Having a stable group of franchisees can often lead to greater performance and overall success of the brand.

By Peter Baldine

The many benefits of the franchise system have been well documented, as each year it gives thousands of talented entrepreneurs the support they need to successfully run their own business. One aspect of franchising that tends to fly under the radar is the reliability of service customers receive that comes through many years of consistent ownership at a given business location.

Franchise Business Review, a market research firm, conducted a study of 30,000 franchisees representing 334 brands between May 2015 and November 2016. It showed that 26 percent of franchisees have owned their business for 10 years or more. That was an increase from its previous study five years beforehand, when 19 percent of franchisees had owned their business for 10 or more years.

This growing trend in franchising comes during a time in which job-hopping seems to be the norm in most other fields. Times have certainly changed from when workers stayed at their jobs for 35 years and retired with a gold watch. According to a report released by the U.S. Bureau of Labor Statistics in 2016, the average number of years a worker has been with their current employer is 4.2 years. 

Unfortunately, frequent employee turnover can have a negative effect on a business. It decreases morale and overall efficiency while costing money to hire and train new staff. Workers showing job instability on a resume can be viewed critically by recruiters, hurting a chance at their dream job. In contrast to the fallout from employee turnover in many other fields, franchising is providing people across the country the opportunity for greater career stability and long-term relationships in their business community.

The Moran Family of Brands, which provides general automotive repair, transmission repair, window tinting and driver safety products, is an example of a company with a large percentage of long-tenured business owners throughout its system. Moran features:

• 32 franchise owners in its system (27 percent) who have worked 20 or more years at their current location,

• 20 franchisees with more than 30 years of service,

• Six franchisees who have spent at least 40 or more years at their shop, 

• Later this year, two franchisees will celebrate 50 years of service at their respective locations.

Moran has been able to profit and grow through the stability of the franchisees in its system. It has also led to success at the individual market level, as stores can offer consistency of service and a feeling of familiarity to their customers.

When a business owner enters your system, it is important that the franchisor builds a strong company culture to keep them feeling valued and satisfied. This builds trust with your franchisees and can lead to a successful, long-term relationship for each party.

Keep Franchisees Informed and Engaged

One important way franchisors can make owners in their system engaged in the direction and development of the company is through frequent dialogue that encourages feedback. Franchisees feel appreciated and empowered when you have open communication and keep them involved in your plans and decisions.

One example of a way in which Moran communicates with its people is through the company’s Franchisee Advisory Board. Each year, eight owners are elected by their fellow franchisees to meet on a quarterly basis at Moran’s corporate office in Midlothian, Ill. In these meetings, we discuss things such as the state of the system, creative marketing and operational plans. We provide franchisees with company updates and information, but just as importantly, we listen to them. While it does provide them with a voice and feeling of appreciation, we also learn a great deal about day-to-day business as it is the franchisees who serve as our front line. 

Moran’s meetings are productive and we use this as a method of improving our company on many different levels. In addition, we and most other franchises hold regional meetings and conventions, which gives us a chance to meet and interact with franchisees directly. These are excellent opportunities for franchisees to meet, network, receive updates and offer feedback that can only help all involved throughout the system. 

Several years ago, Moran underwent a rebranding of the Alta Mere Automotive Outfitters division, which features high-tech automotive accessories and driver safety products. Although we had some ideas going in, we wanted to involve longtime franchisee Greg Goodman in the process. We asked for his recommendations of what would be his ideal showroom and help sell products to his customers.

Goodman provided some valuable advice, and his franchise in Oklahoma City served as the model store for the rebranding. He suggested a more streamlined and visually appealing look, which featured digital menu boards with interactive displays and automated updates.

“Moran listened to my recommendations about what would make a successful rebranding,” said Goodman. “For them to come to me and ask for my input on such a major plan made me feel like I was valued as a franchisee.”

The Importance of Franchisee Retention

Having open communication with franchisees and keeping them involved in company decisions goes a long way in keeping them satisfied. It is also understandable that this feeling of satisfaction plays a major role in retaining franchisees in your system over long periods. But why is retaining franchisees so crucial to your business success? There are several important reasons.

The most effective franchisors are able to build relationships and strengthen the bond with franchisees over time. This comes from getting to know their owners, their strengths and weaknesses, and what they need to be successful. The relationships grow over time through frequent and consistent communication in phone calls, meetings and conference attendance. 

As this relationship grows, so will the trust between both sides. The franchisor can evaluate the performance of its owners and know they will drive successful operations at the local level. The franchisee learns to trust the direction from corporate and follow the company’s business model, which leads to strong unit economics. It is easy to see that the more success the franchisee experiences, the more likely they will sign renewal agreements and stay in the system.

Strengthening the Bond

Perhaps the most important advantage of having franchisees work at their location for many years is the benefit to the customer. Just as the bond between the franchisor and franchisee strengthens over time, so does the owners’ relationships with their customers. Think about why you brought your car for service at a particular location most recently. It is probably because the owners have earned your trust and loyalty through their past service. While this is especially true in the auto repair industry, the same goes for anyone in the service business.

“Many of our customers have been coming to us for years and know exactly what to expect with consistent, reliable service,” said Jay Pond, a Mr. Transmission franchisee in Jackson, Miss. who has worked at the location for 33 years. “We’ve also enjoyed great stability among our staff, with several employees having been here for more than 20 years. A business is only as good as the people that work there, and I believe their performance has a direct impact on the close relationships we have with our customers.”

While it is always nice to have consistency within your system, having a stable group of franchisees can often lead to greater performance and overall success of the brand.

Peter Baldine is President of Moran Family of Brands. For additional information about franchise opportunities at the Moran Family of Brands, visit franchise.org/moran-family-of-brands-franchise.

Search