More than 15 years ago – before I was even a coach – I was taught this cycle of business by MY business coach (Action Coach) and it has always stayed with me as a guiding principle for how to do business and how to do it well. Now more than ever this, combined with a simple quote from Zig Ziglar, I have found where the point is that franchises go wrong.
So the basic principle of the cycle of business is that the Owner looks after the team. In the case of franchising, this is the Franchisor/CEO or even the board of a larger franchise group. These are the people making the ‘owner’ type of decisions.
Now how do they look after their team? Of course they pay them and give great working conditions, by they also give them the skills, knowledge and tools to do their role to a high standard. They also encourage and give them the confidence to execute their tasks.
The next step of the cycle is that the team now look after the customers. In a franchise business (that is the Franchisor’s business), this means their head office team are looking after the franchisees. Franchising is a little weird in the fact that we want the franchisees to be part of the ‘team’, but when you get right down to it, a franchisee is the franchisor’s customer. The franchisor is providing a service and the franchisee is paying via a royalty, so that makes them a customer.
So the next step is simply that the customer looks after the business. That is, if the customers are happy and continue to ‘pay’ for your product or service, they will look after or provide for the business, because really you could almost substitute business for profit. In any business, I always say you want to have customers that are repeat customers and this is the case for franchising. Happy franchisees will stay longer, renew and continue to support the business. Franchisors need to empower their team to find more ‘customers’ (aka franchisees) to help and support because that is how they will reach critical mass in their business. When I say ‘critical mass’ this for me means that the franchisor is receiving enough cashflow via royalties that they don’t ‘have to’ sell a franchise to remain in operation.
The final step is what completes the cycle. That is that if the customers are paying the business, then the business will be making the profit to provide for the owner of the business and we are back at the first stage of the cycle.
As a franchisor grows their business to critical mass and then beyond, they need to stay true to this cycle of providing for their team, so that their team can find more customers (franchisees) and help and support those customers. Then the customers will pay for this service that fuels the business and then the business will provide the cashflow and profit to the owner (franchisor) to go around this cycle again.
Now this is where I think a lot of franchisors go off the rails and where things go wrong, where the culture of a franchise can turn to the negative and where you can take perfectly happy and loyal franchisees and turn them to critical and unhappy franchisees. The very definition of a detrimental cycle to a franchise business.
Basically, the franchisor reverses this cycle of business. The Franchisor turns the view FIRSTLY to the business. How do we make more money? How do we get more profit?
This then leads to the next stage of the cycle (in reverse) that we need our customers to ‘pay’ us more and/or have more customers who pay us. In the case of franchising, this would be equivalent for many franchises, that we need our franchisees to increase their sales in their business as for many franchisors, they make their money as a percentage of the franchisees sales, so for them to make more money, they need the franchisees to make more sales.
This then means that the franchisor then looks to the team to ‘push’ the franchisees to make more sales which then means the team are reporting back to the owner.
Now this may seem like a very fine point of difference but the intention and the FEELING within the group is extremely different.
Zig Ziglar said it best when he said: “You will get all you want in life, if you help enough other people get what they want.”
So when the cycle of business is going in a forward direction (Owner -> Team -> Customer -> Business -> Owner then repeat), then you are following Zig Ziglar’s wise words. The Franchisor empowers their team to help and support the franchisees to build their business to be a profitable success for the franchisee and because of this, the franchisee looks after the business with cashflow, but also the “energy” or culture of the business remains positive which looks after the franchisor to go through the cycle again and bring on more franchisees and continue to help the existing franchisees to be profitable and happy.
When the cycle of business is put in reverses, then the franchisor is going against Zig Ziglar’s words and they are basically getting what they want by PUSHING other people to GIVE them what they want. The franchisor wants more profit in the business so then pushes the franchisees to achieve goals that are going to give the franchisor what they want (eg. increase your sales) without thinking about what the franchisees wants, which means the team need to focus on goals set by the franchisor, not what the franchisee wants.
Does this make sense to you?
I almost think it is the difference between if you are profit orientated with your franchisees or sales/revenue orientated. And trust me, the franchisees and your team can FEEL the difference.
The goal to help franchisees get what they want, will be a profit goal – SET BY THE FRANCHISEE. Every franchisee has different goals for their life. Maybe they have young children so they want to make profit, but having time is more important to them so their sales/revenue goals are not as high because for THEM to get what they want, it is about a balance of time and money.
If the franchisor is focussed on what THEY want, then they will be pushing the franchisee to increase their sales/revenue, not focussed on what the franchisee wants but more what the franchisor wants. In the above example, this leads to an unhappy franchisee because they are making great money, but not getting to spend time with their kids which is their ultimate goal so how dissatisfied and disgruntle will the franchisee be to their business? LOTS!
So what if you have got your cycle going in reverse and maybe you didn’t even realise that is what you are doing?
Firstly, sometimes the cycle is reversed out of fear. If as a franchisor you are not yet breaking even on your own business and you are having to juggle your finances, it is easy to go into this sales focussed PUSHING mode. Don’t beat yourself up, we just have to change the intention behind what you are doing.
Sometimes the cycle of business is reversed when there is an outside party that the franchisor is trying to provide for or prove to. For example, this often happens when a franchisor is more concerned with giving a return on investment to their investors rather than focussing on helping their franchisees who if they help the right way and with enough support will in the end give a return on investment to investors anyway.
No matter where you are, it is just a decision. Just a decision to turn the cycle back into a clockwise direction that will aid and assist you to get your business FLOWING rather than trying to PUSH the business.
Stop and ask yourself, what is it that each and every individual franchisee wants? They will all have a different reason for what they want to achieve, a different WHY they are in business. (Note: I highly encourage you to read ‘Start with Why’ by Simon Sinek if you have found your cycle of business in reverse, but a good read even if you are working in a clockwise motion on your cycle of business).
Talk to your team. Be honest and tell them that you think that you have been working in a reverse cycle and you want to change that. What do your team need to support your franchisees more? What do they want from you as individuals? It is not an easy conversation to have if you ask for your team’s honesty, but if you want success, it is a must. Help the team to have more tools to help the franchisees.
Get your team to talk to ALL of your franchisees and ask them what it is they want in their business. Ask your franchisees how you can HELP them achieve these goals. This doesn’t mean your franchisees can’t do more than what they first state, but stage one is to help and support the franchisees to this first level of success for them. Then when they arrive, see if they want more and help them achieve the next level of success for THEM.
Help you team to support your existing franchisees to be more profitable, have less stress and to be HAPPIER and more brand loyal, because this will be your greatest super power when the team are bringing on more franchisees. A prospect calls a franchisee and the franchisee talks about how they have got what THEY want and how the franchisor supported them to do that…. Who wouldn’t want to join your franchise, right?
As you build more happy, loyal and PROFITABLE franchisees, then your royalties will not only increase, they will increase in a stable and predictable manner, which then will look after the franchisor (and any investors they may have).
If you have found your cycle in reverse, then get that Zig Ziglar quote and print it out on a big banner and put it in your office to remind you every day what your focus should be.
When a franchise system goes off the rails and you track back through the history to see where things have gone wrong, I can usually pinpoint that this is the starting point when things went wrong. The cycle of business was reversed and the franchisor was not ‘helping enough people get what they want’ so that the franchisor was getting what they wanted.
Here’s my little plug ..: This is why I created the Supporting Franchisees course. I have a passion for coaching franchisees to get what they WANT from their business and life. Every year I hear the support team of a franchisor say that this is what they want to do as well – help and support franchisees – but for many, they just don’t have the knowledge or tools to do this in an effective way. So I created the Supporting Franchisees course (all online so do anywhere at any time in your own time frame) to help franchisor support team learn how to COACH a franchisee to success. I’m pretty proud of the course and it is getting awesome results…. Come check it out at www.supportingfranchisees.com
So back to you….. Have you reversed your cycle of business?
It is a leap of faith, it is putting your trust in others, but this is what the franchise business model is actually about. It is not about a licence to print money, selling a system over and over again. It is about helping REAL PEOPLE use your system to get what THEY WANT in their life. It is a big responsibility and one that is so REWARDING when you get it right.
Stop and ask yourself, am I helping my franchisees get what they want or am I more concerned with getting what I want?
If it is the second one, then stop and bring your team together to brainstorm how you can help and support your franchisees more…. The first step to getting your cycle back FLOWING instead of PUSHING.
Here to help in any way I can !
Tracey