Why Franchising Needs To Be "Profile-Based"

How do you really know if someone is a good fit
for your business and franchise model?

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Profiling. Strategy. Results. ®

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Because franchising is all about people doing business with people!

Using A “Profile Based” Strategy to
Grow Your Franchise System

Craig Slavin
President/Founder
Franchise Navigator Business Navigator, Franchise Central,
Franchise Architects and ConnectMe

Since 1980

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Every franchisor has questions that need to be addressed:

1. What specific skills do you require of your franchisees?
2. Do you know what differentiates your high performing
franchisees from the rest?
3. Do you know the best profile for your franchise?
4. Do you know how to reach the right profile?
5. Are you using the right media/medium to reach this profile?
6. Are brokers sending you the right profile?
7. What percentage of your franchisee population are high
performers? Mid? Poor?
8. Do you even care?

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We are going to address these six questions:

1. What does it mean to create an “ideal” franchisee profile?
2. Can you use a generic personality profiling tool? Are they
effective at predicting success as a business owner vs. an
employee?
3. Is it beneficial to benchmark existing franchisees?
4. How can a profile be used to recruit new franchisees?
5. Is a profile beneficial for training, support and relationship
purposes?

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Assumption 1: Your Business Is Like An Eight Cylinder Engine

Franchise Architects Eight Cylinders
OPERATIONS

IMAGE, IDENTITY and MARKETING
BRANDING and ADVERTISING

LEGAL
IT/INFORMATION
TECHNOLOGY

SALES and
ORGANIZATIONAL
/HUMAN CUSTOMER SERVICE
RESOURCES

FINANCIAL

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What does it mean to create an “ideal” franchisee profile?

• Franchising is all about people doing business with people.
• Not all individuals are alike. Think of the vegetable section of the
grocery store.
• Their needs are different.
• Their skills are different.
• Their values are different.
• Just because they can afford to buy the airplane does not mean
they can pilot it!
• The “ideal” profile of a single-unit franchisee is very different
than that of a multi-unit franchisee.
• Investment criteria is not a profile.

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Assumption 2: Your Business Requires Three Distinct Skills

1 2 3

Sales and Marketing Business Product/Technical
Customer Service Administration Skills
Skills and Management
Skills

Question: Which skill and core competency is the most important for your
franchisee to possess for operating your franchise?

Answer: A franchisee should not be expected to be proficient at all three.
In fact, people who are good at all three do not buy franchises.
Every franchisor has to pick which one skill is the most critical!

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Can you use a generic personality profiling instrument?

 Most, if not all, existing “instruments” are designed for the
employer/employee relationship and employee screening.

 Franchisees are not employees. They make decisions and live their
lives differently than employees do. Owning a business or a
franchise is completely different than working on a job.

 Interpretations of the results, from these generic, employee-oriented
tools, is very subjective for business ownership purposes.

 What needs to be measured for business ownership is very different
than selection of an employee. The instrument needs to be business
and franchise ownership specific.

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Is it beneficial to benchmark existing franchisees?

• Understanding what you did in your past and how that affects your
future is critical.
• You could have a strong business model but if it is not sold to the
right person the performance will not produce the results you are
seeking.
• Most likely, every franchisor has High, Mid, and poor performers. Do
you know what differentiates the High performers from everyone else?
• Imperative to find out the “why” now so that you can focus
your efforts on making sure you recruit the right candidates.
• Having locations open then close decreases shareholder value.

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 Benchmarking will show a very clear distinction between your High,
Mid, and Poor performers.
 If you do not benchmark you would not have the “why” and most
likely would be making arbitrary changes to support, training, and
marketing strategies.
 Benchmarking will enable decisions in marketing, support, and
training based on solid data.
 Benchmarking will clearly show what differentiates why your High
performers do well and why your Mid and Poor performers do not.
 Benchmarking and statistical analysis should be done by
Independent statisticians.

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This graph illustrates the average scores of one
company’s franchisee population.

100%
80%
90% 74% 74%
74% 72%
80% 72% 72% 70%
68%
62% 63%
70% 65%

60%
50%
40%
30%
20%
10%
0%

ACCOMPLISHER INFLUENCER ASSOCIATOR CONTRIBUTOR

The three bars indicate the Top, Mid and Poor Performing franchisees in the system.

Left Bar - Average Scores of Top Performers
Center Bar - Average Scores of Mid Performers
Right Bar – Average Scores of Poor Performers

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Food Service – Mid Sized Chain Service Business – Mid Sized Chain

For many years Franchisors would claim their distribution system performance
was always divided into thirds: 1/3 HIGH, 1/3 MID and 1/3 POOR performers.
We have scientifically proven this just is not true. It is a myth.
Here are documented results.

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How can a profile be used to recruit new franchisees?

 There is not a “one-sized-fits-all” solution to franchise recruitment.
 Each company has its own culture and operating model.
 Each profile needs to be communicated in very different methods.
 Some are motivated by income. Some are motivated by security,
Some are motivated by prestige. Some are motivated by what they
can contribute.
 If you have a franchisee population comprised of differing profiles
there is no way your operations, training and field support personnel
can be trained fast enough on how to be a Psychologist and
communicate effectively with each franchisee. It is impossible!

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How can a profile be used to recruit new franchisees?

“ Once we knew who our target profile should be, we set out to refocus our
franchise sales materials and presentations to communicate directly with
this profile.”

“By profiling our existing franchisees and then creating a segmentation
model that defines High, Mid and Poor Performers, we were able to clearly
see who our audience members are and how to better communicate with
them.”

• If you know your profile you can tailor a step-by-step review of your
systems, culture, vision and market niche of your franchise offering.

• That includes the right marketing materials, with the right colors,
verbiage and messaging.

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Is a profile beneficial for training, support and
relationship purposes?

• Understanding your profile gives you:
• A better understanding of your candidates needs and learning style.

• The ability to identify the training and support required.

• The ability to structure the right level of support to fit the
profile of the franchisee based on their Skills, Values and Behavior.

• The ability and opportunity to design communications and training
programs to better communicate with your franchisees.

• The ability to know what works with one profile not with others.

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Why is this important to you?

• Utilizing a “profile” based strategy give you:
• The ability to target the right profile and not have a “generic’
recruitment strategy.

• The ability to be selective so you attract “like-minded” people who can
execute your business model.

• Selling a franchise is not an asset. There is no value to a franchise
agreement. There is, however, value in market share.

• The ability to create a sustainable Indirect Channel of Distribution.
• The ability to “own” markets and not fragment your own efforts.

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• Profiling. Strategy. Results. ®

Why is this important to you?

Creates
Connectivity
Financial Skills, Values amongst your
Resources and Behavior entire
organization
and distribution
Connectivity system!

Market/ Business
Location Systems

How does this affect your franchising success?

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Objective: Identify who can
execute your business model.
“The right Stuff.”
6th Cylinder Franchise Navigator

Franchise Navigator quickly (less
than 10 minutes) and effectively
identifies and quantifies an
individual’s:

 Skills 1 2 3

 Values
Sales and Business Product/
Beliefs of Administration and
Marketing Skillsa person or social group in which
Technical
HR Management Skills
they have an emotional investment. These are
Skills
an individual’s own core set of rules.

 Behavior Behavior that is congruent to one’s values

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FranchiseNavigator

The Four Behavioral Profiles

LEADERSHIP AND DRIVE SALES/COMMUNICATION PEOPLE ATTRIBUTES LEADERSHIP ATTRIBUTES

Everyone has all four profiles. What the Franchise Navigator does is
identifies, instantly, which are the dominant and subordinate profiles.
Results appear in percentages

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FranchiseNavigator

• Big Picture • Narrow focus • Broad focus • Caring focus
• Can multi task • Cannot multi task • Cannot multi task • Can multi task
• Strong business skills • Strong sales skills • Has a need to belong • Has a need to
• Strong drive for • Needs instant • Works with family and contribute
accomplishment gratification close friends • Wants a steady
• Does not need accolades • Needs a lot of • Needs a lot of business
accolades attention • Loves to enrich others
• Wants routine

Single and Multi Unit Single Unit– Single Unit– Single and Multi Unit –
Operators Area Territorial Small Staff Larger Staff

LEADERSHIP AND DRIVE SALES/COMMUNICATION PEOPLE ATTRIBUTES LEADERSHIP ATTRIBUTES

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1 Step 1: Overview
Behavioral Profiles – 3 Measurements
100% 100%

90% 90%
These scores are for illustrative purposes only!
80% 80%
The results appear within 2 seconds
70% 70%

60% 80% 60%
70%
69%
50% 65% 50%

40% 40%

30% 30%

20% 20%

10% 10%
0 0

1. Which profile is the DOMINANT 2. Which profiles are the SUBORDINANTS 3. Combinations

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1 Step 1: Overview
Result of Benchmarking – Results appear within 2 seconds
These scores are for illustrative purposes only!
These results appear within 2 seconds upon completion of the survey
100% 100%

90% 90%

80% 80%

70% 70%

60% 60%

50% 50%

40% 40%

30% 30%

20% 20%

10% 10%
0 0

Our statisticians will create a statistically range based on your High Performers.
An individual’s results are then compared to the high and low ranges of your High performers.

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Importance of Values Franchise Navigator

• Values are personal.
• Our actions and behavior point to what we really value, instead of
what we think we value.
• Values can change as experiences change.
• Often feelings are more accurate value indicators than thoughts.
• When faced with alternatives, our values determine our choices.
• Our values give a particular direction and consistency in our
behavior.
• Our values, attitudes and beliefs condition our perceptions.

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COMPETENCY
HIGH
MID
POOR Overview Skills

We know which skill(s)
each profile performs
Sales and Marketing Business Administration and
best! HR Management Product/Technical Skills

ACCOMPLISHER

INFLUENCER

ASSOCIATOR

CONTRIBUTOR

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Results
Using the Science of Franchise Navigator

This chain of stores, which replaced their Catalog Stores, is now Sears Golden child!
Over 1000 stores delivering $2B in sales and Low to Mid double digit EBITDA
• In 2000, based on performance we sorted the owners as high, mid and poor performers,
• Franchise Navigator helped attract candidates that matched the DNA of the top tier owners
(Sears immediately started rejecting approximately 33% of the candidates that they would
have selected in the past),
• According to Sears the results were amazing:
- Average store sales went from $1.2 - $1.8M in approximately 18 months
- Average ticket improved by $75 in Home Appliances
- Service contract ratio sold doubled
- Failure rate of stores went from 10% to 6.4% (35% improvement)
- This lead to a great deal less legal activity against their P & L –
- Saved Sears $3M - $4M each year in legal fees.

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Results

Real gain was in store growth ---
(perspective owners called the
existing owners to see if they liked the
program, made enough money and
trusted the company),
Sears had much happier owners -
and the word of mouth helped
propel them to increasing store count
by 100 - 125 a year for 5 straight
years,
We had to do the same thing with their
DMs and RMs -- they were not used
to managing/coaching such a
strong owner base,
Sears started putting round pegs in round holes for the first time on a consistent
basis and the results spoke for themselves. We also created their recruitment tools.

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Results

• “Average unit sales (AUV) increased by 38% in the first 18 months of
using Franchise Navigator.”
• “Our unit level store increases averaged 18% - 22% using Franchise
Navigator to select the right franchisees!”
• “36 % of all inbound candidates are disqualified because they don’t
resemble our High Performer Profile.”
• “People coming through training are definitely a higher caliber than
previously.”
• “Closing rates are much higher than ever before.”
• “Franchisee retention has now exceeded 95%.”
• “Franchise Navigator stopped the bleeding. New franchisees are now
opening more locations and faster than ever before.”

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Because franchising is all about people doing business with people

Thank you.
We trust we have demonstrated why creating the “ideal’
franchisee profile for your franchising efforts is so critical.

It is not about franchising.

It is about people doing business with people.

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250 Parkway Drive, Suite 150
Lincolnshire, Illinois 60069 USA
1-847-465-0111

www.franchisecentral.com
www.franchisearchitects.com
www.franchisenavigator.com
www.businessnavigatorsurvey.com

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Why Franchising Needs To Be "Profile-Based"

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