Maintaining brand standards by iFranchise Group

Maintaining Brand Standards When Franchising

About the Speakers • Dave Hood , President, the iFranchise Group – 27 consultants across four functional specialties – 500+ years of experience in franchising – 98 of top 200 franchisors

• Harold Kestenbaum, Harold L. Kestenbaum, PC •

Named one of the top 100 franchise attorneys in America – 30+ years in franchise law – Former board member of publicly traded franchisor – Noted author: “So You Want to Franchise Your Business”

• A lot to cover, so please hold questions • Will email copies of this presentation, so you do not need to write notes • A little about you?

The i Franchise Group

The Quality Control Trade-Off • Many people think franchises have lower level of quality – just the opposite is true • The Quality Trade-Off – – – –

More difficult to control Higher Caliber More highly motivated Longer term

• Studies show franchisees outperform corporate operations

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The Four Pillars Of Quality Control

Quality Control

The Four Pillars of Quality

• Franchisee Selection • Documentation & Training – the Tools • Support • Legal Documents and Compliance

Quality Control Comes at a Cost The Four Pillars of Quality

• Franchisee Selection – Cost of walking away from a check – Higher costs of marketing

• Documentation & Training – First class tools, Intranet, video, etc. – More staff required for more training

• Support – Cost of Staffing – Frequency of visits (travel costs, etc.)

Franchisee Selection

Franchisee Selection • Maintaining quality control starts with the franchise selection process • Philosophy of granting franchises vs. selling franchises • Need to find like-minded franchisees who are a good fit with your system • Franchisees need to “buy into” your operating system • Look for franchisees who want to work within a system rather than change the system • Consider the use of personality profiling

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Five Critical Points of Qualification 1.

Capitalization 

Biggest reason for failure



Can cause franchisees to cut corners

Work ethic

Business acumen

3. 4.

“Job Specific” requirements Personality 

Experience in leading a team



Tendency toward being an entrepreneur



Honesty and ethics



Philosophy and cultural fit



Nature (Confrontational or adaptive)



The iFranchise iFranchise Group

Ways to Maximize Success in Selecting Franchisees • Be proactive rather than reactive in generating leads • Develop and then follow a well defined sales process • Focus more effort on understanding the candidate’s qualifications and goals, and place less focus on closing the sale • Consider incorporating a work experience into your sales process • Have multiple people in your organization assess the candidate • Speak with the candidate’s professional references, not only their personal references • Don’t be afraid to reject candidates

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Tools That Will Help Franchisees to Maintain Your Brand Standards 11

Tools to Help Maintain Brand Standards

Brand

Brand Identity Manual

Design Criteria Guide

Operations Manual

Consumer Marketing Resources

Brand Identity Manual

•

Proper use of logos

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Colors to be used in all marketing and decor

•

Font styles and sizes

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Standard forms of communications

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In-store visual merchandising

Design Criteria Guide To be used by the franchisee’s architect: • • • • • • • •

Facility layout Interior design elevations Ceiling detail Mechanicals (HVAC, electric, etc.) Lighting Millwork drawings Signage Material specifications for counters, flooring, wall treatments, tables and chairs, etc.

Best Practices Operations Manual • Serves many functions – – – – – –

Sales Tool Training Guide Reference Tool Liability reduction Enforce system standards for Quality Control Extension of the legal documents

Developing a Best Practices Manual • Determining what to document • • • •

Scope of the manual Standards to be enforced Procedures to be required Procedures to be recommended

• Manual development process • Gathering pertinent information • Determining best practices • The drafting and review process

• Use of Subject Matter Experts

Development of Best Practices Operations Manual

Discussions with Key Stakeholders

Review existing material, forms, & documentation

Develop preliminary outline

Determine gaps in current documentation

Assign responsibility for content creation

Identify Subject Matter Experts for gaps

Interview Subject Matter Experts

Onsite observation of units & documentation

Resolve Best Practices Conflicts

Draft material to cover all identified gaps

Edit all material into common style & â&#x20AC;&#x153;voiceâ&#x20AC;?

Revise first draft of Operations Manual based on client input

Beyond the Operations Manual • Faster growth requires formal training programs – For your staff – For franchisees

• Train-the-Trainer too – Franchisee will train their staff – Should have tools to do so

• Video pushes QC to lowest level of organization • On-line training decreases costs, increases quality, and can decrease liability – Customized by employee – Document what is reviewed and test scores – Lowers on-site training time and costs for both the franchisor and the franchisee Copyright, The iFranchise Group, 2013 All rights reserved

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Consumer Marketing Resources â&#x20AC;˘ All consumer marketing undertaken by your franchisees should be approved by the franchisor â&#x20AC;˘ As a franchisor, you must provide franchisees tools that will make their local marketing more consistent and successful

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Consumer Marketing Resources Target Marketing Approach

Point Of Sale In-Store Marketing

The iFranchise iFranchise Group

Consumer Marketing Resources Online Ad Builder Site

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Consumer Marketing Resources Annual Marketing Calendar

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Using Field Support to Maintain Your Brand Standards 23

The Role of Field Support in Maintaining Brand Standards

Key roles of your field support staff: • Brand ambassador • Trainer and coach • Conduit for sharing best practices • Field marketing support • Financial analysis

The Role of Field Support in Maintaining Brand Standards

Issues to consider when setting-up your field support program:

• Necessary qualifications for field consultants • Span of control between field support consultants and franchise owners or locations • Frequency and duration of visits with franchisees • Role between business coach and monitoring of brand standards • Documentation of the field consultant’s activities

Legal Issues In Managing Quality Control 26

Protecting Your Brand Trademarks Many new franchisors don’t understand the importance of protecting their trademarks. Here are a few key questions to ask:  Why should I protect my trademark?  Should I protect my trademark in my State, or at the Federal level?  What trademarks should I protect?  How long does the registration process take?  How are franchisees able to use my trademarks?

Legal and Sales Best Practices

Limiting your liability:  Be sure your contract and FDD have the necessary levels of control  Document should allow you the flexibility to make changes as the system matures  Develop and monitor a system for monitoring contract compliance  Develop and monitor a system for determining financial qualification  Train your franchise sales force on quality standards for franchisee selection  Notice to cure and default process used when appropriate

Accounting and Auditing Best Practices

Limiting your liability: ď ś Install a system for tracking and documenting that each franchisee is maintaining proper insurance coverage ď ś Install a system for tracking and documenting that all franchisee licensing is kept current ď ś Install a system for documenting appropriate franchise background checks, financial diligence, representations.

Operations Documentation

Limiting your liability:  Ensure that your franchisees are properly representing themselves as an independent business, and not as your agent  Operations Manuals must provide you with adequate brand control but should not be too prescriptive – a fine line  Must avoid potential areas of negligence or take great care when prescribing actions  Should cross-reference regulations and not cite them  Should be updated annually and reviewed by professionals and attorney.

Operational Support

Limiting your liability:  Have a standard compliance checklist for field support that does not leave room for interpretation  Make sure your support people document everything and that you keep a detailed file on each franchisee including all correspondence, contracts, FA, FDD, etc.  Supplement field support visits with Secret Shopper Programs  Document all client calls using Contact Management Software  Train your staff on a regular basis on appropriate franchisee communication and interaction, as well as best practices communications techniques – especially emails!  Develop a Field Support Manual for identifying problems and maintaining best practices. 31

10 Common Mistakes in Quality Control 1.

Poor franchisee selection

Insufficient training provided to franchisees before they open for business

Failure to adequately document quality control standards within the operations manual and training materials

Failure to update the operations manual at least annually

Hiring staff that are not qualified to support franchise owners

Failure to address franchisees that are not in compliance with the systemâ&#x20AC;&#x2122;s standards

Lack of trademark protection for the franchisorâ&#x20AC;&#x2122;s brand

Failure to adequately monitor the quality of suppliers to the franchise system

Inadequate field consulting practices (visit frequency and effectiveness)

10. Lack of ongoing training provided to franchisees and their employees

Questions