The Veteran Playbook for Franchises

Four ways veterans can maximize profitability in their franchise.

By Kyle McEuen

Opening a business takes a huge leap of faith. But the great part about franchising for veterans is that there’s a tested blueprint to follow, helping you land on your feet and increasing the opportunity for success.

“The franchise agreement may remind veterans of an Operations Order as it outlines the equivalent situation, mission, execution, sustainment command and control of the business,” explains Monty Heath, U.S. Navy SEAL and Director of Veterans in Business at PrimePay.

Getting your business off the ground is one thing, but if you really want to be successful in franchise operations, the key is maximizing profitability. 

Here are four ways franchisors and their franchisees can do this:

Mission 1: Assess Trends and Identify Areas of Improvement

The first step to maximizing profitability is to identify the data needed to help understand how you are doing and where you can improve. This can include both financial and operational metrics. 

For example, franchisors often focus on top-line sales and fail to consistently review their franchisees’ bottom line. With current data, franchisors can identify a struggling franchisee and intervene long before the franchisee is in danger of closing the business.

To obtain actionable data, appropriate systems must be in place. Manually collecting data is time consuming and costly. Identifying and implementing systems will help a franchisor easily collect the data on a more consistent basis.

First, determine how often you want to collect. But keep in mind that the more real-time — and complete and accurate — the data is, the greater your ability to assess trends and identify areas
of improvement.

Trends show when something is not right or problematic, especially compared to a prior period or year-over-year analysis. A dip or spike in a graph can trigger a franchisor or franchisee to investigate a specific area further to determine whether additional information or action is required.

The real power of analytics comes not only from the assessment of data, but also in taking action to improve the situation and profitability. A franchisor can also use this data to identify top performers and trends to help coach other franchisees.

Mission 2: Assess Trends Among Other Franchisees

After identifying the actionable data and implementing systems, you must verify the data. The purpose of the data is to help make well-informed, data-driven decisions.

The phrase “garbage in, garbage out” applies here; if the data is bad, you will make poor decisions. “Just like in the military, good intelligence is a critical component to mission success,” Heath explains.

A good data collection provider, like ProfitKeeper, a division of PrimePay, will collect only complete data (i.e. completed financial statements). It also helps validate the data to increase the accuracy and confidence of those who use it.

Franchisors can use the information to analyze the growth and health of franchisees – and identify which franchisees are hitting it out of the park and which are underperforming. The more profitable your franchisees, the more you can grow your franchise.

There are also benefits for your franchisees. Having access to trends, benchmarks and comparisons of fellow franchisees can be an effective means of motivation and collaboration. They can compare their performance and potential. This creates a culture where franchisees can discuss best practices with one another to help improve their businesses. 

Mission 3: Measure and Maximize Performance

Performance can be measured across many facets of franchising. What you can measure, you can manage. It’s important to track key performance indicators (KPIs) and distribute them to all friendly forces — your franchisees.

The key here is accountability. Encourage franchisees to share data with employees to increase their vision and level of accountability. This small practice will greatly increase the effectiveness and performance of your business. Some areas to consider:

- Tracking employee performance: Help your franchisees understand what top staff members look like. Then, look at employee processes and set expectations there. How are they tracking employee performance? How are they tracking employee time? If a lot of this is manual, it’s worth considering an automated system to save time as well as money.

- Product demands, demographics and purchasing data.

- Marketing campaigns and what an expected outcome should be (hint: ROI).

- Business seasonality: pricing, overhead costs, etc.

Having this information makes your path to success that much clearer. Numerous franchisees have told me that they used the benchmarking data to renegotiate different vendors or expenses to increase profitability within their business. 

Mission 4: Set Benchmarks

Setting benchmarks is crucial to ensuring model performance across all franchise locations. Set a target, measure said target, and analyze those results so that you obtain expected outcomes to pass along to each franchisee.  

All the items I’ve mentioned roll into each of the four types of benchmarking:

Internal benchmarking compares business processes across the organization.
Example: Maximizing employee performance.

Competitive benchmarking can be applied directly to the trends we were talking about. Outside of your franchisees, look at what your competitors are selling, servicing, processes they’re using, etc.
Example: Examining KPIs across your industry, like table wait times for a restaurant.

Functional benchmarking compares what you’re doing to businesses outside of your industry.
Example: Broader, all-encompassing KPIs, like brand recognition or overhead costs.

Generic benchmarking looks at processes/functions that can be used in any business, no matter the industry.
Example: Customer reviews or Net Promoter Scores.

With that benchmarking information, franchisees can set realistic goals for their business and staff. It also allows each location to expose weak points in its business. By looking at trends other like-minded franchisees have used, it opens up new possibilities to the franchisee and provides a catalyst for growth.

These key steps can instill actionable growth mentality and accountability to each of your franchisees, which will lead to increased profitability and growth for your brand.

Kyle McEuen is Senior Vice President of Franchise Services for ProfitKeeper by PrimePay. Learn more here.