FW Focus: Franchise Relations
Strategic Planning with System Franchisees
It will be exciting for franchisees and the system because it will reap great rewards.
By Philip Friedman
Strategic planning is essential for the long-term success of operating organizations. The best planning is accomplished when the organization’s key constituencies are included. In a franchise system the franchisees are a primary constituency, making it imperative to include them when building the strategic plan.
Franchise systems are dynamic, continuously-evolving competitive organizations, designed to succeed through the accomplishment of shared goals executed by a diverse group of owners. While each system has its own unique business model, all share the challenge of consistent operations directed to a common purpose—one that keeps owners focused on the system’s goals and objectives. As competitive pressure and economic environments change, strategic planning is a tool to keep the system on track to achievement of these goals and objectives.
Franchisee involvement in the planning builds the common purpose required for success as the group gains understanding of the plan’s rationale, develops a personal commitment to its success and learns the execution steps required to make the plan work. Failure to gain franchisee commitment to the plan, and thus their commitment to the system future, would be a major mistake and an opportunity lost.
What is Strategic Planning?
Focusing the decisions and actions required to achieve the common purpose of the franchise system is the responsibility of the franchisor. Systemwide strategic planning, planning in concert with franchisees provides the means to develop decisions and action plans effectively and efficiently. By embracing the concept of strategic planning, the franchisor is starting the process of strengthening the long-term prospects of the franchise system.
Simply described, strategic planning is a process that establishes a franchise organization’s long term direction by:
• evaluating the internal and external situations faced by the franchise system,
• establishing common goals for the system,
• evaluating and choosing alternative courses of action,
• setting near term and long objectives for the system,
• detailing the supporting action plans required to meet these objectives, and
• gaining support and commitment throughout the system through execution of the plan.
Why Plan with Your Franchisees?
Strategy could be done solely at the corporate level and then communicated to the franchise community. This would establish direction as it accomplished the first five benefits of planning detailed above. However, this “corporate down” approach would not accomplish the sixth benefit, losing a major opportunity to build the mutual respect and commitment that comes from working on the process with and jeopardizing the successful execution of the plan.
The importance of franchisee participation can best be described by what it provides for the system:
• an opportunity for franchisees to express their insights on how to best improve the performance of the concept,
• a sounding board for corporate developed initiatives,
• participation in developing strategic alternatives,
• improved systemwide communication and understanding, and
• systemwide commitment to the plan.
Done honestly and correctly the trust and commitment created by the planning process will provide a foundation for the continued growth and prosperity over the years to come.
How Do We Get Started?
Initiating the strategic planning process will require some system preparation as the franchisor and franchisee must come to the process with understanding and open communication. The required preparation includes:
• establishing franchisee representation,
• pre-strategy corporate-level planning,
• gathering and evaluating existing research, and
• franchisee satisfaction and understanding.
Effective planning is done best with a relatively small leadership group made up of approximately four franchisor representatives and four franchisee representatives. If the system has an active committee process the committee members can join the planning team. If such a structure does not exist, the franchisor will have to work with the franchise community to determine the franchisee representatives.
Active Franchisee Committees
Since it will not be possible for all franchisees to participate directly in the planning, a committee structure enabling franchisees to participate through fellow franchisees should be established.
To facilitate representation (for planning and ongoing management of the system) it is best to have established an ongoing communication structure. This can best be achieved through active franchise committees. The committees will have an ongoing business purpose within the system which will prepare them to be involved in the planning work.
For example, at McAlister’s Corporation, there are three active committees representing franchisees in different areas, these being the:
• Franchise Advisory Committee,
• Marketing Committee, and
• Purchasing Committee.
The committees have four to five franchisee members, appointed through elections by the franchisee membership. Each committee meets quarterly operating with a published agenda and follow-up meeting minutes. This working structure provides widespread representation and ongoing communication with the franchisor. The Strategy Committee is the Franchisee Advisory Council. The other committees work on specific components of the plan throughout the year as their work becomes part of the corporation’s business plan. The committees are kept up-to-date on the system’s overall performance and all research being conducted by the franchisor.
Pre-Strategy Corporate Planning
To prepare for the strategy work, the franchisor must engage in pre-strategy planning. This work will establish the goals and objectives the franchisor will bring to the planning table. The corporate business plan will be prepared for presentation to the planning committee. It should anticipate the various franchisee perspectives. The preparation work will include:
• recent performance of the business,
• forecast of the business,
• franchisor’s goals and objectives, and
• strategic initiatives planned by franchisor.
This work provides the starting point for the strategic planning with the franchisees. All presented materials should be considered open for discussion.
An Understanding of Existing Research
Evaluating and understanding existing research will provide valuable planning insight. In the planning process this information provides objectivity and a means to focusing the range of alternatives discussed to affect decisions. It is the franchisor’s responsibility to ensure the understanding is achieved by the planning committee as a starting point for the planning.
Franchise Satisfaction Survey
Strategic planning in a franchise system must begin with an evaluation of the internal situation of the franchise system. A basic understanding of the current relationship between the franchisor and the system membership (individually and as a whole) is an essential starting point for the situation analysis.
The best approach for gaining these insights is a professionally-prepared franchise survey. It should be designed to detail the essential areas of interaction between the franchisor and franchisee. An easily understood quantitative measure area of interaction will be used to determine the relationship’s strengths and weakness. This knowledge provides a solid starting point for the planning to begin with your franchisees.
Using a Planning Professional
Strategic planning with your franchisees will be a major milestone in the system’s evolution as well as a serious commitment of human and financial resources. It cannot be led well by those involved in the business, as they are too close to the daily activities to facilitate an open dialogue and an exploration of alternative courses of action. As with any new endeavor, it is best to have an experienced guide to show participants the way. To achieve value and impact for the system, a professional strategic planner is required. He or she will understand planning methodology, manage sequence of events and be skilled at channeling diverse interests to a common goal.
The planner should be familiar with franchising and have some knowledge of your industry. The planner will not have the answers to your questions, but will be skilled at facilitating the process leading to those answers.
When to Begin?
There is no time like the present. The strategic planning process will take a full year. By beginning today and by letting franchisees know that the system intends to do the planning and have them involved, you will begin to create the excitement and renewed commitment expected from the process. It will be exciting for franchisees and the system because it will reap great rewards.
Philip Friedman is president and CEO of McAlister’s Corp., franchisor of the McAlister’s Deli restaurant chain, operating 170 restaurants in 20 Southeast and Midwest states. He can be reached at 601-952-1100.
Strategic Planning with System Franchisees
It will be exciting for franchisees and the system because it will reap great rewards.
By Philip Friedman
Strategic planning is essential for the long-term success of operating organizations. The best planning is accomplished when the organization’s key constituencies are included. In a franchise system the franchisees are a primary constituency, making it imperative to include them when building the strategic plan.
Franchise systems are dynamic, continuously-evolving competitive organizations, designed to succeed through the accomplishment of shared goals executed by a diverse group of owners. While each system has its own unique business model, all share the challenge of consistent operations directed to a common purpose—one that keeps owners focused on the system’s goals and objectives. As competitive pressure and economic environments change, strategic planning is a tool to keep the system on track to achievement of these goals and objectives.
Franchisee involvement in the planning builds the common purpose required for success as the group gains understanding of the plan’s rationale, develops a personal commitment to its success and learns the execution steps required to make the plan work. Failure to gain franchisee commitment to the plan, and thus their commitment to the system future, would be a major mistake and an opportunity lost.
What is Strategic Planning?
Focusing the decisions and actions required to achieve the common purpose of the franchise system is the responsibility of the franchisor. Systemwide strategic planning, planning in concert with franchisees provides the means to develop decisions and action plans effectively and efficiently. By embracing the concept of strategic planning, the franchisor is starting the process of strengthening the long-term prospects of the franchise system.
Simply described, strategic planning is a process that establishes a franchise organization’s long term direction by:
• evaluating the internal and external situations faced by the franchise system,
• establishing common goals for the system,
• evaluating and choosing alternative courses of action,
• setting near term and long objectives for the system,
• detailing the supporting action plans required to meet these objectives, and
• gaining support and commitment throughout the system through execution of the plan.
Why Plan with Your Franchisees?
Strategy could be done solely at the corporate level and then communicated to the franchise community. This would establish direction as it accomplished the first five benefits of planning detailed above. However, this “corporate down” approach would not accomplish the sixth benefit, losing a major opportunity to build the mutual respect and commitment that comes from working on the process with and jeopardizing the successful execution of the plan.
The importance of franchisee participation can best be described by what it provides for the system:
• an opportunity for franchisees to express their insights on how to best improve the performance of the concept,
• a sounding board for corporate developed initiatives,
• participation in developing strategic alternatives,
• improved systemwide communication and understanding, and
• systemwide commitment to the plan.
Done honestly and correctly the trust and commitment created by the planning process will provide a foundation for the continued growth and prosperity over the years to come.
How Do We Get Started?
Initiating the strategic planning process will require some system preparation as the franchisor and franchisee must come to the process with understanding and open communication. The required preparation includes:
• establishing franchisee representation,
• pre-strategy corporate-level planning,
• gathering and evaluating existing research, and
• franchisee satisfaction and understanding.
Effective planning is done best with a relatively small leadership group made up of approximately four franchisor representatives and four franchisee representatives. If the system has an active committee process the committee members can join the planning team. If such a structure does not exist, the franchisor will have to work with the franchise community to determine the franchisee representatives.
Active Franchisee Committees
Since it will not be possible for all franchisees to participate directly in the planning, a committee structure enabling franchisees to participate through fellow franchisees should be established.
To facilitate representation (for planning and ongoing management of the system) it is best to have established an ongoing communication structure. This can best be achieved through active franchise committees. The committees will have an ongoing business purpose within the system which will prepare them to be involved in the planning work.
For example, at McAlister’s Corporation, there are three active committees representing franchisees in different areas, these being the:
• Franchise Advisory Committee,
• Marketing Committee, and
• Purchasing Committee.
The committees have four to five franchisee members, appointed through elections by the franchisee membership. Each committee meets quarterly operating with a published agenda and follow-up meeting minutes. This working structure provides widespread representation and ongoing communication with the franchisor. The Strategy Committee is the Franchisee Advisory Council. The other committees work on specific components of the plan throughout the year as their work becomes part of the corporation’s business plan. The committees are kept up-to-date on the system’s overall performance and all research being conducted by the franchisor.
Pre-Strategy Corporate Planning
To prepare for the strategy work, the franchisor must engage in pre-strategy planning. This work will establish the goals and objectives the franchisor will bring to the planning table. The corporate business plan will be prepared for presentation to the planning committee. It should anticipate the various franchisee perspectives. The preparation work will include:
• recent performance of the business,
• forecast of the business,
• franchisor’s goals and objectives, and
• strategic initiatives planned by franchisor.
This work provides the starting point for the strategic planning with the franchisees. All presented materials should be considered open for discussion.
An Understanding of Existing Research
Evaluating and understanding existing research will provide valuable planning insight. In the planning process this information provides objectivity and a means to focusing the range of alternatives discussed to affect decisions. It is the franchisor’s responsibility to ensure the understanding is achieved by the planning committee as a starting point for the planning.
Franchise Satisfaction Survey
Strategic planning in a franchise system must begin with an evaluation of the internal situation of the franchise system. A basic understanding of the current relationship between the franchisor and the system membership (individually and as a whole) is an essential starting point for the situation analysis.
The best approach for gaining these insights is a professionally-prepared franchise survey. It should be designed to detail the essential areas of interaction between the franchisor and franchisee. An easily understood quantitative measure area of interaction will be used to determine the relationship’s strengths and weakness. This knowledge provides a solid starting point for the planning to begin with your franchisees.
Using a Planning Professional
Strategic planning with your franchisees will be a major milestone in the system’s evolution as well as a serious commitment of human and financial resources. It cannot be led well by those involved in the business, as they are too close to the daily activities to facilitate an open dialogue and an exploration of alternative courses of action. As with any new endeavor, it is best to have an experienced guide to show participants the way. To achieve value and impact for the system, a professional strategic planner is required. He or she will understand planning methodology, manage sequence of events and be skilled at channeling diverse interests to a common goal.
The planner should be familiar with franchising and have some knowledge of your industry. The planner will not have the answers to your questions, but will be skilled at facilitating the process leading to those answers.
When to Begin?
There is no time like the present. The strategic planning process will take a full year. By beginning today and by letting franchisees know that the system intends to do the planning and have them involved, you will begin to create the excitement and renewed commitment expected from the process. It will be exciting for franchisees and the system because it will reap great rewards.
Philip Friedman is president and CEO of McAlister’s Corp., franchisor of the McAlister’s Deli restaurant chain, operating 170 restaurants in 20 Southeast and Midwest states. He can be reached at 601-952-1100.
Labels: Franchise Opportunity
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