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Jan 14

Summary of Seven Habits of Highly Effective Franchisees (Part II)

5. Understand how your business makes money. You may find this hard to  believe, but most franchisees—especially when they’re just getting  started—do not understand how their business makes money!  “How can that be?” you might ask.  It’s because they’re busy, busy, busy, doing, doing, doing ….but they’re not busy doing the  things that produce revenue!

Do What Makes Your Money

Understand how your business makes money and do that. Don’t do the  other stuff. Do what makes money. Ask yourself, “Is what I’m doing now  going to produce money for the business?” If not, do something else. Does that mean no one does the other stuff? No! You pay someone to do  the other stuff. Hire an employee or outsource the work. Or, do it afterhours.  Don’t do the other stuff when you should be producing money for  the business.

But this franchisee didn’t have a clue how to make money in his business. And he’s not alone. Most franchisees don’t know how. Ask  them, and you’ll see!  But you, because you’re going to be a successful, effective, top  producing franchisee, you know how your business makes money and  that’s all you do!  If franchisees analyzed their daily activities, many would be surprised to  discover that much of what they do in a day is counter-productive and  unprofitable. Many franchisees are slowly losing money. Don’t be one of  them.

6. Understand the value of a customer. Once you understand how your  business makes money, the next step is to understand who brings money  to your business! And that’s when you’ll discover that not all customers  are created equal. They don’t all add value to your business!  Some customers are better than others. But you won’t know who’s who  until you understand the value of a customer.

Many Franchisor  so busy focusing on attracting new customers that  they don’t take care of existing customers and instead of the customer  returning weekly for seven years, the customers comes in once, or two or  three times, and never again. That happens because the owner doesn’t understand the value of a customer.  Highly effective franchisees do!  Part of your job as a franchisee is to know which customers add the most  value to your business; then keep those customers and capture more just  like them.

7. Don’t blame the franchisor. You chose this franchisor. You could have  invested with any number of franchise companies, but you chose this  one. No one forced you to sign the franchise agreement. It was your decision. Now, accept the responsibility that comes with that decision.

Business isn’t easy and it’s not perfect. Things will go wrong. Expect it.  And when they do, and they are unrelated to the franchisor, or out of the  franchisor’s control, make the best of the situation without blaming the  franchisor.  Sounds stern, but it makes sense. What good is it going to do you or  anyone else to blame the franchisor when things go wrong?

It’s Not Always The Franchisor’s Fault

The city decides to tear up the road in font of your store, detouring traffic  (and impeding traffic to your business) for six months. Not the franchisor’s fault. A vendor doesn’t deliver, or an employee doesn’t show up. Not the franchisor’s fault. Customers are rude, or scarce, or cheap . . . customers don’t like your  product or your service. Not the franchisor’s fault.You’re losing money after you pay the franchise fees. Not (necessarily)  he franchisor’s fault. I’m not at all suggesting that franchisors are always blameless. All  franchisors are not created equal; some are better than others. However, it  was your job—before you invested—to select the very best franchisor for  you. If you didn’t do that, you can’t blame the franchisor.

Keep The Franchisor Accountable

“What if the franchisor lied to me? . . . Or what if the franchisor violates  the franchise agreement?”  Take responsibility for what you can and should do. Voice your opinions  professionally. Formally file an objection. Speak with members of the  franchise advisory council (if there isn’t one, then I’m wondering why  you selected this franchisor).  If you believe your rights have been violated, look at your franchise  agreement and take appropriate action. The agreement will tell you how to proceed if you’re dissatisfied. Your options may include mediation,  arbitration or a trial in front of a jury (which most franchisors will do  everything they possibly can to avoid).  So if I file a lawsuit, isn’t that blaming the franchisor?”

Yes, it is. But that’s not what I’m talking about. Some franchisees blame  their franchisor for everything that goes wrong in their business, regardless of the franchisor’s ability to control the situation. Don’t fall  into that trap. Keep your franchisor accountable, by all means, but be reasonable. That’s what highly effective franchisees do.

These are the 7 Habits of Highly Effective Franchisees . . . now make them your habits, too.

By John P. Hayes, Ph.D.

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