As a Franchisee, You Can't Be the Investor AND the Manager and Still Be Successful
Franchise owners face unique challenges: Some have several stores and locations and couldn’t participate in daily operations even if they wanted to. Others struggle to run a nearly one-man (or woman) show: providing both the financial capital and the day-to-day management.
In fact, owners can't do it alone. Those who try to play both sides, as investor and manager, eventually let something slip, piling up small mistakes that turn into big problems. In the wake of McDonald’s decision to terminate the franchise agreements of 169 stores in India -- citing broken contract terms and unpaid royalties -- franchise owners should step back and reconsider which role they should actually be in.
As a trampoline park franchise owner and operator, I know what it’s like to need more hands, eyes and hours in a day. I also know how easily those 12-hour days can lead to burnout, which is why I delegate most of the day-to-day work to a team of employees I trust.
Not every franchise owner needs a dozen people to keep the ship running, but owners who serve as the primary manager of their stores must recognize their physical limitations. Owners must set clear expectations on reporting, scheduling and training metrics. They must follow up weekly to stay on top of issues before they get out of control.
Personally, this is the approach I take, and it allows me to work on growing my business without losing sight (through my managers) of the ground-level operational efficiencies that drive daily revenue.
Investors and managers play different parts.
I'm close to other franchisees in my sector, so I’ve seen others struggle to wear the hats of both investor and operator. They’d find more success, I believe, if they knew how to separate working in the business from time working on it.
For instance, you may want to manage small details, but this can prevent business growth. When guests call to inquire about birthday parties at my trampoline business, sure, I'd love to take the call; but it’s better delegated to a trusted, able employee so, as investor, I can focus on other tasks.
To serve as your staff's gatekeeper of key information, you need to keep a consistent on-site schedule, but if you provide the tools needed to operate your business,you need not be involved in day-to-day details. Instead, you should tackle the big-picture projects.
Certainly, I recognize that I don't have a monopoly on good ideas. According to a blog post from the Indiana Small Business Development Center, citing a University of Tennesee survey, 46 percent of businesses studied failed because the people running them were simply incompetent and apparently unwilling to admit it. Some of these owners took an emotional approach to price; some failed to pay taxes; some had no knowledge of pricing conventions and financial requirements -- and more.
In short, no one owner should go it alone, unless he or she has to. By delegating work to trusted employees, you can cover your own weaknesses and create more time to study the market and make better decisions.
How to run a better franchise
Giving up control isn’t easy, but franchise owners must learn to pick their battles to avoid getting overwhelmed. Follow these tips to create some distance from day-to-day operations without sacrificing quality:
1. Remember that brevity is key, but clarity is right there with it. Managers want to do well, but they often don’t recognize where they go wrong. According to research published in the Harvard Business Review, 57 percent of U.S. workers surveyed said that ineffective leaders don’t give clear directions, while 39 percent said they didn't offer constructive criticism.
So, in your own business, buck the trend by establishing reasonable goals and mentoring managers to meet those requirements.
Know who does what and when they do it; then check to ensure they did it. Alyssa Gregory, founder of the Small Business Bonfire and an expert consultant for business owners, advises entrepreneurs to create systems that don’t require their personal input to function.
Design workflows and reporting schedules to stay informed on the metrics that matter without losing sight of the big picture. Work with managers to optimize factors such as staff schedules and hiring processes and then step back and let data guide the next move. Create a deliberate layer of separation to free time that could be better spent on higher-level strategy.
Clearly communicate key performance indicators, such as staff turnover, and provide corrective direction as needed to ensure managers have the knowledge and resources they need to meet expectations.
2. Make sure your employees can wear many (if not all) hats. Encourage training at all levels to build a team that functions well, regardless of who’s on-site. Don’t let managers start thinking, “If I train someone to do my job, she might take it from me.” Teach managers to train their employees so if they have sick days or emergencies, other people can cover without needing owner assistance.
Additionally, consider hiring staff members whose only focus is on aiding franchisees. As an example, the company Solar Universe, which sells solar panels to franchisees, saw such a demand that owner Joe Bono realized a full-time employee was needed to man the order desk. Solar Universe also ended up hiring a trainer and a “franchise advocate” to answer any and all questions and qualms franchisees might have.
Make sure your eadership team is capable both in-house and in the field.
3. Delegate everything, then delegate some more. Once you’ve provided managers and team members with the tools and knowledge they need, step away. No one will get everything right on the first try, but through training and some trial and error, your employees will learn to handle things on their own.
Gregory, the small business expert, also warned owners against the dangers of micromanagement. Delegation with too much oversight is not true delegation -- just an extra layer of frustration for both parties. So, get out of the way and let people learn and grow. Consider Amazon’s CEO Jeff Bezos: He's frequently been described as a micromanager, and employees and certain product launches have suffered because of it: “Whenever anyone asked why we were doing this, the answer was ‘Because Jeff wants it,'" an Amazon insider said about the company’s failed product, the Fire Phone.
Bottom line: Don’t be that guy.
While I warn against micromanagement, I’m still encouraging effective, constructive management. Discern specific steps you can take to support your employees -- always being one step ahead of knowing what they’ll need and checking in regularly. What do they have going on in their personal and professional lives? Pay attention to any signs of growth or trepidation and address them. Connect and follow up.
By following these strategies, owners can give themselves breathing room to step away from daily operations. Occasionally, an owner might need to jump in to cover some work -- say that the general manager and assistant general manager take leave at the same time. But for the most part, owners who follow these strategies can trust their employees to run things themselves, letting the owners do what they should be doing: building the business.