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Don Sniegowski's picture

Without knowing franchise profits, a franchisor is blind

History shows that massive increases in franchise store count without the average store being profitable bodes poorly for a franchise system in the restaurant industry. - Restaurant analyst John Gordon

I want to thank John for his insightful column on what brands publish franchised store profits and how much. This information on what franchisors know and disclose about franchised store profits is quite rare.

"If you can't measure it, you can't improve it," said Peter Drucker. The business management guru famously surmised that management cannot improve on success that it cannot quantify and track. That perception is the mantra of management.

One of the most critical measurements in business is profitability and cash flow. Knowing store revenue is simply insufficient. Frankly, without knowing franchised store profits, a franchisor is managing franchises in the blind. It is out of touch with the health of its franchises.

John Gordon's data to analysts from earnings calls shows that Domino's, Popeyes and McDonald's are not blind when it comes to franchise-level profitability. I wish more would join in this essential practice so that franchise investors and franchisor management can make informed decisions.