The true competence of a franchisor is revealed through three major pillars: mastery of growth, operational excellence, and an unwavering focus on return on investment (ROI) for franchisees.
Today, let’s delve into operational excellence.
Why is it crucial to develop and maintain a culture of operational excellence within your franchise network?
Going beyond superficial answers, let’s closely examine the multiple facets that establish operational excellence as an unassailable foundation of your success.
Customer Satisfaction
A meticulously crafted culture of operational excellence serves as the cradle for fostering customer satisfaction. By ensuring a consistently exceptional customer experience, you forge a strong and loyal bond with your clientele. Every interaction becomes an opportunity to establish enduring trust, setting off a virtuous cycle of repeat business and fruitful referrals.
Facilitating Recruitment, Integration, and Therefore Retention
Operational excellence isn’t just a guarantee of quality service. It transforms into an irresistible magnet for attracting talent and potential franchisees. When your network stands out for its relentless attention to detail and unwavering rigor, attracting committed partners and collaborators becomes a straightforward task. Furthermore, a robust operational culture facilitates seamless integration of newcomers, ensuring their long-term retention.
Uniformity
A culture of operational excellence injects vital uniformity into every execution across the network. Practices, standards, and values become the foundational pillars underlying each franchise. This uniformity ensures not only brand consistency but also solidifies the identity and recognition of your brand through every interaction.
Productivity
When each operational process is optimized and adhered to rigorously, productivity is inevitably enhanced. Inefficiencies diminish, downtime is minimized, and resources are allocated judiciously. This boost in efficiency directly impacts financial results and fosters an environment where creativity and innovation find fertile ground.
Profitability
Operational excellence isn’t limited to being a mere lever of efficiency; it translates into a substantial elevation of profitability. By optimizing every process, every interaction, you generate stronger profit margins. Unnecessary costs are reduced, value addition is maximized, and your franchisees reap the rewards of an agile and high-performing operational model.
Is Investing in Operational Excellence Worth It?
Asking this question is already answering it, isn’t it? Still not convinced? Allow me to present an example:
Let’s consider ABC Fast Food Restaurant:
Annual Sales: $1,000,000
Number of Annual Transactions: 60,000
Salary Costs: 27%: $270,000
EBITDA Before Owner’s Expenses and Financing: $200,000
Assuming an isolated hypothesis from other factors: Operational excellence positively impacts key variables by 1%:
Additional Average check: $0.17 = Additional Annual Sales: $1,020
Additional Number of Transactions: 600 = Additional Annual Sales: $10,302
Total Additional Annual Sales: $11,322
Additional Gross Profit of 65%: $7,359
Salary Cost Reduction due to Retention: $2,700
Increase in EBITDA: $10,059 = +5%
Hence, if operational excellence influences key variables by just 1%, EBITDA increases by 5%. Quite impressive, isn’t it? This simple illustration should already stimulate reflection. As an executive coach, I consistently work with clients on this fundamental strategic variable, and each time, the efforts invested yield positive returns that surpass even the most pessimistic projections.
Foundations of Operational Excellence Leadership undoubtedly plays a pivotal role in establishing operational excellence. This leadership takes shape when certain fundamentals are ingrained daily in the actions of franchisees.
The 5 Fundamentals of Operational Excellence in Franchising
Definition and documentation of franchisee roles and responsibilities
This allows the franchisor to confidently delegate the responsibility of leading a franchise. This includes creating and updating a comprehensive operations manual and a training system.
Annual Success Plan for Each Franchisee
A key tool to align mutual efforts and validate the franchisee’s capacity and willingness to succeed in their business venture. Regular training and evaluation of the network’s “coaches” These coaches are trained in emotional intelligence, communication, leadership, etc. Above all, they must be business coaches.
Regular Training and Assessment of Network Coaches
These coaches undergo training in emotional intelligence, communication, leadership, etc. Above all, they are expected to be business coaches.
Documented Performance Audit System
Each franchise undergoes a comprehensive audit at least 4 times a year, going beyond technical standards to include key performance indicators and customer evaluation of excellence.
Documented and Effective Human Resources System
The franchisor must provide quality support to assist franchisees in recruiting and integrating their employees. Stronger teams ensure operational excellence.
Do not jeopardize the Value of your brand
For the franchisor, operational excellence undoubtedly rests on these 5 fundamentals. Without them, mediocrity creeps in, the brand is at risk, legal liabilities increase. Without operational excellence, the franchisor jeopardizes the businesses of their franchisees, their own, thus annihilating value creation. Each recipe is unique to each, but to become a world-class franchisor, a culture of operational excellence stands as a passport to guaranteed success.
