Franchisee Satisfaction Surveys

A Franchisee Satisfaction Survey Has Many Benefits for a Prospective Franchise Owner, But Be Careful . . .

LINCOLN, Neb. (Blue MauMau) - Just three years ago, franchise buyers would have traveled coast to coast and from one Internet site to another in vain to find out which franchisors had highly satisfied franchisees. But in the last couple of years that information (see an example in the chart below) has now become more readily available.

There’s a huge upside for the buyer in being able to know which franchisors have the most satisfied franchisees, with at least three major benefits. A franchisee satisfaction survey can:

1. Provide a “consumer report” of what franchise owners think of their franchises, allowing comparisons within an industry to identify the best system(s), where franchisees are exceptionally satisfied
2. Paint an overall picture as opposed to a look at the system from a skewed small sample group
3. Guide buyers to ask more informed questions when they conduct their one-on-one franchisee interviews

An Honest-to-Goodness “Consumer Report” of Franchisors Ranked by Franchise Owners Helps Identify Business Excellence

Many franchise buyers ask themselves a simple question: which franchise is the cream of the crop. Getting that answer has been quite a challenge.

Jeff Johnson (see his blog), CEO of FranSurvey, a consulting firm in Lincoln, Nebraska that designs and implements franchisee surveys, has the same thought about the need for a sort of consumer report for franchise buyers. Johnson says, “If it were me buying a franchise, I would only want to consider the best 50. But where are they? How would I know? How would I know that I was even looking at one? I would want someone with the combination of real world experience coupled with methodology around the integrity of the process. And it isn’t that hard to do.”

Johnson is a veteran of the school of hard knocks when it comes to the downside of missing the inside scoop when buying a franchise. Johnson was a Schlotzsky’s franchisee and multi-state area developer for 18-years, only to have the relationship incinerate into years of litigation as the chain plunged into bankruptcy.

FranSurvey’s CEO observes of those days a few years ago, “One of the ways to find the right franchise partner would be to go and look at a consumer reports kind of thing to see how the folks who actually owned those franchises rated their business. Why wasn’t that information available?”

Such a “consumer reports” can help everyone.

Johnson feels that a truly great franchisor has just as much difficulty differentiating themselves because there’s enough leeway in the game that a mediocre or poor franchise opportunity can look just as good in the UFOC document as a truly exceptional opportunity.

Professor Bob Justis, the Director of the International Franchising Forum at Louisiana State University, agrees. “You’re not going to get franchisee feedback from the documents that are provided in franchising.”

So there’s a need for good, solid franchisee satisfaction reports by both high quality franchisors and by those searching for such systems.

Dangers of Skewed One-on-One Interviews and Feedback from Small Groups

One of the great problems of asking franchisees questions when they aren’t anonymous, say in one-on-one interviews with buyers, is that they can be reluctant to say anything really negative and may even give false information, for numerous reasons.

Prof. Scott Shane of Case Western University expounds, “You want to know that the people answering the questions are representative of the whole population that could answer the question. The question is always are the people who didn’t answer the question different than those who did.” (See chart below to see how difficult it is for a few interviews to predict the whole network.)

FranSurvey’s Jeff Johnson agrees. He observes that such skewed results from one-on-one interviews happen all of the time. The interviewee may think it is in their interests to say their business is wonderful when they really think it’s a loser. Or, if they think that you might compete with their territory, they could easily tell a buyer that the network is a loser when they actually have found the goose that laid the golden egg.

Jeff continues, “You may end up with a false positive because franchise owners are concerned about their negative opinion of the franchise getting back to executives and affecting their standing or influence. If a franchise prospect decides not to go forward and the salesperson for the franchisor asks why and the prospect says, ‘Well, I talked with so-and-so and they said it wasn’t a very good opportunity,’ then that franchisee can be in trouble. There can be some negative consequences. So you can end up with a false positive from a system that is not doing well because the franchisees are fearful of retribution.”

The Difficulty of Contacting Enough Franchisees to Represent the Full System

As human beings, we trust our own senses. We look at someone and size them up. Ally or foe? Lying or truthful? Sharp or not so sharp? The answers to these questions may help us decide, “ If they can succeed, well, most likely, so can I.” We trust our own impressions over abstract statistics. But even if a franchisee somehow interviewed 10 franchise owners out of 300, the problem still remains that if the 10 that a buyer interviewed said they love the system, there is little statistical guarantee that the other 290 in the network would feel the same.

A frequent user of statistics in his own studies on franchising, Professor Shane also cautions on how small numbers can greatly skew results. “There is a tendency that when there are few respondents that the answer is less reliable.”

Johnson also points out this problem of low numbers skewing results. “The problem with contacting franchisees yourself is that let’s say you contacted 20 franchisees, that may not be enough of a number to be representative of the system.”

Another firm who designs and conducts franchisee satisfaction surveys is Franchise Business Review. Its president, Eric Stites, explains, “You typically as an individual will not be able to contact 50, 60, 100 franchisees, depending on the size of the system. It [the survey] does give a broader, more balanced perspective for someone. It also helps on a comparison standpoint. If you are looking at three or four competitive systems, to be able to look at these reports is obviously very helpful. You can see how different companies rank in specific areas that are of importance to you. Somebody might be concerned about marketing. Another about training. Someone else about strictly the financial aspect. This is a good benchmarking tool from that standpoint.”

Surveys Help Shape Smarter Questions from Franchise Buyers

Ms. Nikki Sells, Vice President of Franchising for Express Personnel, says, “Franchisee satisfaction surveys allow the franchise candidate who typically doesn’t understand the business yet [to grasp the issues]. So then their validation calls become different. They ask more intelligent questions. They say, “You know in the Franchisee Survey, I read that . . . . Tell me about that. Is that a big problem?”

Ms. Karen Knuckles, a new Express Personnel franchisee, who bought her franchise in January ‘07, used a satisfaction report during her interviews to dig into the concerns that came out in the survey. She found it was helpful in giving her issues to drill down on. She spoke with 10 franchise owners before she bought, quite a high number of people.

“One [concern] was around the amount of support received from corporate”, says Ms. Knuckles. “The issue was that the franchise network was growing quickly and the franchisees were unsure with this continued growth rate that Express would continue to build the infrastructure to support the growth. So when you call in, it would be a longer wait before you talk with someone to assist you.”

Personal interviews are important in not only digging into the chain’s business issues but also in coupling the statistics with a sense of the individuals behind the numbers.

Professor Shane observes that you need to get behind the statistics and learn their meaning for you. It is possible that a system collects owners who are much more easily pleased. “If you do not know the attitudes and beliefs of the person answering the question, it is kind of hard to evaluate what their satisfaction means to you. Some people are always dissatisfied with everything in life, while some people are always happy with everything. If you don’t know what those respondents look like, then it is hard to know how to look at the data.”

Limits of Satisfaction Surveys and the Potential for Manipulation

Prof. Bob Justis says that surveys are a good start, but there are things that questionnaires do not address that are important to a buyer.

“You need responses to things the questionnaire doesn’t ask. You need to know would they [franchise owners] do it again. What kind of behavior does the franchisor expect of the franchisee? Are they supportive or dictatorial? You won’t get this kind of information from a satisfaction questionnaire. What kind of delivery service does the franchisor provide? You have to find out this kind of information before you become a franchisee because you need to have information about what the franchisor actually delivers vis-à-vis what’s happening in the UFOC. The UFOC does a poor job disclosing that because it is written by lawyers.”

Franchise Business Review’s Stites adds this word of caution. “A company may have great franchisee satisfaction, but that is not as important as it being a fit for your specific goals and individual desires. That’s one of the biggest mistakes that prospective franchisees make every day. They’ve gotten expectations of business ownership from maybe friends they know. They don’t necessarily look at the experiences of the day-to-day of a franchise. They end up buying a franchise and then realize that they don’t really like doing this on a day-by-day basis. Whether it’s a good franchise system or not, it’s important to figure out if it is a good fit for you.”

Buyers are concerned that surveys can be manipulated and abused to create a desired conclusion, or that questions can be crafted so that results are skewed.

One can imagine a franchisor selecting a survey consultant and thinking, “I gather, young man, that you wish to be my survey vendor. The first lesson that you must learn is, when I call for statistics about the level of happiness in my network, what I want is proof that my franchisees are happier so that I can sell more franchises. That’s what I mean by statistics.” (Winston Churchill once said something similar about statistics and politicians.)

But franchisee surveys can be quite helpful if done right. The need for unbiased franchisee satisfaction surveys are extremely valuable to buyers who want to get assurance that they will be adequately supported once they join a franchise system.

Not all surveys and surveyors are alike. In Part 2 of this series, we look at what the difference is among some of the better known franchisee satisfaction survey firms.

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Further readings:

As a service to our readers, Blue MauMau and FranSurvey have provided a free one page overview of FranSurvey's top franchise satisfaction surveys. Click here.