Not All Franchisees Are Created Equal
by Ed Teixeira
It’s a proven fact that buying a franchise is not a guarantee of success.
Moreover, there are few McDonald’s in the franchise world where a powerful
brand, top notch operating system and a history of near flawless site selection
leads franchisees to success by following the “Program.” Rather, many
franchise systems fall short in certain areas, which may require its franchisees
to overcome these shortcomings.
Individuals purchase a franchise based upon the expectation that by investing
in a franchise built from a successful business model the probability of success
is high and risk of failure low. In many cases, franchisees anticipate that by
following the franchise program they will achieve their financial goals.
However, apart from the highly successful franchise programs like a McDonald’s,
many franchises require a certain level of business skill and commitment for
success. Some franchises may require a level of experience in the industry that
the franchise is a part of. In any case this means that simply following a
franchise program may not be enough.
Despite the best of intentions certain franchisors, should recognize that
some of their franchisees may not have the business acumen to achieve success on
their own but rather require added assistance and support. Franchisors may have
an in-depth and thorough franchisee selection process; however, some franchisees
are just smarter, more experienced and better performers than others. Combine
this factor with franchise operational requirements and you have a situation
where operating a successful franchise will be easier for some and more
difficult for others.
If a franchise system finds itself in this situation I believe its incumbent
upon the franchisor to face the problem and respond.
As an analogy, consider the coach that employs a particular system and
expects his or her team members to follow the system. A good coach recognizes
that some players may need extra coaching and motivation to maximize their
potential. By knowing who to coach and how to coach, the probability of having a
successful team increases.
Franchisors that observe inconsistent franchisee performance should have a
way to deal with this situation.
Following is a suggested plan of action:
- Have a sound and objective method for evaluating individual
franchisee performance using key performance indicators.
- The most competent franchisor staff should indentify the
strengths and weaknesses of its franchisees or at the very least
those that have below par performance. Include surveys of
franchisees in order to identify possible causal factors.
- Confirm that the better performing franchisees are not
required to work or operate at extraordinary levels to be
successful. If this is the case then the franchise program may
- Determine if the performance issues are the result of
franchisee competency, staffing, lack of capital or lack of
- Identify those franchises that require support and
assistance and those that may need to be counseled from the
franchise program. In some cases a buyout may be appropriate.
There are benefits that the franchisor can realize from employing this
approach. Of course if a franchisor takes the position that by simply following
their franchise program the franchisees will be successful, then the franchise
had better be darn good. However, in the real world people have differing
talents and in franchising it’s important that franchisors work towards
maximizing the talents of their franchisees. If a franchisee is unwilling to
make the commitment and accept sound advice then other steps will need to be
Here are some of the benefits that franchisors will gain as a result of
evaluating and coaching particular franchisees:
- Franchisee performance can improve resulting in more sales
- The franchisor will enhance the sale of new franchises by
demonstrating their commitment to their franchisees in tangible
- Improve franchise relations.
- Head off potential franchisee litigation by being proactive.
- Franchisor staff will improve their level of competency and
gain a level of satisfaction by enabling improved franchisee
It’s important for franchisors to recognize that not all franchisees are
created equal. Some have better marketing skills while others may be more adept
at organizing and managing the franchise operation. Franchises don’t run on
auto-pilot and the basic responsibility for the daily operation of the franchise
rightfully rests upon the shoulders of the franchisees. If the franchise program
is fundamentally sound and some franchisees are performing below acceptable
levels for themselves and franchisor staff, it’s important to find out why. If
the franchisee is committed but needs some support and coaching, provide the
assistance. If the franchisee is not committed to the franchise than they should
be out of the system.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC.
He can be reached at