Graeme McCormack, Mentor

How closely should I be overseeing my franchisees?

StartupSmart /

I’ve opened a second retail store on a franchise basis. How closely should I be overseeing the franchisee who is running this store?

 

The short answer is you need to be working very closely with your franchisee, irrespective of whether they are your first or one-hundredth, for the following key reasons:

 

  1. The franchise store and franchisee are a direct extension of your own business and brand.

    That is to say, if the franchisee operates the business the right way, they have the potential to impact positively on your existing “corporate owned” store and any future franchise stores going forward.

    Conversely, it also applies that if the franchise store is operated poorly and/or outside regulatory compliance, that has the potential to negatively impact on your existing store.

  2. You must provide the level of operations and business development support all franchisees expect and rightfully deserve from day one (irrespective of the franchise model).

    The level of this support will vary from franchise to franchise, however as a bare minimum you should be engaging with each franchisee on a monthly basis, and reviewing their operations and key performance indicators such as their profit and loss performance for each preceding month (irrespective of the number of franchisee you have).

 

To paraphrase the philosophy of McDonald’s legend Ray Kroc, “if you make them (franchisees) successful, then it will go to follow that we (franchisor) will be successful too.”

 

That principle is still as accurate and appropriate as ever, particularly in the context of this question.

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