“People don’t plan to fail they fail to plan” is the famous adage and perhaps obvious. However, is the main reason for failure to achieve our goals due to the lack of regular monitoring of the performance required to succeed?

Investing Time and Money

Franchisees will have invested their two most scarce resources in their franchise – Time and Money. In today's fast-paced business environment, simplicity is often the hallmark of efficiency. The adage "keep it simple" resonates profoundly in the realm of financial planning. When it comes to monitoring the performance of your franchise business and using that information effectively, KPI’s that are 90% accurate and on time are usually more beneficial for you than those that are 100% accurate and a week or two late.

Business planning doesn’t have to be lengthy or tedious, it is simply about where you (the franchisee) want to go and how you will get there, of course with help and advice from the franchisor. Achieving your planned goals should be a real confidence boost to raising the performance bar for your franchise and achieving greater success in the future for yourself. A simplified financial model offers transparency, enabling stakeholders to comprehend the underlying assumptions and drivers of business performance. By avoiding unnecessary complexities, businesses can focus on pertinent metrics and contingencies, fostering agility and responsiveness.

Leveraging KPI's

Successful tried and tested franchise models materialise after the franchisor has successfully navigated through a myriad of challenges to establish their successful franchise model, such as marketing and promoting the product or service at the heart of the business, testing price points and margins, etc... And at the heart of their journey lies a foundational tool: the business plan. Often overlooked or underutilised, the annual business plan serves as a compass, guiding businesses towards their objectives. In this article, we delve into the significance of crafting a business plan each year, emphasizing the merits of simplicity in financial models and absolutely critical is leveraging the franchise key performance indicators (KPIs) for measuring performance.

A Franchise model’s KPIs encompass a range of critical information about the business, its performance and how effectively the franchisee is managing the Tried & Tested business model they have invested in. KPI’s such as - sales growth -  customer satisfaction – cost of sales - and other key operational measurements. By highlighting specific KPI’s that are critical to the franchise model, the franchisee and franchisor can gauge performance accurately and identify areas needed attention or remedial actions such as more training in key areas of the franchise day to day operation. For example, average transaction value, customer retention rate, recommendation or repeat business transactions.

Franchise Growth

Furthermore, monitoring a franchisee’s KPIs regularly offers both the franchisee and the franchisor  the opportunity to build meaningful statistics or benchmarks of performance across the entire franchise network. The ability to compare an individual franchisees performance with an important KPI against the average being achieved throughout the franchisee network is a real and tangible benefit of being part of a franchise network. As the franchise network grows then the KPI’s can be used to compare performance across a range of different criteria, such as franchises that have been operating for less than 24 months or those that have been trading for 5 years or more etc.. By establishing a standardised framework for performance assessment, businesses can facilitate knowledge sharing and best practice across the franchise network, fostering synergy and collective growth that adds strength and momentum to the franchise network

Incorporating franchise KPIs into the franchisees annual business plan is essential for clarity and operational focus. By aligning strategic objectives with operational metrics, businesses can track progress systematically and take measures to correct bad habits or poor performance that has crept into the day to operation of the franchise. But of course they can also plan to do more of what has worked well for them.

Annual Business Plan

In conclusion, the annual business plan serves as a linchpin for organizational success, providing a structured framework for achieving the success desired by all involved in the franchise relationship. By embracing simplicity in financial modelling and leveraging franchise KPIs for performance measurement, franchisees are able to navigate through uncertainty and generate sustainable growth. In today's competitive arena, the adage "plan the work and work the plan" resonates louder than ever, underscoring the indispensable role of a well-crafted business plan in achieving enduring success through careful and regular monitoring of the franchises actual performance against the forecasts.