential dysfunction. Theareas measured were: FranchisorEffectiveness, Relationship, FranchiseGrowth and Development, SupportServices, Marketing and Advertising,Day - to -Day Suppor t , P rograms ,Communications and an Overall score.

In essence , the survey resu l t sprovided the franchisor with informationregarding the performance and opinionsabout its field consultants, trainingprograms, market ing, operat ions,management and the impressions of thefranchisee regarding their overall satis-faction with the franchisor. The surveyrespondents were given individualpersonal identification numbers thatallowed them to access to take the onlinesurvey. Their survey invitations werepre-loaded with demographics that toldthe franchisor in which part of thecountry the franchisee was located,number of years in business, perfor-mance, intent to sell , and severalproprietary indicators.

The f r anch i so r a l so asked i t sfranchisees to complete two differentbehavioral assessments: The firstmeasured the behavioral attributes orpersonality of each franchisee and thesecond measured the behavioral require-ments of the position of franchisee.These data points were delineated andcollected based on performance.

Findings of the Behavioral SurveysThe survey that measured the personalityof the franchisee determined that there

was a direct relationship between thepersonality profile of the franchisee andtheir generation of royalties. In fact,those with the strongest personalitiesgenerated a greater level or royalties, asnoted in the chart below:

The franchisor also discovered that incontrast to its original, off the cuff,opinion about its franchisee base in thatperformance was equally dispersed withone-third of its franchisees being goodperformers, one-third average and one-third mediocre. The franchisor foundthat 10 percent of its franchisees had“Optimum” profiles, 20 percent had“Good” pro f i l e s , 50 percen t had“Average” profiles and 20 had “Poor” or“Wrong” profiles.

The second assessment given to thefranchisees was used to determine theirperception of their own positions. Thefranchisor learned that regardless of theperformance level of the franchisee, allrespondents saw their job as requiringvery similar behavioral requirements.These attributes were:• Self confident• Good leader• In control• Assertive• Results oriented• Convincing• Able to sell• Warm• Friendly• Flexible• Good with numbers• Driving• Independent, but not too indepen-

dent

An important element of these resultswas that regardless of the personalities ofthe franchisee, they saw the job asrequiring the same behaviors. This is a“mission critical” understanding becauseif the franchisee doesn’t know what isexpected then their performance willalways suffer.

Conversely, if they do understand thebehaviors necessary and if they cogni-

tively understand this, then their chancesof improving their performance goes upexponentially. In essence, if they areable to embrace this understanding andturn it into actions, then results arewithin reach.

Changing our behaviors is not an easyprocess, as is demonstrated by thepyramid below. Tier I: Personality The franchisees each completed an assess-ment that determines their natural style.

Tier II: Behaviors required to be a strongperformer. These were de te rmined by thefranchisee and are listed above in thebulleted list.

Tier III: Actions required in order to bea strong performer.

Tier IV: Results that will be achievedwhen the franchisee is able to manifestthe right behaviors and actions.

Findings of the Franchise OwnerOpinion SurveyIn the Franchise Owner Opinion Surveygiven to the franchisees, a strong correla-tion was found that showed a direct andstrong relationship between engagementof the franchisee, their personality andtheir overall performance. The surveyquestions were designed using a five-point scale with a five being the highestlevel of agreement/engagement with thequestion and a one being least in agree-ment or disengaged. According to thesurvey results:

The Optimum Personality Profile wasalso highly-engaged and in support ofthe franchisor 82 percent of the time.

The Good Personality Profile was alsomoderately-engaged and in support ofthe franchisor 74 percent of the time.

The Average Personality Profile wassomewhat-engaged and in support of thefranchisor 48 percent of the time.

The Wrong Profile was predictably-disengaged and only in support of thefranchisor 28 percent of the time.

As you can see , the re was anextremely strong correlation betweenroyalties, engagement and personality.(To receive a copy of these surveyresu l t s , send an e -ma i l toinfo@accordsyst.com with “IFA” in thesubject line.)

22 FRANCHISING WORLD FEBRUARY 2006

(Continued from page 21)

FEBRUARY 2006 FRANCHISING WORLD 23

OutcomesFranchisee Selection: The franchisor hasimplemented a systematic approach tofranchisee selection. It now has appli-cants complete a personality assessmentearly in the process. This represents theTier I Personality. The only applicantswho are invited to Discovery Day arethose who obviously meet all qualifica-tions, plus they have a personality thatmatches the behavioral requirements ofthe position. The exception to thiswould be a master franchisee or thosewho plan to or will hire a manager. Inthis case, the franchisor requires aguarantee that the franchisee will not beinvolved in the day-to-day managementof the operation.

Performance Enhancement: Thefranchisor has implemented a trainingprogram that provides the job behaviorsfor its position and works with thefranchisee so that he or she understandsthe changes that may be considered inorder to perform at an optimum level.This represents Tier II behavior.

As a part of this training process thefranchisee receives an action plan thatincludes a very thorough plan thatembraces Tier II behaviors and movesthem into Tier III actions. An example ofthis would be a franchisee we’ll callRebecca. Rebecca does not have theright personality to be an “Optimum”performer but she does possess thedesire to give it her best. She has been afranchisee for several years (before thefranchisor embraced personality assess-ments) and is just breaking even.

Remember the first question of thisarticle. When we asked the franchisorthis question as part of our scopingexercise the franchisor indicated that itwould accept Rebecca’s resignation andreplace her with a high-potent ia lfranchisee.

The franchisor’s regional coach metwith Rebecca and suggested a number ofexercises, actions, schedules and plansfor her to embrace. They included avery strong neighborhood marketingplan, meeting with local members of thepress, the chamber, groups of differenttypes and so forth.

We also suggested that init ial lyRebecca should go out and market herbusiness with the aid of one of heremployees, since there is strength in

numbers. Rebecca devoted one dayeach week for a three-month period.She only needed her employee’s supportfor the first couple of weeks; she nowenjoys the process.

If the franchisee doesn’t know what

is expected then their performance

will always suffer.

By the end of the first six months,Rebecca, for the first time, was makingmoney and is on her way to becomingan “Optimum” performer. It should alsobe noted that Rebecca was exhausted atthe end of each of her weekly marketingdays, but this exhaustion and frustrationis normal for the behavioral changes thatshe is making. Her cognizance of thisfrustration minimizes its effect as shenow knows that she is supposed to betired. If she weren’t tired then shewouldn’t be stretching and growing.This is very counter-intuitive thinking,which is why most people give up whenthey begin to experience this normallevel of frustration.

Engagement Action PlanThe franchisor was able to generate anaction plan that benefited both thefranchise system and the franchiseealike. Remember that there was a five-point scoring grid with a 4 or a 5 beingengaged, a 3 was neutral and a 1 or a 2was disengaged.

1. The first action was to address thosespecific questions that scored a 3, asthese respondents have neither apositive or negative perception andtherefore it is easier to improve aneutral response than a negativeresponse.

2. Based on geography, it was deter-mined that one coach did not receivevery high ratings. The franchisorcommitted to either re-train theregional coach or find a replacement.

3. It was found that 38 percent of thefranchisees were planning on movingor remodeling within the next 24months . The f ranchisor had a

branding issue where their olderlocations had a much different lookthan the newer locat ions. Thisprovided the franchisor with abranding initiative that allowed it tohave a pos i t ive impac t on thefranchisee by providing financialsupport and still improve the overalllook of the franchise.

4. The franchisor also learned that thosenew franchisees with the right person-ality for the position had revenuesthat were 33 percent greater duringtheir first six months of operationwhen compared to those who werepreviously selected with the wrongpersonality.

5. Based on comments made in theopinion survey the franchisor beganrequiring additional cash reserves andinc luded reg i s t r a t ion fo r thefranchisee for their first annualconvention.

The Bottom LineThe franchisor depicted in this article isnow able to accurately measure thebehavioral requirements of the positionand compare them to the behavioralattributes of the applicant or incumbent.This allows the franchisor to really focusthe system’s training and developmentthat impacts on the correct deficienciesor bolsters a specific strength. Thefranchisor can also determine the level ofits organizational health, threats anddevelop action plans that solve andaddress relevant problems and solutions.The bottom line is that if the franchisorcontinues to push the right behaviors(Tier II), is able to train the right actions(Tier III), then the franchise system willreap the results (Tier IV).

Bill Wagner is CEO and co-founder ofAccord Management Systems Inc. He willbe the keynote presenter for the Women’sLeadership Conference at IFA’s 46thAnnual Convention in Palm Springs.His new book, The Entrepreneur NextDoor is scheduled for release in April. Hecan be reached at info@accordsyst.comor 818-889-5600.

FEBRUARY 2006 FRANCHISING WORLD 23