The New C-Suite Position Franchisors Don’t Know They Need

Written by Keith Gerson, CFE – Gerson Advisory Services

As a franchisor, it can feel awkward to refer to your franchisees as customers, right? But by and large – they really are. As the franchisor, you can control the things that are defined in your franchise agreement, but at the end of the day these franchisees are not your employees. Thus, influencing what they do daily and dictating how they run their business is entirely up to them.

The Franchise Experience Conundrum

Most people enter franchising looking for success and a profit. But don’t fall into the trap of assuming that finances are the number one thing keeping them up at night. What is the overall experience that a franchisee has? If you think about the journey of the franchisee, there is a starting point and invariably an ending point. We all would like to think that franchise relationships are forever, but if a franchisee is doing exceptionally well, their goal down the road could be to secure a buyer and exit the business with a profit. They always start out with the understanding that they are new to the business, and they need to learn more about the product, technology, and marketing. However, those notions eventually may turn into things like business valuations and succession plans. Their customer experience has everything to do with where they are at and in what phase they are in of their franchise life. What is their experience when they need help or need a question answered? Is someone ensuring that they are reading the operations manual or suggesting that they may need more training and development?

When you are a brand-new franchisee, the general thought is that at that exact moment and time, you are making the smallest contribution to your franchise organization. You have zero to limited revenues and you are getting a lot of love, support, and visitations from your franchisor. As the franchisor, your main goal is getting this unit stood up and out of the gates in their first year. 

On the other end of the spectrum, you might have other franchisees, often the highest franchise revenue contributors, that end up being the ones that are most unhappy. It’s not unusual to hear a long-term, high performer lamenting the fact that they pay the most money in royalties, put the least demands on a franchise system, yet get less relevant support than new franchisees and average performers. This notion can leave a strain on the relationship they have with their franchisor. Depending on where the franchisee is in their franchise journey, it could require you to apply different tactics and attention to the various customers/units throughout your system.

Introducing the CFXO

The franchisor of the future should be introducing the role of a Chief Franchise Experience Officer (CFXO), the executive who wakes up every morning thinking about “how do we continually improve and deliver a better experience for our franchisees, and why is that important?”. Even Harvard Business Review makes the case that every company should have a CXO – so why not a CFXO?

For starters, the CFXO would be the person responsible for understanding why so many franchisees within a system are operating in the lower performance quadrant, especially given that franchise systems already have franchise business consultants that are (or should be) held accountable for their assigned franchisees results? 

 Is it worth a franchisors time and expense? It is when you also consider that:

  • Many finance companies will not lend to a system or to its franchisees that have greater than a five percent (5%) rate of turnover (aka regrettable churn).
  • Franchisees that terminate must be reflected in the Franchise Disclosure Document (FDD) for a full year after their departure. This includes their name, address, and contact information for prospective franchisees to call when doing their due diligence.
  • The loss of franchisees can have a detrimental impact on the morale of your other franchisees.

The primary role of the CFXO will be to oversee every interaction that a franchisee has with your brand. This will be accomplished with franchisee journey mapping. If you touch the franchisee or you’re supporting someone that touches the franchisee, you’ll need to really understand how to do a journey map along with what the inputs are to that, because it will help create empath, and empathy is so important in moving towards a better future state and a better experience. This will become a core competency, and not a function.

If we look at the franchisee customer experience on a chart to break down each of the steps in their franchise evolution, someone would be assigned and accountable for making sure that each step and experience is the best. Different from the Franchise Success Manager – this person can ensure other positions in the system are accountable for helping the franchisee succeed. Having one person in your organization who knows what to look for and is providing a situational success map for franchisees can help franchisees feel like they aren’t getting help that is “one size fits all”.

Talk to our team today to see how we can help you manage all the aspects of your business, so you can focus on your franchisee’s experience and growth goals.