About FRANdata
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FRANdata is the only source of comprehensive information about franchising:
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Fact‐based research and analysis
World's largest database of franchise information
Tracks and analyzes more than 3,500 brands in 30 industries and 200 sectors
Manages SBA Franchise Registry
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Custom Research: Addresses questions/needs with timely analysis
Reports: Data, analysis, trend forecasts
Complete objectivity: FRANdata receives no advertising or referral fees
World's Largest Library of FDDs
Intra‐day order fulfillment
REPORTS
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Targeted Marketing Services
Competitive Analysis
Issue Analysis and Consulting
Franchisor/Franchisee Surveys
FDDs
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FRANdata’s capabilities are unique in the franchise world
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CUSTOM RESEARCH
Quarterly New Concepts
Monthly New Registrations
Franchise System Credit Risk Analysis
Industry and Segment Analysis
CONTACT LISTS
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Franchisor Management
Single‐Unit Franchisees
Multi‐Unit Franchisees
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Can You Support Performance Claims with Data?
SBA Loan Failures and Real Business Failures
20%
18%
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Educate candidates about your brand’s historic performance
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009
2010
2011
Cumulative SBA Loan Failure Rate since 2001
% units ceasing to operate as franchises through closure, non‐renewals, contract termination or
reacquisition
Real Unit Failure Rate
Sample of 59 food and 41 non‐
Justifying Fees: Prospects Get what they Pay for
Higher IFF = greater number of initial training hours Training Hours
Highest IFF
Lowest IFF
‐
50
100
150
200
250
300
350
*Sample of 41 brands across 11 industries
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Can You Show off Your Initial Training? Average Unit Revenues
$1,800,000
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$1,600,000
Higher IFF $1,400,000
brands $1,200,000
generated higher AUR than $1,000,000
lower IFF brands $800,000
Upfront Support $600,000
= Better $400,000
Performance
$200,000
Higher IFF
Lower IFF
$0
2009
2010
*Sample of 100 brands (59 food and 41 non‐food)
2011
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Your Message: Upfront Support Improves Success
Average Continuity Rates
97%
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Higher IFF brands generated higher 96%
franchised unit continuity rates 95%
than lower IFF 94%
brands
Higher IFF
Lower IFF
93%
92%
2009
2010
2011
*Sample of 100 brands (59 food and 41 non‐food)
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Your Message: Upfront Support Reduces Risk
Real Unit Failure Rates
5%
5%
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Higher IFF brands had lower real unit failure rates than lower IFF brands
4%
4%
3%
Higher IFF
3%
Lower IFF
2%
2%
1%
1%
0%
2009
2010
2011
*Sample of 100 brands (59 food and 41 non‐food)
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Can You Show off Your Support Structure?
Real Business Failure Rate by ZEEs to Field Support Staff
Continuity Rate by ZEEs to Field Support Staff
Above Avg Ratio
Above Avg Ratio
Below Avg Ratio
Below Avg Ratio
Peer Average
Peer Average
95%
96%
97%
98%
0%
1%
2%
3%
4%
FRANdata research
• The more field support staff per franchisee, the higher the continuity rate and the lower the real business failures
• Better support = better performance = better marketing to prospects
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
What Does All This Mean for Development?
• Better informed franchise candidates demand better information
 Break free from the chains of FDD thinking
• You have an Item 19? Great, so do about 50% of mature brands.
 What is going to appeal to better informed and more demanding franchise candidates?
• Support any performance claim with clear examples in the context of your peers
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
HOW DOES SUPPORT RELATE TO LENDING??
Common questions from lenders:
• How do you support your new franchisees through Break – Even?
• How does your training/support re‐sales to non‐franchisees? • What is your protocol in allowing a Franchisee to expand?
• Development Schedules
• KPI Compliance
• “Show me the Money!”
• How do you handle distressed situations?
• Is the lender always a part of the discussion?
• How do you measure stress in an operating unit?
• Do you have a special support function to deal with distressed Franchisees?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
How does your FDD Communicate Training/Support
• Franchisee Selection Process
• How does a non‐industry person learn your systems, processes and industry?
• Do you require “aptitude” or on the job tests to ensure a good fit?
• Do new franchisees participate in other grand openings before their own?
• Expansion Training
• Is there a separate “multi‐unit” curriculum
• Are basic management tools taught for single unit operators?
• Is there a “manage by the numbers” guide used?
• Opening Support
• What is Corporate’s position and basic procedure for support during a unit opening?
• Is there a basic metric used to know it was a good or bad opening?
• How do you follow up to ensure a good outcome?
• How do you handle the “slow starters”?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Supporting Distressed Franchisees
• Is there a defined and documented process?
• If so, what are the triggers?
• How can the lender become a part of the discussion/solution?
• Will you consider re‐marketing for a unit that needs to be transferred?
• Who in your organization is responsible for “fixing” distressed units?
• Is there a SWAT Team?
• Is the lender always a part of the dialogue?
• Do you always know what a franchisee’s balance sheet looks like?
• Do you tolerate “specialty” lenders into your system?
• Merchant Cash Advance
• Other high interest/short amortization products
• How is this process communicated to the lending community, if at all?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
MAKING MORE POSSIBLE:
Compelled by a need to find care that was more — more dependable, more supportive, more complete — BrightStar was founded in 2002 as a family business to provide the full continuum of care.
LIFECARE: adult and elder care.
KIDCARE: newborn care, babysitting and nanny services.
STAFFING: for individuals, families and healthcare facilities.
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
KEY STATISTICS ‐ BRIGHTSTAR CARE
Number of Years Franchising
9 years
Number of Franchise Units
270
Franchise Unit Growth
71% CAGR (2006‐2012)
Number of Company Owned Units
2
FRANCHISEE AVERAGE INITIAL INVESTMENT
$90,378 to $165,676
AVERAGE STORE SALES ‐ FIRST LOCATION ONLY
$1,180,568 **
AVERAGE TIME TO BREAKEVEN
11.1 Months **
AGENCY ECONOMICS Average Sales 2010 $856,322 2011 $1,042,358 2012 3‐Year CAGR $1,180,568 17.4% ** 2013 Franchise Disclosure Document
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Outstanding Franchisee Financial Metrics
Franchise Metrics from 2013 FDD Column1
Franchisee Revenue*
1st Year Performance
$ 366,716
2nd Year Performance
$ 929,569
3rd Year Performance
$ 1,197,479
4th Year Performance
$ 1,442,545
5th Year Performance
$ 1,685,601
6th Year Performance
$ 1,903,984
Average for units open 1 year+
$ 1,180,568
Average time to breakeven*
Average Gross Margin*
11.1 months
BrightStar Care® invests in higher‐quality, trained caregivers. As shown to the left, this investment in quality care is rewarded with excellent financial returns.
41.7%
* First Store Only
Source: BrightStar U.S. Franchise Disclosure Document (FDD), 2013
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Average Location Revenue Trends ‐ 2012
Competitor A**
Competitor B
Competitor C**
Competitor D**
Competitor E
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Focus on Franchisee Unit Economics
1. Training and Franchisor Support
2. Right Support at the Right Time
3. Focus on Metrics
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
2012‐2013 Training Improvements
• Training conducted by Subject Matter Experts who have real-time solutions
based upon their experience
• Added a whole new day on Leadership, including Sales Manager Certification
• New emphasis on having Owners and Salespeople get a clinical foundation
(“transform non-healthcare backgrounds into confident expertise”)
• Train all key roles with 3 separate “tracks”; Huge injection of Clinical
knowledge, energy and leadership
• Added Goals Tool, Routines for Results and Action Plans
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Franchise Support
Specialized Onboarding & Support Team
BrightStart/JumpStart/ReStart Dedicated staff to support new franchisees into the system along with franchisees needing additional support & focus to drive revenue.
BrightStart:
• Enhancing the current BrightStar program to facilitate onboarding, agency openings and quicker revenue ramp ups
• 6 months program focusing on sales & operations
JumpStart:
• 90 day program that includes intensive coaching and accountability primarily focused on the sales function, however, there will be operational support as needed
• Goal of the program is to move the agency beyond the revenue bench mark consistently
ReStart:
• Designed for new franchisees entering the system through a resale
• Similar program as BrightStart but accelerated due to existing operations
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Right Support at the Right Time
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Top 2 Quartiles and/or Established Franchisees:
– Strategic Planning 2‐day sessions with CEO (groups of 10)
– Multi‐unit performance groups
– Expansion financing programs
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Bottom 2 Quartiles beyond 1 Year:
– JumpStart Program
– Resale
– Up or out assessments
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Transfers:
– ReStart Program
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Focus on Metrics – Invest in Business Intelligence
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Define Success Drivers
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Set Developmental Milestone
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Reinforce Performance
Culture
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Framework for Staff
Improvements
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Investing for Excellence
1.
2.
Investment in personnel/leadership and investment in technology (platform for franchisee to run their business (ABS2):
– Twelve full‐time field support employees, at a ratio of one full‐time field support staff per 21 franchised agencies and one per 14 franchisees. 1:3 support to franchisee ratio
– Weekly monitoring of performance
– Team of five to focus on new franchisee launches, franchisees operating below break‐even and transferred businesses. – Monthly franchisee coaching calls; quarterly goal setting calls (field support)
– Best practices calls monthly; Town Hall calls quarterly (leadership)
– How to measure? Franchisor contribution margin (royalty less support costs) and growth trend for franchisee (revenue/week at point of incremental support to revenue/week after program); franchisee KPI – average and median for each field support (sales, GM, overhead labor and EBITDA; NPS)
Specific Process and Support to Address Struggling Franchisees
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Systematic support system allows detection of any struggling franchisees. –
Field support employees nominate struggling franchisees to be enrolled in the JumpStart program.
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How to measure? growth trend for franchisee (revenue/week at point of incremental support to revenue/week after program)
3.
Business intelligence for reporting, benchmarking, and integrated coaching and Microsoft Dynamics Great Plains financial system with standard chart of accounts and reporting
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Effective Development of Your Franchise Support Organization
Keith Gerson, CFE
President of Global Services
FranConnect
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
PATHWAYS to PROFIT
PATHWAYS to PROFIT
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
What’s the role of the Operations Support Consultant?
Drive Franchisee Performance
Drive Franchisee Satisfaction
Ensure Franchisee Compliance
Create alignment DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
What is your ratio of field consultants to franchisees?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
On average, how often do you conduct onsite visits at the local level?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
On average, how frequently do your ops consultants speak with their assigned Franchisees?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
So How’s That Working For You?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Is this communications & visit frequency enough to positively impact franchisee performance?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
How do you rate your franchisees ability to execute as compared to your competitors?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
What is currently your biggest challenge in helping your franchisees improve their performance?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
What Are Your
Operations
Consultants
Bringing to the
Party?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
CEO Strategic Planning, Engagement & Execution
Bain & Company Key Study on Organizational Change
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
CEO Strategic Planning, Engagement & Execution
Comparatively, FranConnect’s CEO Survey Revealed:
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
In short…
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Developing the Operations Consultant:
Ability
Willingness
Knows What to Do
Knows How to Do It
Drive Franchisee Performance
Drive Franchisee Satisfaction
Ensure Franchisee Compliance
Create alignment DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Do You Have a Formal Training Program for Your Operations Consultants & Field Staff?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
How much training do your Operations Consultants get in behavioral management & coaching for improving performance?
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Key Drivers for Operational Success
“Coach the Coaches”
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
COACHING ANALYSIS
"What is Influencing unsatisfactory Performance?"
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
"Steps of the Coaching Technique"
Step 1 Get his or her agreement that a problem exists.
Step 2 Mutually discuss alternative solutions.
Step 3 Mutually agree on action to be taken to solve problem.
Step 4 Follow up to measure results.
Step 5 Reinforce any achievement when it occurs.
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Key Drivers for Operational Success
Coach the Coaches
A Tiered Support System
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Key Drivers for Operational Success
Coach the Coaches
A Tiered Support System
Onboarding: “Days to First Dollar”
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Key Drivers for Operational Success
Weight Franchisee Training For Customer Creation & Retention
New Hierarchy for Effective
Communications
Close the Loop on Open Tasks & Performance Gaps
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Track Open Tasks, Overdue Visits & Outcomes
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Case Study: Aurelio's Restaurants 4th Qtr. QCA Results
• QCA SECTION Avg. Score Avg. Score 90% is Goal
3rd Qtr 4th Qtr
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Food‐Pizza Station Summary 78.07 91.73 ↑
Food‐Steam Station Summary 68.32 85.67 ↑
Food‐Salad Station Summary 74.35 90.71 ↑
Product Sampling Summary 68.74 84.39 ↑
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Complete Audit Summary 75.13 85.86 ↑
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Systems for Improving
Communication/Focus
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
Key Drivers For Operational Success
Track Local Market Spending &
ROI by Franchisee (67% don’t)
Validation & “Referability” (f‐NPS) (SAT)
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA
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DRIVING GROWTH in CHALLENGING TIMES
February 22‐25, 2014 | New Orleans Convention Center/Hilton Riverside & Towers | New Orleans, LA