Whether you’ve built it from the ground up or acquired it, running a franchise can be incredibly rewarding. So it can be especially worrying to see its performance start to slip, to the point that you’ll want to do everything you can to correct things. If you can isolate that dip to specific franchisees, then you’ll be able to focus your efforts and change things for the better.
Here’s how you do that.
Use a territory-mapping app
An often-ignored aspect of measuring franchisee performance? How location intelligence can be essential for territory mapping. Too often, franchisors treat franchise territories as just another box to check as they prepare a franchise agreement. They might pull a few zip codes from a database or draw a quick map on My Maps and call it a day.
However, mapping franchise territories without a dedicated tool can severely impact the performance of your franchisees as well as your ability to accurately track that performance.
That’s where tools like Smappen come in. Smappen is a location intelligence tool that allows you to accurately map out franchise territories based on drive times, zip codes, and more. You can also use it to research your potential customer base in those territories.
With this tool in your stack, you can map franchise territories more accurately and get a better measurement of performance.
Map each franchisee’s coverage accurately
Whether you have a dedicated tool for this or not, it’s important to take the time you need to properly map your franchisee’s territories — ideally before they sign your franchise agreement. Otherwise, even high-performers may find themselves struggling.
And don’t worry, even if your franchisee has already started operating, you can still make changes to their territory — with their consent.
Here are a few techniques that, when combined, will help you properly map territories for franchisees.
Draw isochrone maps to get an initial sense of each territory
An isochrone map uses travel times to map out territories according to real-world conditions — meaning they account for natural boundaries and roads. If you know that your customers usually drive up to 30 minutes to reach one of your franchisees, an isochrone map will give you a rough estimate of their territory.
Use zip codes to check for conflicts between franchisees
With an isochrone map serving as a rough territory, you can drill down even further by assigning specific zip codes to each territory. While you can use free lookup tools to find these zip codes — like the USPS website — it’s a lot easier to do this with a dedicated tool like Smappen, which also allows you to visualize those zip codes on a map.
Check demographic data to evaluate a territory’s potential
While zip codes can give you a better visual representation of a franchise territory, you shouldn’t stop there. To ensure that each franchisee has a fair chance at success, you should dive into demographic data for each area to see how many potential customers they’ll have in their territory. With this kind of data, you can break populations down by gender, income, education level, and more.
Compare territories to avoid cannibalization
Cannibalization refers to losses in sales that occur when two locations in a franchise are competing for the same customers. While a bit of cannibalization can be good for some franchises, it’s usually something you want to avoid. With the franchise territories you’ve mapped out using isochrone maps and zip codes, you can compare multiple locations to check for cannibalization. A little overlap between isochrone maps might be fine, but too much overlap will see franchisees competing with one another.
It can seem daunting at first, but combining these approaches is essential to creating standardized territories that give your franchisees the best chance to succeed.
Calculate and compare market penetration for each franchisee
Market penetration lets you calculate how many potential customers in your territory have purchased your product or service and how many you still have to reach. While other numbers — like topline revenue and overall profits — can give you insight into a franchisee’s overall performance, market penetration can give you more to work with.
If you find that a particular franchisee has only achieved low market penetration, you can help them focus their efforts on customer acquisition. Conversely, high market penetration with stubborn low performance could signal issues with the territory itself or the franchisee’s logistics.
Calculating market penetration is as simple as knowing the number of customers your franchisee has, figuring out the size of their total target market, and using the following formula:
Market penetration rate = (Number of customers / Total Target Market Size) x 100
Compare the rate between each franchisee and you can get a better idea of what high and low performance look like.
Talk to franchisees about their performance
While you can look at the numbers and get a pretty good understanding of a franchisee’s performance, it won’t give you the full picture. That’s why one of the best ways to improve their numbers is to take the time to visit and speak with franchisees, hoping to work with them to increase performance.
Get their perspective
You may already have ideas about why your franchisee isn’t meeting their quota. But before you start sharing your theories with them, you should take time to learn about their operation, the problems they’re facing, and why they think their performance isn’t where it should be.
You might learn that the neighborhood they’re operating in has seen an increase in crime rates that make customers unwilling to make the trip. Maybe one of their suppliers isn’t as reliable as you thought. Or a high-performing employee has had a personal issue that’s affected their work.
When you’re looking at spreadsheets, there’s a lot you can miss. Giving a franchisee the space to share these issues can help you figure out if low performance is a pattern or a blip.
Review local marketing efforts together
As a franchisor, you may have a ton of experience that individual franchisees don’t have, and one of your roles is using this to give them support and guidance. With that experience, you can sit down with an underperforming franchisee and review their local marketing efforts.
Local marketing covers any location-based marketing efforts a franchisee might be carrying out in their territory, from canvassing the neighborhood with salespeople to building partnerships with local complementary businesses.
For some industries, these marketing efforts are some of the most important for bringing in customers, so any help you can give your franchisees will go a long way.
Help them optimize logistics and strategy
For brick-and-mortar businesses that manufacture, ship, or sell goods, logistics can make the difference between a healthy bottom line and a failing business. For e-commerce businesses, the amalgamation of suppliers, online platforms, and fulfillment centers can create its own logistical headaches.
So how can you help?
That depends on just how involved you want to be. You could go through every step of their logistics with them, looking for inefficiencies and opportunities for improvement. Alternatively, you could show them some of the tools you’ve used to improve logistics for the overall franchise, and that might be enough to help them turn things around.
Make every franchisee a high-performer
Struggling franchisees aren’t a lost cause. By spending some extra time getting to the bottom of their struggles, asking for their side of the story, optimizing their logistics, and working with them to improve their marketing efforts, you can turn even your lowest performers into superstars. Pair that with a location intelligence tool like Smappen, and you can do it in a fraction of the time.