Six Things Small Businesses Can Learn From Franchises


Mark Van Wye, CEO of Zoom Room.

A few weeks ago, I was run over by a car. I was biking to pick up my son from school, on the way to his birthday party that evening. Lying in the street and disoriented, I started to take a personal inventory. I raised my son right and have provided for him, so peace of mind flooded over me as I picked some shards from my shin. But what about my business? Would it pass the proverbial-made-literal test of, “What if the CEO got hit by a car?”

It did. I believe that the structure inherent in running a franchise is responsible for the peace I enjoyed in those moments, not to mention every day. Further, many small- and medium-sized businesses can take a lesson in discipline and organization from the world of franchising to ensure their own longevity, growth and continuity.

I believe the human ego and its corollary, the fear of loss, are the source of human suffering. All too infrequently do we recognize that in business, monomaniacal reliance on the notion of a key person and fear of failure are some of the greatest obstacles to success. Myriad religions and philosophies have provided guidance and a framework for maintaining humility in the face of these obstacles to peace and prosperity.

From my perspective, franchising is an overlooked source of instructive humility in the business world. Franchises by their very nature have no place for ego. Everyone and everything must be replaceable in order to be scaled and replicated. Elegant, efficient and economical systems triumph. Individuals may thrive and derive success and satisfaction, but they are not the driving force. With this in mind, below are six lessons I believe all businesses can learn from the franchise world:

1. Train your team to function without you.

Maybe your small business makes the world’s tastiest tortellini. I won’t argue, but how many places can you be in at once? And who will make it when you are out sick or snowboarding? Train others until a blind taste test can no longer distinguish between student and teacher. Now you can open more locations. But even if you have no such intention, you will know the business can survive you and thrive in your absence.

2. Develop a thorough operations manual.

Document everything. When any employee, customer or other stakeholder asks any question, you should be able to point to the page in the operations manual where the clear answer is written. If it isn’t there, answer the question, then add it to your OM so you’re ready the next time someone asks. Don’t trust that anything in business is common sense or self-evident. Practice the discipline of memorializing everything for posterity.

3. Remember that consistency is queen.

Consistency is essential in your signage, colors, uniforms, telephone greeting—the list goes on and on. When one of our franchisees opens a new location, we have specified everything from the lightbulbs to the soap dispenser. If you have multiple locations, this preserves the magic. Even with a single location, it ensures customers always know exactly where they are and that today’s tortellini is as magical as what they enjoyed on their last visit.

4. Analyze everything.

At scale, you will want to gather data from every location and every client interaction. This enables you to develop insights from a wide pool of vital numbers and benefit from emerging trends. In a franchise, we communicate these key performance indicators so that each franchisee has a line of sight beyond what is in front of them. Sometimes simply knowing that someone has broken the four-minute mile is enough to make you realize you can run faster than you thought possible. But a single location will still have multiple employees, different shifts and different promotions. By building a data pipeline today, you will prepare your system for its eventual growth.

5. Cherry-pick your location.

A franchisor will not allow a new site to open if the conditions aren’t right. They know the necessary demographics, the traffic count, the required layout and square footage, the type of parking and nearby anchors, and the maximum rent that can be afforded. Apply the same strict limits on your own site surveys. Resist the urge to settle; wait for the location that will serve you well in the long run.

6. Be an influencer.

When Mark King, CEO of Taco Bell, was describing some of the differences between his current post and his ultra-successful prior history at TaylorMade and Adidas, his answer had nothing to do with shredded cheese. One of the major differences was the franchisees. Those who owned and operated the individual locations were the true stakeholders. King quickly learned that for new initiatives to gain traction, he must lead by influence.

Franchise agreements create a unique relationship between franchisor and franchisee; while there is technically room for mandates, operating a franchise with an iron fist is exceedingly difficult to enforce and makes for unhappy franchisees whose vote of no confidence can devastate growth. John List, in his book The Voltage Effect, gives additional examples of when top-down leadership fails to gain traction at the store manager level.

Regardless of the size of your own business, maintain the confidence that great ideas will gain followers among your staff if you allow them the latitude to embrace them. In today’s world of employees leaving for new opportunities, drop the edicts and practice patience with your new role as an influencer, not a boss.

A few weeks have passed. My son’s birthday party was a smash. And my hip has already moved from shades of purple to mustard. My bike has some battle scars, as does my business, which over the past decade has learned from its missteps and grown to be the success it is today. It’s a success all the greater since I know, without hesitation, that it can and will survive me.


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