Development Expertise and Focus Can Make or Break Your Dreams of Growth

Many franchisors focus their franchisee support and training on operations and marketing. We’re not debating these elements are essential. Without them you have no brand.

If growth has been identified as a priority however, increasing knowledge and resources against development is also going to be crucial.

The development resources within franchisee organizations can vary significantly based on their size and development commitments. When development resources are limited, their specialized knowledge and fractured priorities outside of development can severely impact the long-term growth of any brand.

It’s not uncommon for franchisees to have their CEO responsible for capital investment decisions; they often lead negotiations, not only with the franchisor, but also with brokers, landlords and general contractors. This can be a challenge if they don’t truly have the time to focus and ‘drive’ unit growth.

A franchisee may also use local operations leads to identify and qualify potential sites and manage the construction process. Although they are certainly closest to consumers, have strong opinions of their markets and have the greatest visibility to the progress of any construction while out in the field, they may not be fully educated in trade area analytics, critical site requirements or the construction process. Ultimately though, in order to ensure the current units continue to be strong, operators really need to prioritize operations rather than get sidetracked by development.

As a franchisor focused on growth you could insist on a dedicated, experienced development team within the franchisee’s organizational structure. This can be a hard sell to franchisee organizations though due to the financial G&A weight involved.

Alternatively, the need for development resources and expertise could be met by one or two mid-level franchisee resources focused on development, combined with support from the franchisor and third-party organizations.

Franchisors with the greatest chance of success provide consistently implemented development standards and processes to their franchisees along with an education on the keys to success for development. Franchisees can also often benefit from access to third-party organizations, recruited and educated by the franchisor, to support their efforts (development consultants, real estate brokers & developers, financial lenders and construction management organizations).

Lastly, it’s essential to have a strong franchisor development team to provide ongoing support. Expanding on the franchisor development team, it’s important to recognize this will be the department within any brand organization critical to realizing dreams of growth. The skill set of the development team needs to be far broader than real estate expertise and an ability to communicate with franchisees. The development team should consist of client managers able to analyze data, share insights, provide expertise on all things development, talk to the franchisees in their own language and understand the financial implications of their recommendations. To support the breadth of franchisees (and the breadth of their development experience), the strength of the brand’s development team is going to be vital.

As a franchisee, understanding the development requirements expected of you each year and the amount of support provided by the franchisor will lead to determining your specific development resource needs.

Whether you’re a franchisor or franchisee, if you feel you’re lacking in expertise or development focused resources but don’t have the need or capacity to hire the necessary team members full-time, BDG can help by providing support to fill the gap on a part-time or project basis.

If you’d like to raise the overall development knowledge and focus within your organization, BDG can spend a day or two with your team on an online seminar customized to meet your needs.

Please explore our website further www.beyonddevgroup.com to see the services we provide.

We look forward to hearing from you at info@beyonddevgroup.com to explore how we can work together to help you make your dreams of growth come true.

Data…Your Most Effective Guiding Light

There are long-term real estate experts who will stand at a site within a market under consideration and just ‘feel’ whether it would or wouldn’t work. At the other end of the spectrum there are finance experts looking for a model to perfectly forecast the sales and returns for each potential location. Admittedly these are the extremes and I genuinely believe real estate development is both an art and a science as has often been said.

When emotion-filled debates occur as each person’s gut is telling them something different, you know there must be another way; there must be the potential to reach a more fact-based decision. For those of you who tend to be more science-based, whilst modeling solutions continue to become more sophisticated, I challenge any forecast model able to consider absolutely everything affecting the success of a specific unit and subsequently predict a future unit’s sales and returns perfectly.

In my experience, even if forecast models don’t provide the exact answers, the chance of success is far improved when franchisors and franchisees arm themselves with all available data and models and assess the resulting insights against their gut feelings.

For this to occur, all measurable performance-impacting factors need to be tracked and taken into consideration for each location. Each factor needs to be tracked consistently and collated across as long a timeframe as possible. With COVID impacting consumer behavior as much as it has, and with the uncertainty around future consumer behavior, I’d recommend considering data from both pre and during COVID times and ensure the ability to update analyses frequently over the next year until a new norm is reached.

As a franchisor, the first step in the process of assessing a new location is ensuring you have solid alignment on development and financial goals (internally and with your franchisees). You also have to identify the questions you need to answer to help achieve those goals.

Next, you need the right tools, funds, and resources to answer those questions, to:

• Collect and collate a plethora of data consistently and longitudinally

• Analyze the data and correctly draw out insights

• Understand the limitations of those insights (and watch for potential false inferences)

The last step, without which all the data and analysis in the world is worthless, is to ensure you have a team with a trust-based relationship with your franchisees. This team needs to be able to share, collaborate and discuss the findings and subsequently agree on next steps. With the right franchisee/franchisor relationship, franchisees will not only listen to the insights and your perspective, but also add to them by sharing data and information only available to them. Once you have achieved this level of engagement, the ability to align on the path forward is far more straightforward. Collaboration and fierce alignment provide the quickest path to action and hence growth of your brand.

Remember there are no guarantees, and there will always be factors able to impact results you’re unable to fully measure. A struggling store manager can cause a great site to underperform, and a strong manager can make a marginal site incredibly successful. It’s important to evaluate and understand any unpredictable and unmeasurable factors and refine your perspective over time. With those additional learnings combined with solid data analysis, you’ll be in a far stronger position to make informed and reliable decisions.

Growth is predicated on past results and an ability to predict the future. Optimizing the use of data will light your path to success across any industry and geography.

Listen to Learn From Your Franchisees

As you all know, any relationship requires ongoing communication. But the focus for a franchisor should be on listening and learning from your franchisee’s first.

As the franchisor there’s a tendency to believe you need to have all the answers. There’s nothing wrong with this theory, but it’s a significant weight to put on your own shoulders. If you establish a team of corporate experts who believe they alone need to have all the answers, their collaboration with your franchisees, your field experts, can be significantly limited. Believing the brand’s corporate team need to have and share all the answers can lead to a lot of telling and little listening. Dismissing the true depth of experience and knowledge from the franchisees can be a significant loss to your organization.

There’s no one better able to share the reality of opening and running a unit of your brand in a specific market than the franchisee. Team members working in an outlet and engaging with the customers daily, can provide broad and real feedback on customer likes and dislikes as well as their challenges and excitement about the brand. The construction teams building the units can offer suggestions on how to optimize capital spend. Feedback on how to lay out and set up a unit most efficiently and effectively is best described by those that have worked in them. There’s no one better able to tell you about potential competitive threats or opportunities than the teams that have observed them in their local market. There’s so much depth of insight available from the franchisees and their teams that not actively listening to them shouldn’t be an option.

In my experience, within a franchisor organization there are usually a couple of teams most connected to the full breadth of franchisees. The operations and development teams are generally on the front line interacting with all franchisees throughout the year. You will hopefully have already established these teams based on their excellent relationship-building and communication skills. They’re usually the first point of contact and spend hours engaging with the franchisees and their teams, very often on long days with a considerable amount of wind-shield time. They often have little choice than to hear everything, but the best ones truly listen, recognize themes, consolidate the learnings and provide it back to the broader organization. The question lies in what happens next. To truly optimize the collection of these insights, the broader organization also needs to be ready to listen. The organization needs to have a forum for the feedback; the internally focused experts need to believe there’s value in listening and they need to be willing to incorporate these insights to help them provide better guidance for the whole system.

Beyond the failure to benefit from specific experiences, there are other risks from not actively listening. The relationship with the franchisees will be dysfunctional similar to any other relationship – a lack of active listening can drive disengagement and a loss of trust. Franchisees can become set on believing the franchisor must have all the answers and anything that doesn’t work is solely the franchisor’s responsibility. The franchisor’s front-line operations and development teams can also be challenged. It’s near impossible to maintain a positive attitude for any length of time when positioned between a franchisee who’s trying to share and a franchisor who isn’t listening. These teams can stop being able to do their jobs effectively due to their anxiety in trying to resolve the situation, by only seeing either the franchisor or franchisee perspective, or from disengaging from communication completely.

It’s critical to work collaboratively with the franchisees to build solid relationships, uncover best practices and determine the most effective and efficient way to improve and grow the brand.