By Angela Cote, Founder and CEO of AC Inc

There is hidden profitability in every franchise system — yes, even yours! And the best part is you can unlock it, improve it, and open new areas of growth for your business. How cool is that!? 

Every franchisor is focused on increasing shareholder value, whether the shareholder of that system is you, or whether you report to the owners of the company.

Typically, when we talk about growing revenue and increasing shareholder value, we usually talk about adding more locations to your system or unit expansion. But there is a second, arguably more sustainable and important way to increase shareholder value — and that is where we find the hidden profitability potential. 

What is This Hidden Profitability? 

Happy, profitable franchisees are the hidden profitability in every franchise system. When franchisees are engaged, profitable, and satisfied, several things happen: 

• The system royalties increase 

• Franchisees become ambassadors, improving brand reputation 

• Franchisees spread the word about the franchise opportunity

 • Coaching helps brands stand out in recruitment

Unfortunately, franchisors have historically struggled with how, and why, to prioritize the support and coaching of franchisees for success and improved profitability. The trend is changing, however, and many forward-thinking franchise companies are implementing modern, strategic support for franchisees that focuses on improving the operational leverage of the company as well as unit expansion for growth.

Strategic Growth Coaching for Franchisees 

Now that we know what the hidden profitability is, the next step is to figure out how to capitalize on this new avenue for system growth and improved shareholder value. The answer? Supporting your franchisees strategically for growth.

Traditional franchisee support covers a broad range of methods including online training, a resource library, a franchisee hotline, and so much more. The list above describes operational support — the kind of support that helps franchisees run their business smoothly day to day. This is great for putting out the daily fires of running a business but doesn’t address things like planning for ongoing business growth and business skill development. 

The next level in franchisee support is to provide strategic growth coaching for your owners. Coaching takes a proactive approach to franchisee support and is the biggest driver behind improving your franchisee profitability. 

Strategic growth coaching (or field coaching) for franchisees includes:

• Understanding each franchisee’s individual business goals 

• Working with the franchisee to map out a strategic plan 

• Having a framework to use the same coaching method with all owners

 • Fostering and maintaining accountability to action steps and goals

 • Business skills training and coaching for professional development

Hiring a Field Coach 

When it comes to implementing ongoing franchisee coaching, the best practice is to hire a specific franchisee support role (field coach) to proactively coach your owners. 

As you look to hire this role in your system, here are some traits to look for: 

• Passion or understanding of the brand (not necessarily the product or service offering as that can be taught).

 • Business experience — previously owned or worked with small businesses. 

• Coaching and people skills — knows how to build credibility with people. 

A common mistake when it comes to hiring a field coach is to view the role as a “junior” position instead of a valued, highly important role. In fact, this role is ably the most important in the entire system because happy, profitable franchisees are the number one driver of company success. 

When companies hire field coaches in a junior position and don’t provide highly effective training for the role, it may lead to poor performance, unhappy franchisees, or a fragmented relationship between franchisees and the home office.

Franchisee Coaching Framework 

After you have the right person trained and designated as the franchisee support role, the next step is to establish your coaching format. Some of the most common franchisee coaching formats include: 

• In-person or virtual — typically mostly virtual. 

• One-on-one or group coaching. 

• Peer-to-peer performance groups or roundtables. 

Outsourcing vs Insourcing

There is still the decision of whether to bring on a third-party expert or establish your franchisee support internally. Depending on your circumstances, here are some key points to consider: Pros of Outsourcing 

 A third party can bring a fresh perspective, energy, and a proven method for implementing franchisee coaching successfully. 

• Due to the unique nature of the zee/zor relationship, franchisees tend to trust the advice of a third party more than they trust the advice of a franchisor. Pros of Insourcing 

• Not all third parties have an in-depth understanding of franchising and the unique zee/zor relationship, which can lead to coaches rallying against the franchisor with the franchisee. 

• It’s nice to have your coach in-house instead of relying on an outside expert. The best case scenario is outsourcing initially and getting expert support to build an internal coaching team.

Whether you decide to insource or outsource, implementing strategic growth coaching for your franchisees will help you unlock the hidden profitability in your system, stand out in your franchise recruitment, and create more success in your franchise development.

ABOUT THE AUTHOR 

Angela Coté is the CEO of AC Inc. and has been in the franchise industry for 25+ years on the franchisor, franchisee, and field side. AC Inc helps brands improve their franchisee profitability through best-practice field coaching, education, and training. Join the AC community at angelacote.com