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.