I posted previously about the difference between “absentee” (or “semi-absentee”) and “executive” franchise ownership. It’s all about mindset. Think of yourself as an absentee owner, and you’re taking a passive approach to franchising. Think of yourself as an executive owner, and you’re taking an active approach. As you might guess, I believe you’re much more likely to succeed as a franchisee if you take an active approach. But business is like life in general: mindset alone won’t get you everything you want. You also need the right skills. So as a followup to my earlier post, here are the skills I think are most important for successful executive ownership.
Willingness to Learn
Before becoming a franchisee, I had a successful career as a corporate executive, with my wife Lauri playing an essential supporting role while she managed her own interior design business. Our teammates Mack and Sharon worked as a pastor and a teacher, respectively, before buying their first franchise. Other franchisees we know have excelled in the industry after working in the nonprofit or military worlds. Many of the skills we all learned during our first careers transferred well to franchise ownership. But the different types of work are different, nevertheless.
If your success elsewhere has you thinking, “I know everything I need to know about how to succeed in franchising,” you’re going to experience a rude awakening. You must enter the industry with a learning mindset, a willingness to admit that you have gaps in your knowledge, and seek out advice and information from those who are more experienced.
All of franchising, in fact, is built around learning. The franchisor provides training, manuals, and an operational system for you to study and follow. Franchisees are part of an owner network that exists, in part, to teach the ropes to new owners. Take advantage of these opportunities to accelerate your success! And don’t be afraid to learn on your own any time you find gaps in your knowledge. The more you build your expertise, the better your business will do.
Strategy
Business leaders generally have one of two core functions: strategy or operations. Some executives are “bi-modal”–able to fill both roles–but even those individuals are often stronger in one area than another. In franchising, the franchisor takes care of most of the operationalizing. That’s what the franchise business system covers. And executive owners, by definition, are not owner-operators. They either own too many units to manage them all on a day-to-day basis, or they chose franchising as a side hustle or way to stay busy in retirement. As a result, they focus on big-picture issues and hire franchise managers to handle day-to-day operations.
What if you’ve primarily worked in operational roles? You can still be a successful executive franchisee. But you may need to read some books, take some classes, or work with a coach to improve your strategic focus. If you start out as a single-unit owner-operator and transition to executive ownership as your business grows, you can learn strategy by taking advantage of built-in opportunities to exercise that muscle. Long-term planning, goal-setting, and market research and analysis are all great ways to improve your strategic skills.
Financial Savvy
To be a successful executive franchise owner, you don’t need to be an accountant. You can hire someone to manage your books. But you do need to know how to read and manage a profit-and-loss statement, plan for major financial events, and vet your accountant’s work. You’ll also benefit from understanding at least the basic principles of pricing, incentives, and compensation.
The good news: if you have corporate or nonprofit leadership experience, you probably already have many of these skills. You’ve had to manage budgets, put a dollar amount on products or programs, create revenue (or funding) streams, and figure out the right balance of salary and benefits for your staff. However, if you realize that you’re missing some financial skills, just go back to the top of this post. Put on your learning cap and fill that gap!
Hiring and Leadership
A good team of employees is crucial for successful executive ownership. This is because executive franchisees aren’t always on site. Even full-time executive owners normally own multiple units and divide their time between them. You’ll need to rely on your team at each location to keep things humming when you’re not there.
This isn’t that much different from a corporate, nonprofit, or military leadership role. As a leader, did you personally execute every new project, program, or mission assigned to your organization or department? Of course not! You did it through leadership. You delegated responsibility to your direct reports, who in turn delegated specific tasks to direct reports of their own. You communicated strategy, kept tabs on the team’s performance through managers or junior officers, and hopefully found ways to connect periodically with individual contributors so they would understand your vision and feel valued and appreciated.
Similarly, as an executive franchise owner, you’ll need to hire a manager for each franchise unit you own, then lead them as they choose a team. You’ll have to communicate your strategy to the manager and provide accountability for them. And you should periodically (at least once a quarter, in my opinion) visit each franchise location to connect meaningfully with the employees there.
Perseverance
Perseverance may seem like a random skill. It’s not necessarily business-related, and it’s not something you can learn from a book, class, or coach. In some ways, it’s more of a personality or character trait than a skill. But it’s crucial, all the same.
No life is without challenges–and business is the same. Along your journey to franchise success, you will run into hurdles. You’ll have setbacks, possibly large ones. On rare occasions, a hurdle or setback may be a sign that it’s time to admit defeat. But much more often, it’s just a challenge to be overcome. Perseverance will help you power through. Coupled with the first skill on this list–willingness to learn–perseverance will help you turn challenges into learning opportunities so you can do better next time. Which is another way of saying that you’ll turn failures into victories.
Do you need help assessing whether you have the skills for successful executive ownership? As part of our consulting process, my team and I can help you review your experience and abilities to determine the best path for you. And yes, we do tell some people that franchising is not right for them. You can trust us to be honest because we have all been down this road, and we only succeed if the franchisor-franchisee match is a good one. Book some time with one of us to get started on your own journey to success!
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