Franchising World June edition




By: Shelly Sun

As a CEO of a growing franchise, I am always looking for another tool to help my franchise system. At this year’s International Franchise Association Annual Convention, IFA released OnTrack-Performance Benchmarking for Franchisors. OnTrack easily allows me to identify the areas of my business where I can improve   and I am not the only one. By early April, OnTrack had over 120 registered users, and this is more than 10 percent of IFA franchisor members. 
When I first heard about OnTrack two questions came to mind: “What is it?” and “How can it help my company?”   

What is OnTrack? 
OnTrack is IFA’s newest service to franchisor members. It is a sophisticated Web-based benchmarking tool that allows franchisors to compare their franchise to a group of other franchises. The task force of IFA members did a great job of boiling down the assessment to the most important questions. This means that in about an hour of information   gathering and data entry, I was getting back valuable information on my company’s key performance indicators or KPIs. 

Besides providing an easy-to-use interface that generates analysis for sales, expenses, employees, and best practices, OnTrack allows you to compare the performance of your franchise system to data gathered from other franchisors. OnTrack’s filter feature allows you to choose the characteristics of the companies your system is compared to. 
How Can OnTrack Help My Company? 
The simple answer is that it helps me improve my franchise system. OnTrack’s 24/7 interface provides me with metrics on lead costs, expenses and employee allocations when I need them. 
The “Compare Companies” and “Reports and Charts” features allow me to dig into my system’s KPIs and examine our efficiencies. The “Filters” feature raises this analysis to the next level by enabling me to fine tune the characteristics of the companies that I am comparing with my system. Through filtering companies by system size, business category, total revenue and years in franchising, not only am I provided with the most relevant data for my business today, but I can test hypotheticals and see how my system would compare to groups of companies with different characteristics. Therefore, OnTrack not only lets me evaluate where my system is today, but it helps me map where we are going.    

The First Three KPIs I Look At 
To me there are three primary KPIs that I look at first: operations expenses as a percentage of revenue, sales per domestic franchisee-owned unit and royalty revenue per domestic franchisee-owned unit. 
I look at the operations expenses as a percentage of revenue because it allows me to evaluate scalability over time. I recognize, but want to validate, that as we drive our franchisees results and in turn grow our royalties, that our operations expenses as a percentage of revenue decreases. This allows me to measure productivity and the effectiveness of the investments we are making. 
The sales per domestic franchiseeowned unit KPI is important to me because it holds me accountable for driving a better than average return for franchisees and allows me to challenge myself and my leadership team to be the outlier at the top of the curve. 
The royalty revenue per unit KPI enables me to ensure that our growth is balanced and not dependent on franchise fees from adding new franchisees. I want to ensure that our system is healthy for the long term by keeping royalty revenues at or above average for our closest comparables. We will use this to drive investments to ensure that the majority of our revenues are from royalties and this only improves over time. I also compare this KPI with the total franchise operations expenses per domestic franchisee-owned unit to look at the contribution margin per unit driving the health of my system and ensuring that revenues are increasing and expenses per unit are decreasing over time. 
I have been very impressed with OnTrack, and it has proven to be the   right tool for my business. When you are preparing to do your benchmarking, I encourage you to start with OnTrack, because it can help you as it has helped me and my business. Furthermore, OnTrack is a free benchmarking service for IFA members. Can you pass up an opportunity that in just an hour could be providing you with such valuable insights? 

Shelly Sun, CFE, is CEO and co-founder of BrightStar Franchising, LLC and an IFA board member. She can be reached at 877-777-7110 or 

info@brightstarcare.com

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