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Lifecycle of a Franchisee
On May 31, 2012,
in Latest Blog Posts,
by Joe Mathews
From the upcoming book
Developing Peak Performing Franchisees
by Joe Mathews and Deb Evans
Developing Peak Performing Franchisees
by Joe Mathews and Deb Evans
Every new franchisee goes through an intense period of learning and adjustment before they master the franchise system they have purchased. This is typically a time when their emotions run high, ranging from total joy to complete frustration. Franchisees move through five linear phases Franchise Performance Group (FPG) calls The Lifecycle of a Franchisee. These five phases start with “The Launch,” which is characterized by the excitement of opening and marks the beginning of the learning curve. This is followed by the toughest phase, “The Grind,” identified by the franchisees’ increasing frustration with putting forth a huge effort for only modest results. The Grind eventually gives way to “Winning,” which is the time when franchisees have acquired the necessary knowledge and skills to produce positive outcomes. Eventually, some franchisees will acquire a unique level of mastery called “The Zone.” Eventually, franchisees sell and move on. Their final phase is called “The Goodbye.”
KASH model of Success
It’s often been said that cash is king. However, money alone doesn’t move mountains, people do…people with another kind of KASH: Knowledge, Attitude, Skills, and Habits. Franchisees must generate KASH before they generate cash. KASH always comes first.
Knowledge describes the level of understanding franchisees have about their business. Peak performers know what it takes to win. Knowledge however is highly overrated because without skillful implementation, knowledge on its own doesn’t make a difference.
The second ingredient to the KASH model of success is “Attitude.” Attitude describes how franchisees currently think. Peak performers possess similar outlooks about their customers, products and services, the franchisor, and their future as other peak performers. Franchisees will never become peak performers until they learn to think like peak performers.
The third ingredient to the KASH model of success is “Skill.” In order for franchisees to win, they must exhibit polished on-the-job behaviors, translating knowledge into results.
The last ingredient to the success formula is “Habit.” Habit describes where franchisees invest their time. Peak performers spend a large percentage of their day engaged in the activities which produce the greatest results.
Underperformers often engage in meaningless busywork which doesn’t make a difference.
Like cash, KASH fluctuates over time. KASH increases as franchisees successfully navigate each phase of The Lifecycle of a Franchisee.
The Lifecycle of a Franchisee
The Launch
When a franchisee signs their franchise agreement, they are usually filled with a sense of joy and empowerment. They eagerly serve customers and treat themselves and their employees gently. While money is tight, they prepared for it to be tight. Because they are not yet skilled, their results are as poor as they will ever be. They recognize this is temporary stage. Let’s look at the typical start-up KASH.
Knowledge
When a franchisee launches a franchise, much of their past business knowledge becomes irrelevant. They need to become students of their new business.
Attitude
Perhaps for the first time in a long time, the franchisee will feel inspired to go to work in the morning. Appropriately, they are not focused on profitability, they are focused on learning the KASH necessary to survive…and then thrive.
Skills
During the start-up, unless a franchisee is a rare prodigy, they probably stink at what they do. As a famous motivational speaker once said, “Anything worth doing is worth being lousy at for a little while.” However, be mindful many franchisors are typically skilled at imparting knowledge to their franchisees, but often ignore their skill development. For example, the franchisor may not have a program to advance the sales skills of a franchisee beyond some basic level. How quickly a franchisee develops knowledge and skills will determine how quickly they ramp up their business and generate positive cash flow. Many underperforming franchisees become arrested in their KASH development, never acquiring the necessary KASH to successfully navigate the learning curve into Winning.
Habits
The day a franchisee opens their doors for the first time, their habits will form – either the good habits of spending time executing activities that generate the most results or the bad habits of wasting time on busy work which produces little. Franchisors need to be watchful as to where the franchisee spends their time.
A franchisor will recognize when a franchisee has completed The Launch when they start becoming frustrated and disillusioned with the learning curve of their business. In a combined 60+ years of experience working with franchisors, no one at FPG has ever heard a franchisee utter, “My business is ramping up quicker and easier than I ever thought possible.” When franchisees start demanding results they haven’t had the time or acquired the KASH to produce, they will enter The Grind.
The Grind
Think about the last time you personally picked up a new hobby, like golf. Learning was fun and at first, pop-ups, grounders, and Texas-sized divots were no big deal. These were part of the learning process. Then something happened. The permission you gave yourself to make mistakes was replaced by a demand for results equal to the money and effort you have invested. As franchisees move through the learning curve they also place demands upon themselves which rob them of their capacity to enjoy their business as it is. The Grind is not a bad thing, but seemingly a necessary part of the learning curve. Franchisees typically don’t jump from The Launch to Winning without experiencing some Grind in between. Let’s take a look at a franchisee’s KASH when in The Grind.
Knowledge
Franchisees are steadily acquiring new knowledge about what it takes to win. However, franchisees start realizing the gap between where they are and where they need to go to win. This realization can be disempowering, terrifying, and frustrating.
Attitude
Here is where franchisees and franchisors often disconnect. This disconnection occurs when franchisees need franchisors the most. When franchisors take an objective look at the franchisees’ results, they see a steady increase in franchisees’ key performance indicators. Franchisees who struggle may dismiss the key indicators and get sucked into the false experience of failing although they may actually be on track. Franchisees respond to The Grind generally one of four ways.
Here is where franchisees and franchisors often disconnect. This disconnection occurs when franchisees need franchisors the most. When franchisors take an objective look at the franchisees’ results, they see a steady increase in franchisees’ key performance indicators. Franchisees who struggle may dismiss the key indicators and get sucked into the false experience of failing although they may actually be on track. Franchisees respond to The Grind generally one of four ways.
- Fighters fight. They create huge problems where tiny problems exist. They blame the training, products, competition, support, marketing, pricing, and even their customers. They create a strained relationship with the franchisor support team. They decide the system isn’t working and make changes based on what worked in their past business. These changes usually don’t work, prolonging the learning curve and miring the franchisee in The Grind.
- Overly optimistic franchisees get caught up in false hopes. They hope things will get better, although they have no plan of attack to make things better. Some franchisees are prone to positive thinking without a plan.
- Emotionally mature and balanced franchisees manage their emotions, don’t buy the false experiences, and give themselves permission to learn. Although they are not crazy about mistakes, they learn their lessons and move on.
- They quit. Some franchisees lose heart and either close their doors or fast track to The Goodbye Stage and put their businesses up for sale.
Skills
As franchisees polish their on-the-job behavior and hone their skills, they will zoom past The Grind and into Winning. Both franchisees and the franchisor need to budget time and money necessary to acquire the skills franchisees lack.
Habits
In The Grind habits are beginning to gel. This is a critical time in the learning process, because practice doesn’t make perfect, only practice makes perfect. Practice makes permanent. Every business has high priority activities which produce most of the results. Aside from developing the necessary skills, franchisees must also form winning habits to propel themselves into Winning.
Strategies to successfully navigate The Grind:
- · Franchisees must work their business one day at a time. They need to plan their day and work their plan.
- · They will need emotional support. Franchisees should seek someone in their life who instinctively knows how to pick them up when they are down.
- · Franchisors need to help franchisees stay out of “survival thinking.” If franchisees think they are failing, they will cut budgets, lay off staff and run with skeleton crews, and do other things which may cut short term costs at the expense of future growth.
- · Franchisees need to learn from their mistakes and then move on. If franchisees aren’t making mistakes, they aren’t trying hard enough.
- · Franchisors should encourage franchisees to stay in constant communication.
- · Both franchisees’ and the franchisor need to understand and trust the learning process. Remember, franchisees aren’t born masters.
Winning
As franchisees acquire the KASH to succeed, they begin to experience the ability to create positive outcomes. Where franchisees in The Grind feel trapped and powerless, in Winning they feel empowered. As the franchisee enters Winning, success is often the product of their personal contributions. But as the business grows, franchisees can only do so much. Growth will eventually cause an organization breakdown unless franchisees develop their franchisor’s KASH formula of success to their team. However, many franchisees have difficulty letting go. If no one is paying attention, they become a causality of Winning.
Knowledge
Franchisees in Winning know what they are good at and what they need to do to produce results.
Attitude
Winning franchisees are empowered franchisees. They are re-engaged in the reasons they started their business in the first place.
Skills
These franchisees acquired the necessary talents to win. Next, they must become skillful trainers and master imparting the KASH formula of the business to their employees.
Habits
Franchisees know the high priority activities which produce the greatest results and spend their time engaged there. They are generating greater results with more ease and a high degree of predictability.
The Zone
When franchisees enter The Zone, they produce outstanding results as if they were on auto-pilot. Keep in mind, most of what franchisees are looking to accomplish with their business will occur in Winning. Many Winning franchisees will not enter The Zone, nor is it a requirement for their success. Franchisees in The Zone often have highly developed teams and manage their businesses according to performance measures, such as sales, labor cost, product costs, and others. When in Winning, franchisees need to think about what they must do to win. Franchisees in The Zone have committed the KASH success formula to memory that they now perform at masterful levels with seemingly little thought or effort.
Knowledge
Peak performing franchisees are experts in
their field. They know their customers, products, and their industry, and they
know the franchisor’s corporate structure inside and out.
their field. They know their customers, products, and their industry, and they
know the franchisor’s corporate structure inside and out.
Attitude
These franchisees are empowered with the sense of being able to design positive outcomes. Some start focusing less on money and more on how to benefit their community. Others enjoy the material rewards that success can bring.
Skills
Franchisees have highly defined personal and organization skills sets.
Habits
These franchisees know what activities produce the greatest results and structure their day to expertly execute these activities.
Franchisees in Winning and the Zone pay the most royalty dollars to the franchisor and consume fewer of the franchisor’s time and money resources than their underperforming counterparts. They offer franchisors high margins on their royalty revenue. It’s the franchisor’s job to keep these franchisees engaged as long as humanly possible. However, these franchisees are not without risk. Believe it or not, their greatest risk comes from their previous success. For instance, after conquering the last known civilization, famed military leader Alexander the Great cried out in anguish, “Alas, no world’s left to conquer.” The thrill of work occurs in playing to win, but not in the actual achievement of goals. Ultimately, winning like losing means the game is over.
The Goodbye
Business experts will say a time to sell the business is when a business is at its peak market value. This doesn’t always hold true in franchising. Often franchisees sell their business when they have nothing left to prove or no more goals worthy of being attained. Other franchisees hang around too long and become bitter. Just as it is completely natural and expected for franchisees to generate positive attitudes in The Launch, it is just as natural for franchisees who win to become bitter if they do not create a new challenge.
Knowledge
Franchisees in The Goodbye stage of their business have expert knowledge. They have seen it all.
Attitude
There is a slow and steady erosion of their attitude towards their business and in the franchisee-franchisor relationship. Since the business is generally working well, there is little motivation for them to sell. However, their attitude left unchecked will eventually diminish their results, and the business will track downward. Most franchisors report significant sales increases when such a business transfers, often in double digits. What do these new franchisees have that the former franchisees did not? More knowledge? More skills? Better habits? Certainly not. They simply possess a more productive attitude.
Skills
These franchisees are often highly skilled. However, some of their newly acquired skills may include cutting corners, gossiping and complaining. No longer motivated by achieving peak performance, they may be driven by not being hassled by employees, customers, and the franchisor. They often start detaching more from their business.
Habits
Many of these franchisees walk the path of least resistance. Chances are they have dropped the habit of personal development and continual improvement, and replaced it with just doing enough to continue to maintain their current lifestyle. Franchisees in The Goodbye stage of their business usually say long goodbyes. Many franchisors don’t know how to coach franchisees out of their business and into a new venture or challenge, so they just linger in the system. These lingering franchisees who have checked out mentally but haven’t yet exited typically wreak havoc in the system, riling up other disgruntled franchisees to fight with the franchisor.
In summary
Successful franchisors understand how to accelerate franchisees through The Launch and The Grind into the Winning and in The Zone where franchisees contribute the most and consume the least. Then will keep franchisees away from The Goodbye as long as possible. Unsuccessful franchisors seem unable to pull franchisees out of The Grind. Eventually, these franchisees suck the organizations resources and motivation dry. Then they ultimately sell to new owners who also require more time, energy and resources than franchisees in Winning or the Zone. Eventually, the franchisors create a corporate culture defined by The Grind, which ultimately will lead to the demise of the brand.
Franchise Performance Group has networked with some of the most innovative thinkers in franchising, performance coaching, adult learning, and human behavior to create a replicable system of education and coaching called Developing Peak Performing Franchisees designed to help franchisors move franchisees out of The Grind and into Winning and The Zone, where franchisors maximize royalty collections. We help franchisors and franchisees establish an Achievement Culture®, where the franchisor and franchisees work together to maximize franchisee profitability and enhance franchisee-franchisor relations.
For more information about bringing Developing Peak Performing Franchisees training and coaching to your franchise:
Contact Deb Evans,
Sr. Franchise Operations Consultant
Email Deb@FranchisePerformanceGroup.com
phone: 832-334-6664
Contact Deb Evans,
Sr. Franchise Operations Consultant
Email Deb@FranchisePerformanceGroup.com
phone: 832-334-6664
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Spot on! I am looking forward to my purchase of your book so that I may enjoy my days reading someone else’s experiences with franchisees and franchisor’s
Thank you Michael!
Excellent article Joe! Every potential franchisee should have this information.
Joe, you continue to succinctly and eloquently lay out clear concepts of business and franchising business in particular. WELL DONE! This was a great read, and instantly became a part of my business vocabulary and part of what I will measure myself in business and personal pursuits. This isn’t just a home run, it’s a grand slam.
[...] Developing Peak Performing Franchisees is a project that Joe Mathews and I have worked on since March. I can actually see a light at the end of the tunnel and I’m getting very anxious to have the work published. [...]
[...] Read more about KASH, as well as their forthcoming book, in this article, Lifecycle of a Franchisee. [...]
[...] on the calendar was a trip to Pensacola, Florida to work with Joe Mathews on our new program Developing Peak Performing Franchisees. My goal was to observe and learn from Joe as he delivered the program. I know the material [...]