Adding value to your tenured franchisees: enhancing the value of the businesses we serve through financial analysis, accountability and the knowledge gained from each other.

Scenario: Tomorrow you have a meeting with the largest franchisee in your system. They are your top performer, a model for their peers. They are the largest because they do everything right. They embrace all of your new programs faster than anyone else and implement them more effectively than anyone else.

So why are you so uneasy about the meeting? Maybe because you know they are going to challenge you, just like they challenge themselves. They want you to do more for them, and why shouldn't they? They pay you more royalties than anyone else. Everyone else in your system is inspired by their leadership.

At Allegra Network, we believe that a constant focus on growing the value of every business in our system will result in happy, healthy franchisees regardless of size or sophistication.

That seems straight forward enough. We can enhance the value of many of the franchises in our network by simply implementing new marketing programs to increase sales. Some have reasonably high sales, but their business can be made more valuable by improving the efficiency of their operations to improve profitability. This is a little more challenging but, frankly we can generally address it by ensuring they are developing excellence in the execution of the basics.

The Best Want More

Okay, now we have growth and profitability. But, our best franchisees want more. They want us to lead them to greatness. And every year their definition of greatness changes to something greater than it was the year before. We believe we have found a way to lead them to the greatness they desire through performance groups which give us the ability to realistically assess the current value of each business and a process to take that value to the next level.

Performance groups began as a way to improve the profitability of large franchisees but have grown far beyond that. Today they are ranked by our franchisees as the single most important support activity we provide. Nearly every one of our large franchisees is a member of one even though it requires more expense, more time and more work from them than any of our other programs. While we developed the concept with our largest franchisees in mind, today we have nearly half of all franchisees participating in one.

Performance groups are under girded by our annual operating ratio study, which provides valuable benchmarks for the financial performance of our entire system. We also conduct comprehensive assessments of individual franchisees (at their request) which provide specific recommendations for addressing key issues. While the combined effect of these three activities is very powerful, performance groups are the key to getting meaningful results.

Small Group, Like Minds

A performance group is made up of a small group of like-minded franchisees led by a staff facilitator, usually a regional director. Each group meets for two days twice each year. In the course of that meeting, every member of the group reviews their business with their peers and receives recommendations for the growth of their business. Typically, we rotate the meeting sites through the group with a member of the group acting as the meeting's host.

The ideal number of franchisees in a group is six. A few groups with five and a few with seven, but the group dynamics with six is almost magical. With six, everyone is assured of getting both a large enough share of the group's time and a significant amount of input from their peers.

For the input to really be meaningful the franchisees need to be "like-minded." That means they need to be of similar sales size. To really maximize the value of the interaction between franchisees they should be facing similar issues in their business. In our case, size dictates that more than any other factor.

Meetings typically begin by touring the host franchisee's location. The tour gives the group the opportunity to view the facility, meet the staff and see the business in operation. After the tour, the group will generally move to a hotel conference room to begin the actual meeting. The discussions begin with an overview of the agenda by the facilitator followed by the review of the host business. The host will present an update on the status of their business which includes a discussion of key issues they are facing in each of the following five areas:

1. Financial performance

2. Sales and marketing

3. Staff

4. Technology

5. Facility

As the host discusses these areas, the rest of the group acts as a board of advisors and asks questions to gain an understanding of the issues and then makes recommendations on how to address each issue. As recommendations are made, the facilitator works to shape them into specific recommendations that can be used to build an action log. Upon the completion of the discussion, the facilitator reviews the recommended actions with the presenting franchisee to gain commitment to add them to their action log.

The host generally has the most discussion time, ranging from one to three hours. Once the host is done, the group holds a similar discussion for each of the other members in turn. They each typically have approximately two hours to discuss their key issues. At the conclusion of the meeting we provide an action log for each franchisee to help them increase the value of their business.

The Element of Accountability 

The first time a group meets it spends a considerable amount of time building relationships and gaining an initial understanding of the key issues facing each franchisee. In subsequent meetings the group becomes both more effective and more efficient. Most importantly, we introduce the element of accountability. Each franchisee must begin the discussion of their business with a review of the action log from the last meeting. That single element might be the strongest part of the value. Knowing that you are going to have to face respected peers who you made a commitment to and give an accounting of your actions provides powerful motivation for completing that action log.

What we're really doing when we establish the pattern for a group is creating a continuous improvement process. Every six months we meet to:

* Be accountable for the actions we committed to last time.

* Review our current performance and discuss our key issues.

* Decide on how to address those issues.

* Commit to taking action.

I believe performance groups are so important that I have facilitated a group for the past five years. It began with seven mid-sized franchisees making a commitment to work together. They have grown into some of the largest, most sophisticated businesses in our system. Along the way we have faced serious issues so personal that tears have been shed, new ground has been broken and new standards have been set for the rest of our system. We've even had a little too much fun on occasion. I am more valuable to my franchisees as a result of the experience.

The key to driving continuous value to our largest, most sophisticated franchisees is this continuous improvement process we call performance groups. In addition to very effectively moving each of these businesses forward, we find that our franchisees make better use of our other support programs, are more positive about what we are doing for them and build strong enduring relationships with each other which, in turn makes us a stronger, more valuable franchise system.

Steve White is the executive vice president of printing franchise Allegra Network. He can be reached at 248-596-8600.