All franchise businesses are expected to have performance gaps. No one is perfect 100% of the time. Every business has common areas where it can improve its performance, and if they have the correct information, it can learn what areas need improvement and make those changes to help its business success.

The biggest reason why many franchises struggle is because they don’t know what it is that’s causing them to get stuck and unable to achieve scale. In that case, franchise scorecards will quickly offer data-backed performance statistics to help you understand the gaps and opportunities to allow you to engage in productive conversations that improve performance at the outlet level.

Read More: Develop Franchise Scorecards to Maximise Franchise Units Performance

Franchise scorecards allow both franchisors and franchisees to keep an eye on their performance and key metrics, empowering all to analyse and improve. Franchise Scorecards light the way and allow conversations to be based on a single source of truth and should illuminate in its simplicity.

Yet the question is, what key areas of franchise performance do we look for when we discuss franchise scorecards?  In this article, we’ll discuss metrics you should monitor and look at when evaluating how your brand performs across its various outlets.

1. Store Financials

Franchisors routinely monitor net sales during periods, from hourly and daily to quarterly and annually, depending on the system. But they also review elements such as average check size, percentage of sales of a specific category, or percentage of sales from a particular source, as these are easier to compare across the system. In addition, broader issues like Revenue per sqft, cost of goods, investment in human resources, and additional expenses contribute to the franchise unit’s performance.

2. Store Management

Franchisors often represent the brand through physical stores. How each franchisee manages the individual store and offers the service directly reflects the overall brand. The importance of ensuring franchisee compliance in every key performance area cannot be emphasized enough. More explicit performance guidelines must be created and communicated to know how well a franchisee manages its stores. After that, the franchisor must implement audits in each store to ensure compliance and discover gaps within the franchise management system. When the store management audit metrics are strong, franchisees have a stronger chance of representing the brand well and replicating franchisor’s best practices to operate their units successfully.

3. Employee Performance

What are the factors that affect employee performance? Employees are the backbone of delivering successful service and products to our customers. Tracking the factors that affect the team’s performance outcomes is essential. Key areas like training and development, employee engagement, and recognition are key factors that affect employee performance, whether from the franchise headquarters or the franchisee units. Operation management tools like audit management, process management and learning management systems help to plan, schedule, implement and help franchise managers produce value-added reports. Employees need to know what they need to do, how to conduct these customer-related tasks, when they need to do it and how to handle difficult situations when required. Including these employee performance tracking metrics on the franchisee’s unit performance scorecards will give the franchisee and franchisor a guideline on how well the franchise unit is performing regarding the store-related employee performance.

4. Customer Experience

When customers patronise a brand, they expect the brand owners to deliver upon a brand promise. When customer experience does not live up to the brand promise, regardless of whether this experience happens in a franchisor or franchisee-owned outlet, the brand equity hits the brand value. Although single lapses do not immediately cause the business to experience pain, frequent lapses in customer experience delivery can cause brand equity erosion. Eventually, these lapses start to erode the revenue and following that, the bottom line will also feel the pain. Therefore, monitoring and improving customer experience is essential, and unit-level franchise scorecards can track critical customer interaction areas through Front of store Mystery shopper audits.

5. Internal processes

Franchisees acquire franchises because a franchise system offers not only the ability to leverage the brand name and what it promises but also the efficiency of the franchise’s internal operating processes. Every brand has business operations processes that must be observed to ensure each part of the business follows the proper standard Operations Protocol (SOP) and that no critical steps are left out. Within each step, crucial business information may be captured and presented on the franchise scorecard. For example, the pertinent information may relate to speed, number of steps, value stream etc. Once key success factors are identified, benchmarks can be set on the scorecard and regularly assessed across various time periods. When presented holistically against an overall network benchmark, this information can allow the franchisor, Franchise manager and franchisee to glean valuable insights on improving overall performance to increase productivity.

CONCLUSION

If you do decide to use a franchise scorecard as part of your brand, make sure you keep track of the five metrics we discussed here. These are just some of the key metrics that you should be looking at when evaluating how your brand is performing, and they will give you a good idea of where to start focusing your attention.

Ultimately, the greatest value derived from consistent use of these franchise scorecards is to alleviate the anxiety surrounding franchisor-franchisee accountability and transparency in growing the business. Identifying the right performance metrics, which, if tracked and analysed on a regular basis, can help them benchmark their performance against their own corporate goals.

By focusing on these franchise scorecard metrics, you can improve operational efficiencies and ultimately drive profitability across the franchise network so your business can grow better and achieve operational success.

Read More: Successfully Grow Your Brand with a Complete Franchise Management Software  – TreeAMS