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The KPIs Your Franchise Can’t Afford to Overlook

The importance of measuring and engaging with your Franchise’s data can not be overemphasized. The insights gained from your company reporting are vital to the ongoing growth and development of your business from every angle. This blog post is dedicated to exploring the crucial KPIs that every franchisor and franchisee should be monitoring to ensure the most informed decisions are made toward increased profitability and wealth generation.

Gross Sales as a Franchising KPI

1. Gross Sales

There is, and always will be, a strong emphasis on gross sales as an important KPI to monitor. After all, this is the metric that Franchisors use to calculate royalty fees. For the Franchisee, this KPI should be compared to your past performance and evaluated for growth, instead of simply compared to another unit’s gross sales. That being said, from the standpoint of the Franchisor, it can be useful to collaborate with your franchisees that have higher gross sales to see what strategies they are employing to produce those increased sales.

2. Rankings

The true benefit of rankings will show you which Franchisees are successfully implementing strategies and serve as an example to be replicated. A franchise is not a competition, but rather a means of wealth generation that will lead to increased quality of life for all parties. Establishing rankings as a motivational (not punitive) tool and focusing on which Franchisees are growing is just as important as recognizing the top rankings holder's hard work and success.

Profit Margins as a Franchising KPI

3. Profit

This metric is the true evaluation of financial success and the most important KPI to consider, regarding your revenue and ongoing business decisions. Gross Sales may determine rankings, but when ranked by profit, the list may be drastically different. Utilizing actionable data to inform strategies and conscientious decisions will lead to increased profit.

4. Growth Rate

Growth Rate can be misleading if not reviewed carefully. As a business grows larger, the growth rate percentage may be smaller, but that doesn’t mean they aren’t doing better than a unit with a higher percentage that is just starting out. This KPI must be considered alongside expenses and net profit of the unit to truly reflect their progress.

Customer Satisfaction as a Franchising KPI

5. Customer Satisfaction

Customer Satisfaction is as important as Profit and a valuable KPI that can not be overlooked! Actionable data that indicates customer satisfaction can be gained through your Net Promoter Score (NPS) or other customer satisfaction surveys or online ratings. At the end of the day, a satisfied customer may not reply to a survey, but will share their experiences with others and return to your business themselves.

6. Customer Count

Attracting new customers is an important part of your franchise growth and marketing strategy, but gaining repeat customers represents long term sustainability. Customers that are loyal to your brand are more likely to refer your services to others as well as continue patronizing your establishment. How many customers are brand new? How many are referrals or repeat customers? This actionable data represents a customer’s lifetime value as well as customer acquisition cost.

Ticket Average as a Franchising KPI

7. Ticket Average

How much does each customer spend per transaction? How can you increase that average? In order to increase it, you should start by tracking what the average is, and then implement strategies to increase that amount. The term “upselling” is generally used to increase ticket averages by encouraging customers to purchase higher priced items. Rethinking the way you increase your ticket sales can be rewarding because “upserving” shifts the focus from personal gain to finding goods or services that will fulfill and meet the needs of your customer. In turn, customers will return to a company that has their best interest and overall satisfaction at heart.

8. Employee Satisfaction

How do you quantify an employee’s satisfaction? What is it that makes some employees engaged and willing to go the extra mile to contribute to customer satisfaction? Recently, everyone has felt the effects of staffing shortages whether they are business owners or not, but the bottom line is that unhappy employees lead to unhappy customers and slumped sales. Whether you hold open forum discussions with your employees or issue employee satisfaction surveys, this KPI is valuable and necessary to maintaining your operation. Do not make the mistake of undervaluing your employees’ satisfaction rates.

Expenses as a Franchising KPI

9. Expenses

Maintaining and monitoring your budget without sacrificing quality of service can be a tight line to walk. However, keeping a vigilant watch on your P&L will allow you to see where cuts can be made and which goods/services are thriving. Look to other Franchisees for inspiration and learning opportunities, but comparing yourself to your past performance will give the greatest insight into progress made toward increased profitability.


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