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16 09, 2022

The Franchise Manual Podcast – Episode #34 – Franchisor Pitfalls

By |September 16th, 2022|Franchise Development, Franchise Recruitment, Franchisee Onboarding and Training, Podcast|0 Comments

My Podner in this episode is Michael Peterson and he’s going to talk with us today about the mistakes that new franchisors typically make during their first year of operation. Some of these mistakes can be quite expensive, while others can lead to the death of your entire system. If you are a newly minted franchisor, or if you are about to start your journey, this is one that you won’t want to miss.

Time Stamps

Michael Peterson Intro 00:00:31
Segment 1 00:02:37
Get to know Michael Peterson
Segment 2 00:18:22
Topic Segment: New Franchisor Pitfalls
Segment 3 01:03:05
Topic Segment: Quick Draw Questions

TOPICS DISCUSSED IN THIS EPISODE:

Key areas franchisors miss in their first year:

Pre-launch

  • Not getting the FDD to fully capture the business model. This leads to something so prevalent that I came up with a name for it; the 2nd year re-write. So many franchisors make massive changes to their second year FDD either because they didn’t capture the existing model in the first year, or they didn’t have someone walk them through the thought processes they should be going through on every item before they commit it to paper.
  • Having “to be implemented” clauses in their agreements. The most common one I have seen here is a national ad fund, though I have seen tech fees quite a few times as well. When your franchisee #1 or #2 has been operating for 3 years, paying you your royalty only, and suddenly you decide your system is big enough to justify the advertising fund of 1-3%, believe me they will not be happy. Start taking this from day one, even if you turn around and spend it in their market.
  • Cutting corners or coming in underfunded. This is probably the #1 cause of failure of young franchisors. Deciding to write an operations manual in-house, find the cheapest franchise attorney possible (or, worse yet, trying to do an FDD without a franchise attorney), not having quality marketing materials, not having funds set aside for franchise sales; these are so self-defeating.
    • A bad operating manual can lead to system problems and even litigation.
    • If you succeed as a franchisor you will end up using a good franchise attorney, if you start out with inexperienced or ineffective counsel, you’ll just pay in negotiation, litigation, or just headaches before you switch to better counsel.
    • Your marketing materials are your first impression, you have to make them count.
    • Franchise sales cost money, period. If you don’t have a good marketing budget, you will struggle to grow. Think about this. Each year, you are going to spend between $6,000 and $25,000 on renewal, depending on how many registration states you go into and how complicated your audit is. I would guess the average is close to $12,000. If your lead generation spend results in one sale, then you have an extra $12,000 in costs for that sale. If you have a robust budget and someone solid handling franchise sales, and you award 3 franchisees, then the renewal is only adding $4,000 cost-per-close. Big difference.

Post Launch

  • Hands down, the biggest mistake a franchisor can make is bringing in the wrong franchisee. If you have been doing all the ‘right’ things, spending money, having a professional franchise salesperson either in-house or outsourced, reaching out to brokers to talk about your brand, and 6 or 12 or even 18 months in you don’t have a franchise sale, that can be frustrating. It also might happen; the first franchisees are the hardest to find (lets delve into that). I have seen this situation cause many franchisors to award a franchise to someone they shouldn’t and regret it for years to come.
  • Not having a culture of compliance from day 1 is another seemly small issue that will come back to haunt you. If your FA calls for quarterly or annual financials from your franchisees, get them even if you don’t know what to do with them! If your franchisees have a required add spend, monitor it from day one. Or better yet, engage with them and help them spend it correctly, but either way make sure they are spending it. If there is a clause you are not enforcing from day one, throw it out.
  • A problem many new franchisors think they wish they had; growing too fast. I have been in this position. I am talking about 4 stores open in January and 120 open that December fast! Trust me, you don’t want this kind of growth out of the gate.
  • Compromising to get a deal. . . I put this one last because it very well may be something you need to do. As I mentioned, first franchisee is HARD! It may be  reasonable, appropriate, or even necessary to ‘give’ on the first franchisee, maybe even on the first few. But be careful. If you are giving a bigger territory, are you really setting that franchisee up so that there is no chance of you putting someone into the same market and putting local brand awareness 100% on their shoulders? Are you offering a refund clause that you can’t really afford, from a capital cost of onboarding stance? Make sure your attorney is involved here and be careful. And again, don’t be afraid to say no and walk away.

Michael Peterson
Franchise Beacon
michael.peterson@franchisebeacon.com
www.franchisebeacon.com

Kit Vinson
www.franman.net
kit.vinson@franman.net
214-736-3939 x 101

Books Mentioned in the Episode

Think Like a Freak

by Steven D. Levitt, Stephen J. Dubner

The Memory Illusion

By Julia Shaw

Eye of the World

Robert Jordan

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3 12, 2018

The Franchise Manual Podcast – Episode #21 – Franchisee Onboarding and Training

By |December 3rd, 2018|Franchisee Onboarding and Training, Podcast, Uncategorized|Comments Off on The Franchise Manual Podcast – Episode #21 – Franchisee Onboarding and Training

Robert Bilotti talks about franchisee onboarding and training.  We will dive deep into “training theory” and then wrap it all up with a step-by-step discussion on how a new franchisor needs to set up a training program for franchisees.

Time Stamps

Rob Bilotti Intro 00:00:40
Segment 1 00:04:30
Get to know Rob Bilotti
Segment 2 00:18:55
Topic Segment ? Franchisee Onboarding and Training
Segment 3 01:14:03
Quickdraw Questions

Topics discussed in this episode:

The difference between a franchise system and a collection of mom and pops is “Training”

What is the difference between onboarding and training?

When do I need to hire a full-time trainer?

What to train versus how to train

Can a start-up franchisor use the operations manual as the training program at first?

Your first franchisees will be some of the most important validators of the concept, and if you skimp on training up front, it will come back to bite you.

Your most important franchisee is the first one after the former employee, friends, and family franchisees. That is the one that will really be the proof of concept. Be sure that you have a solid training program BEFORE that franchisee starts.

Invest in a learning management system (LMS) early

What is an LMS?

How does training change when you are in growth mode?

How to select an LMS right for your system

Moodle is a free, open source LMS

Look for a user-friendly system (from the administrative perspective) and a nimble system. Learn this by doing lots of demos and talking to other companies that use an LMS. Google is a great resource.

LMS support is probably one of the most important features. Usually, the more you pay, the more support you get.

What are the different modes of training (modality)?

  • In person Instructor Led
  • Virtual Instructor Led
  • Virtual Learning
  • Videos
  • Print
  • Audio
  • Knowledge Sharing (wiki learning)

If you set up a mentoring program to help train new franchisees, be sure to invest in a training program for the mentors so they can be trained in how to train.

There is a difference between lecturing and facilitation when it comes to training.

There is not one modality that is best for everybody. There is not a “one size fits all” when it comes to training.

Survey your franchisees, and do it often, how you are doing with training. Don’t just capture “smile sheets”, rather actionable information. This should happen every 3 to 6 months.

You CAN measure return on investment in training, especially in a franchise system.

Use gust satisfaction surveys to draw training topics.

What are the steps that a start-up franchisor needs to follow to develop a training program?

Step1:

Document – document – document. What makes your business a success.

Step 2:

What can you expand on from that? Create actionable content from that documentation? This is the ?what?.

Step 3:

Determine how you will take that information and disseminate it to the people who need it. This would be the franchisee and their employees. This is the “how”.

Step 4:

Determine how you will support your franchisees in their training efforts to their employees.

Step 5:

Establish a mechanism for measuring the results of the training.

Allow plenty of time to develop your training program. If you start developing your training program after you have signed your first franchisee then you have waited far too long.

Rob Bilotti
www.novitatraining.com
info@novitatraining.com

Kit Vinson
FranMan Inc.
www.franman.net
kit.vinson@franman.net
214-736-3939 x1

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15 12, 2016

The Franchise Manual Podcast – Episode #11 – Franchisee Training

By |December 15th, 2016|Franchisee Onboarding and Training, Podcast|Comments Off on The Franchise Manual Podcast – Episode #11 – Franchisee Training

cordellCordell Riley of Tortal Training talks about Franchisee Training – the positive effects that a well-established training program can have on a franchise system. In this episode we talk about how any franchisor can design and create a franchisee training program that will maximize results to both the franchisees and the entire franchise system.

Time Stamps

00:00:52 – Podner Introduction

00:02:38 – Segment 1: Get to know Cordell Riley

00:20:34 – Segment 2: Topic Segment

00:54:04 – Segment 3: Quick Draw

Cordell Riley Show Notes

People learn at different rates based on the modality of the training being delivered.

VAK: Visual – Auditory – Kinesthetic

What does the start-up franchisor need to think about before developing a training system for the franchisees?

  • Start with a solid foundation (ops manual)
  • Make sure that training is part of your franchise culture – written into the mission and vision statement
  • Measure the amount of training that is being delivered
  • Ensure that training is aligned with business goals
  • Strive for a blended solution – digital, audiovisual, classroom format

A solid training program will lead to franchisees feeling supported which leads to higher validation scores.

Great training versus good training

  • What do you want people to do differently after completing training?

Make training fun

Initial Franchisee Training DOs and DON’Ts

  • Don’t try to cover everything in initial training. Only cover the topics that they need to get up and running. Too much at once will lead to lower retention rates.
  • Do include those topics that have a high impact and short time to master.
  • Do use real world training (hands on)
  • Do utilize “Course of Action” – assignment for franchisee trainees where they have to present how they will use the training that they received. (FREE template available by e-mailing Cordell Riley )
  • Do use internal Subject Matter Experts – have multiple trainers
  • Conduct the initial training as close to opening as possible
  • Avoid an “All lecture” training program
  • Engage the trainees
  • Vendors can be useful trainers on certain topics – don’t let it become an infomercial.
  • Use quizzes throughout to ensure that franchisees are following what is being taught.

Ongoing Training

  • E-learning – online
  • Field support staff
  • Conferences and conventions
  • Include those topics that have a lower impact and longer time to master.
  • Training is not something that happens during the first few weeks of the franchise relationship. Training is a process that should last for the life of the relationship.

E-Learning

  • E-learning is a delivery method that you will use to keep a constant flow of training to the franchisees
  • Use prior to initial training to bring new franchisees up to speed before initial training
  • Use as part of your ongoing training program to promote new products or services, etc.
  • Short, logical chunks of training – don’t pump all of your training into one session. 10 minutes or less
  • Make the training role based and relevant.

E-learning DOs

  • Do engage primary adult learning senses – Visual – Audio – kinesthetic

Repetition is key to high retention

Websites mentioned in the episode:

Books mentioned in this episode:

Good to Great

by Jim Collins

Cordell Riley’s Contact Information

Tortal Training

www.tortal.net

cordell@tortal.net

Kit Vinson’s Contact Information

FranMan Inc.

www.franman.net

kit.vinson@franman.net

217-736-3939 x 1

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