Franchisor participants to all of our franchise management training programs know of the importance we place on franchisee business planning.
We regard it as a critical franchisee and franchisor success factor and process which, in my experience, is often underdone or worse still - left unattended. This leaves a lot on the table for both parties, often manifests in poor decisions, mediocre performance and, at the extreme, business failure. This article highlights five common objections, five reasons why planning is crucial, and four suggestions for ensuring successful planning takes place in your franchise system.
Common franchisee objections
Many franchisees fully understand the importance of business planning and are engaged in the process and the benefits it provides. Yet for those that aren’t we often find a commonality [and an abruptness] in the types of franchisee explanations why.
Five really common examples we often hear are:
1. “Business planning is a waste of time.”
2. “I’m far too busy.”
3. “The plan is in my head – What do you think I think about every day and night?”
4. “I can’t predict the future.”
5. “My plans are none of your business.”
For some systems, these objections are enough to stop planning in their tracks. Yet they needn’t be, as they are often based on a lack of understanding about good business planning and franchising practices - on both sides of the fence.
Why franchisee business planning is critical
There are many reasons why franchisee business planning is important.
1. Goal setting [to establish direction].
A business without clear goals is like sail boat in the middle of the ocean without a sail. As a franchisee you can’t engage your staff on helping achieve your objectives if you haven’t formalised them. You can’t make good investment or resource allocation decisions if you haven’t run the numbers. And your franchisor and field manager are wasting their time if no analysis, training, or improvement-oriented solutions can be anchored to outcome you’ve stated you’d like to achieve.
2. Goal alignment [to get on the same page].
As a franchisee you are part of a system and team, encompassing fellow franchisees, and the franchisor. You are not a lone, independent business – and therefore you can’t plan and act like one. Furthermore, most franchise agreements require that you a) actively develop your location/territory, and b) present and formalise a business plan that is acceptable to the franchisor. The latter point is designed to facilitate goal alignment – and help ensure all parts of the team, which includes yourself, other franchisees, and the franchisor – don’t go out on a tangent. In other words, you and other franchisees are positively exploiting the business model, territory and system within which you operate – for maximum mutual advantage. At least, that’s the idea.
3. Clarity of action [to maximise effectiveness].
Without goal clarity it’s impossible for you to work out what specifically needs doing, by when, by who, and how you you’re going to judge when it’s done. This may seem simple, but the reality is most businesses have limits to financial and human resources meaning smart trade-offs and decisions are needed in order to drive productivity, quality and performance.
4. What if [to explore and respond].
In my experience, problems emanating from an unexpected and sustained explosion in sales rarely arise. By contrast, the opposite is a more common occurrence. This reality strikes at the heart of the “I can’t predict the future objection,” because it is precisely the reason why such planning is so vital.
As an example, if you’re in one of the more cyclical sectors, like real estate or construction, it is possible your sales could suddenly drop by 30 to 50 per cent in a down market. To survive, you may need to scale back operations – fast! On the flip side, in an up-cycle, you may look to structure up a sales force to facilitate sales growth. Thinking through both possibilities is vital – as both require an active approach that, in order to protect and maximise the business, involves timely and quality decision-making.
5. A basis for communication [to engage with needed parties].
Even if you’re a one man band you still need to communicate your business goals, needs and/or activities effectively with others, like your family, accountant, bank, suppliers, staff, franchisor and other franchisees. Completing a business plan provides you with the clarity and confidence to achieve this.
Keys to business planning success
As indicated at the outset we often find many franchise systems failing to engage franchisees on franchisee business planning – and this is despite specific provisions requiring such planning in the franchise agreement and franchise operating manuals. In my opinion there are many factors which help explain this dearth of planning. I think it’s useful to name some of them as they also serve as pointers for getting franchisee planning underway. My top four franchisee business planning success factors include the following:
1. Have a great template.
For me, a great template is number one as the template can make or break franchisee engagement in the planning process. In my opinion the template needs to be specifically tailored to the franchise business so that every section a) counts, and b) contributes toward an output covering all key bases, and c) is comparable (with other franchisees). The template also needs to be simple to complete and bring the business alive – enabling the franchisee to efficiently set goals, understand key sensitivities and what is needed to achieve their plan.
2. Easy access to information.
A major impediment to business planning completion is the ability to access needed information. In an ideal world, all key information needed will be at your fingertips – and you won’t need to spend hours finding and collating numbers for a single business plan input.
3. Franchisor and field support understanding.
Many franchisors and field managers are relatively new to business planning. That doesn’t help, because the planning cycle and process needs to be led by the franchisor. Increased confidence and competence at the top level, in turn, often helps explain the importance and provide franchisees with more practical and valuable assistance. In turn, that can help gets franchisee juices flowing.
4. Franchise relationship.
Quite simply, it’s difficult to get strategic stuff done if the franchisor-franchisee relationship is strained. Investment in the relationship can help facilitate a more engaged business planning process.
Callum has led New Zealand franchise system development and improvement projects across a range of business sectors involving leading local and international organisations. Callum has benefitted by completing both Master of Commerce (with 1st class honors) and Doctor of Philosophy (PhD) qualifications researching franchising.
Franchize Consultants is New Zealand's largest and most experienced consultancy providing specialist advice and assistance to prospective and existing franchising and licensing networks. Founded in 1989, Franchize Consultants provides consulting, training, mentoring and research services to leading local and international franchising companies.
This article first appeared in Business Franchise Australia and New Zealand and is republished here with permission.