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Posted on Jan 02, 2011

The Common Thread For a Successful Franchise System: Leadership

Several common attributes are shared by all successful franchise systems. One of these is strong leadership. I mention this fact with some level of hesitation. One would think that with the constant onslaught of leadership books and emphasis on leadership skills in American business, citing leadership as the one necessary factor to success in franchising would be old news.

If so, why does strong leadership remain elusive at many emerging (and sometimes mature) franchise systems?  The good news is that there are no complex formulas that would require a PhD to understand. Based on our research and observations, successful franchise leaders share the following nine characteristics:

  1. Understand The Importance of A Strong Franchise Brand - Many established franchise systems allocate significant resources to building, enhancing, perpetuating and protecting their brand. Unfortunately, too many founders of emerging franchise systems fail to spend the time and resources necessary to develop a powerful and well thought out brand strategy. Why? Either they think their franchise brand is "good enough" or it's a question of priorities for limited resources.
  2. Know Their Numbers - To state the obvious: franchisees that make more money are generally happier than franchisees that make less money. Strong leadership understands the importance of providing an adequate return on investment for both the franchisee and the franchisor. This requires not only an emphasis on building top line sales, but also protecting the bottom line with adequate cost controls.
  3. Willing to Let Go and Delegate - A company's growth often increases the demands on a founder's time and leadership abilities. The fast growing emerging firm often grows faster than the abilities of its founder. Often the problem is simply that the founder has trouble letting go of his or her precious "baby". Founders need to delegate the $10 - $25 per hour work to other parties so they can focus on the $250 - $1,000/hr work.
  4. Recruit the "Right" People - The best companies allocate capital to hire the right people in anticipation of growth, not as a response to growth. As a corollary to the above attribute, the company must have the right people on board in all functional areas such as operations, finance, sales, marketing, IT, recruitment/HR and risk management. A good leader works hard to get this accomplished.
  5. Communicate Effectively - Does the leadership team communicate with employees, franchisees and outside partners in a positive, yet effective manner? Good leaders regularly communicate using a host of methods including phone, email, in-person meetings, informal gatherings and educational sessions. Do they take feedback from people "in the trenches" seriously?
  6. Foster a Positive Corporate Culture From Day 1 - Good leaders create a strong, positive corporate culture from the time the first employee is hired. Has the management team defined a clear mission statement, vision and set of principles that everyone agrees to play by? Does the leadership team empower its employees, franchisees and other business partners to do the best for the organization?
  7. Focused/Productive - Leaders and team members must be organized and focus on getting the right things done, efficiently and on time. David Allen, in his seminal book, Getting Things Done does a good job in describing this important ability.
  8. Obsessed With Continuous Improvement and Lifetime Education- Every year, new franchise concepts come on the scene in every industry group adding to the level of competition. Strong leadership thwarts the competition by finding ways to improve operational performance in key areas whether it's by making fewer errors, increasing customer satisfaction, higher quality products, lower costs, or other areas.
  9. Seek Balance - Making money shouldn't be the only driver. True leaders are able to not only balance their own personal and work lives, but help employees and franchisees do the same.

Tim Howes is an Assistant Professor of Management at Johnson and Wales University where he designs and delivers finance and entrepreneurship courses. In addition to his academic duties, Tim has spent the last 11 years developing emerging franchise systems in over 25 industry groups. Reach him at timothyhowes@comcast.net

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