Franchisee Satisfaction Business Model
One of the businesses I most admire is JD Power. This business was based on a single individual’s belief that customer satisfaction is THE most important criteria for success. Understanding what motivates the customer, and then finding ways to best service them is the key to success. He convinced one auto company to work with him to measure customer satisfaction levels and used this information to increase the overall profitability of his client (Toyota.) This approach was then adopted by the entire auto industry and has since spread to many different industries.
The impetus for FranchiseFacts was the problem outlined in paragraph one and looking at the JD Power business model as a solution. Franchising is unique in that the customer to a franchisor is the franchisee rather than the ultimate consumer. This adds a level of complexity and confusion that prevented the JD Powers business model from being embraced within the franchising community.
After two years of planning, we believe we have developed a model for measuring franchisee satisfaction throughout the entire franchise industry. This is significant if it can help both franchisees and franchisors to operate more effectively and increase overall profits through cost reduction AND revenue generation. Given the size of the franchising industry, our goal is to help a very large number of individuals and businesses. At over $600 B, franchising is larger than the automobile, computer, truck and airplane industries COMBINED. And it employs as many people as these industries COMBINED. An estimated 75% of all franchises are owner operated (the remainder being corporate owned.)
Our slogan, Capturing the franchise experience, describes our purpose. Through our surveys we have begun gathering information from franchise owners and store managers. This information will be used to convey franchisee satisfaction levels throughout the franchise community. More about the importance of measuring satisfaction levels will appear in my next posting.
FranchiseFacts can only succeed with your help. We can report results to the community but we need Franchise Owners and Store Mangers to step up and participate in the surveys we post. Only by working together can we all benefit. So I encourage everyone to dedicate 20 minutes (at most) to participating in the survey at http://www.FranchiseFactsUSA.com. All survey participants will have the option of receiving survey results directly via e-mail.
This blog will share select insights from our surveys as appropriate, with more detailed results being provided to those who have participated in the survey.
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Next posting: What exactly is a franchise?
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As the owner of four Midas Auto Service Center franchises and the current head of our dealer association, I would offer a different perspective here. It is not so much what the definition of a franchise is, but what are the metrics used at the street level to determine viability, and are those metrics common touch points between my operations and the Franchisors assessment of the same.
It does not matter how we define roles and responsibilities, if we calculate success differently.
An understanding of, and agreement about, these metrics are the first step to a dynamic and robust relationship between the two parties.
Mark,
I don't think you are offering a different perspective. In fact, I think what you are saying is exactly the point of my posting.
If the measurement metrics differ, it is difficult for two parties (franchisor and franchisee) to agree on a common direction. Each will focus on their own definition of profitability to the exclusion of other metrics. And this is, to my thinking, the main reason for franchisor/franchisee conflict.
This is not a theoretical discussion. As you will see in a future posting, I do believe that most successful franchises are able to reconcile these differences. While it is the problems that we most frequently read about, those franchisors that have a positive working relationship with their franchisees do so with a quiet efficiency that is rarely recognized.
What we have tried to do at FranchiseFacts is define the problem as one of communication. Our survey is an attempt at providing solid data to improve communication between franchisor and franchisee. This is much more than just articulating anecdotal franchisee grievances. It means reporting the good and the bad -- what works and what does not work -- as reported by a large number of franchise owners from many franchises and industries. As I hope will become clear once FranchiseFacts begins making available some of its findings (beginning late March or early April), good research and reporting will shed considerable light as to the realities of franchising in a way that is credible and can lead to positive change. To be effective, however, FranchiseFacts requires broad participation in its survey. For that reason, I continue to encourage you and your associates to participate in our survey.
Perry Shoom, FranchiseFacts
Capturing the franchise experience!
Franchisee Survey in progress at www.FranchiseFactsUSA.com.
If you are a franchise owner or store manager, please participate!
Understanding the Franchise Experience blog can be found at franchisefactsusa.blogspot.com
A franchise is an inverse business relationship. The franchisor is interested in the businesses' top line while the franchisee is interested in the businesses' bottom line. Because of this conflict of interest, natural tension build up to and including litigation often resulting in assured mutual self destruction.
While I would agree with most of your post, "assured mutual self destruction" is not inevitable. I think that most franchisees feel that they have made sound long term business decisions. Otherwise, the entire franchise business model would collapse.
The tension that can exist between franchisor and franchisee is not natural. It is the result of many factors including differing criteria for measuring success. Some franchisors deal better defining these criteria and also with resolving franchisee conflict than other franchisors. This is how we separate the good franchisors from the bad.
The most successful franchise business models are those where these potential conflicts are understood, and where serious efforts are made to resolving these conflicts to everyone's satisfaction.
Perry Shoom, FranchiseFacts
Capturing the franchise experience!
Franchisee Survey in progress at www.FranchiseFactsUSA.com.
If you are a franchise owner or store manager, please participate!
Understanding the Franchise Experience blog can be found at franchisefactsusa.blogspot.com
I wish franchising was that easy.
Unfortunately, it is the bad eggs that give franchising a bad name.
It seems as though the franchises worth a hoot cost millions of dollars. Even some of those are rogue.
When it comes to big money of course there will be tension in any business. You have to admit that there are zors who turn and churn and use their zees. There are too many horror stories all over the internet not to see lives ruined because of taking advantage of people who trust for whatever reason.
Perry's comments are, in my opinion, right on the money. Conflicts generally occur because of unfulfilled expectations. These expectation are the result of differing behavioral characteristics of all parties, and that includes the Franchisor, the Franchisee and the people responsible for ongoing training and support.
Attempting to lump all franchisees into one satisfaction survey, with the same criteria, is not only dangerous but, again, in my opinion fundamentally wrong. What is great satisfaction for one person might be a huge disappointment for another. What is great training for one is insufficient to another. Having surveyed over 15,000 existing and prospective owners, through Franchise Navigator, has given us great insight into the different behavioral profiles and how they respond according to their values, skills and needs.
Finally, although it might seem like 10 years is a long time, and in some circumstances it is, being a franchisee for just one single brand does not provide the peripheral vision and insight of all brands. It is like I had a bad experience with Wal-Mart so all big box retailers are having problems?
I don't think so.
Craig Slavin
Franchise Central
Franchise Architects
Franchise Navigator
847-465-0111
Or should I say if only we could get accurate franchising data representative of the industry rather than that which reflects the needs of whomever is paying for it.
In my opinion this is an accurate statement;
And so is this;
However; when franchising data is bought and then promoted as representative of the industry omitting to include a disclaimer describing who paid for the data, the processes of collection and that the data is not reflective of all investments then such information is the enemy of good franchising and probably the greatest cause of foolish investments by foolish people who make up the majority of those who do not perform effective due diligence and end up with the bum out of their pants.
That is of course the goal of BS franchising data, at least in Australia. Perhaps not so in other parts of the world but how do new investors tell the difference?
The available data is a mixture of truth and omission. The truth giving credibility to the data where the naïve have no idea of the omissions.
Quality data would go a long way to allowing good franchising to be differentiated from the rubbish offerings that inundate the market and therefore it does damage to the reputations of those franchisors who would operate a win/win as few as they realistically are.
Prospective franchisees should as a rule ignore the bullsiht and do their own homework with their own paid-for expert. Or they can choose to quite probably lose the farm and probably the family but save a few bucks on the way into a possible hell that will usually live with them for the rest of their lives.