Hereโs How Smart Franchisees Thrive in Uncertain Times
Sep 17, 2024
Franchises are not armored against volatile economic dynamics, changing politics, or the global disruptions that may happen. Regional and local events, such as elections, strikes, or even seasonality, can influence businesses, too.
You cannot stop these events and ignoring them would be wrong. What you can do as a franchisee is make sure you are prepared to face them in the best possible way.
Cesar Coronado, a Multi-Unit Franchisee from Tropical Smoothie Cafe, has had his share of challenges to face since he opened his first unit when the pandemic hit, and Chicago ordered a lockdown. Along with the sanitary emergency, all of the macroeconomic obstacles franchisees have to deal with took the young entrepreneur by surprise.
“I learned the hard way how susceptible businesses are to what's going on in the world. Obviously, Covid was the number one disruption, but what came after that was also very surprising”, he shared. “You can try to account for as much as possible. But how do you account for the unforeseen?”
I invited him for a chat on our latest “Franchisee Wisdom” episode, the interview series of our Franchise Success Formulas Podcast. This playlist is filled with advice from amazing, successful, top-performing Multi-Unit Franchisees who share their franchise journey and all their accumulated knowledge.
I’m sure that as a business owner, you have also experienced some of the difficulties that Cesar has met. So, in this blog post, I’m sharing smart strategies you can implement to tackle the macroeconomic challenges franchisees face.
But first, please subscribe to our YouTube channel and Podcast, and follow us on all social platforms!
Flexibility and Innovation
Cesar and his business partner ventured into franchising in May 2019. They signed a franchise agreement to open seven stores in Chicago and immediately started looking for locations. The construction of their first site started in August, and when they were ready to open, COVID-19 hit, and the state of Illinois imposed strict lockdowns and dining restrictions.
“Our back was against the wall”, Cesar said. No wonder why: indoor dining was banned for several months to stop the spreading of the virus, leaving restaurants to rely solely on takeout, delivery, and curbside pickup services.
Being believers as they were, they leaned into faith and ultimately determined that the right move was to open with all the safeguards in place. But faith alone wasn’t going to keep them in business. They needed to be innovative and embrace technology by leaning into online ordering with a third party. This decision was a game changer: that year, they had the brand’s highest digital transactions.
They also built systems around the technology they were using to know what the expected results should look like. Ever since then, they have revisited these processes regularly to improve them.
Smart Strategy: The pandemic pushed businesses to adopt technology and innovate their processes to survive. Even though, thankfully, we are not in that survival mode anymore, adopting tech has the power to make franchisees be better, faster, and do more with less.
Consider upgrading your point-of-sale systems, using inventory management software, implementing digital marketing tools, or learning how to use a new platform. Depending on your type of consumer, you can even explore the possibilities that AI has for the franchise & retail industry!
You can only win. By being friends with technology, you can:
- Be more efficient.
- Reduce cost.
- Make better decisions based on data.
- Better manage the business.
- Find areas of opportunity.
A Great Team
Cesar’s first unit was located right in the heart of a vibrant community in Chicago, and they saw this as an opportunity to build strong ties with them.
“We hired locally. All the team members had their friends and families coming to try our product, and they fell in love with our concept. We're really grateful for the way the community embraced us”.
Another strategy they have found to be effective is doing internal promotions rather than looking for external talent. That way, they can have their next leaders ready when the new openings materialize.
“We are we're very proud to say that we have one external General Manager; the rest have been promoted internally. It became very clear to me that building a team needed to be our focus, and that's what we’ve been working on: building a pipeline and that understanding of our team. That to us has been the biggest learning in this past year”.
Even though they have developed great systems and programs for their people, Cesar confessed that finding good talent has been the most challenging thing in running their business nowadays, as well as managing high-level operations with the rate of growth they want to have.
“It's a delicate balance because as we put our energy into successfully opening new cafes, we need to make sure the units that came before also continue to be highly managed”.
Smart strategy: You need a great team and leaders who take care of the operations while you, as a franchisee, confidently focus on growing your organization. Considering the staffing challenges that the industry is facing, the best way to build that dream team is by developing an internal bench so that, when the time comes, you can have the leaders ready instead of depending on externals to fulfill such critical roles.
Think about it! You have already taught them the culture of your company, the things that really matter, and how to move the needle. Plus, as Cesar pointed out:
“By doing internal promotions, your retention goes through the roof because, if you invest in people professionally and personally and build those relationships, they'll do for you what you do for them”.
Remember: what the Unit Manager does every day directly influences the sales and profits of that unit. And the District Manager is actually the one that determines your business success.
What is more: the only way in which you’ll obtain true financial and time freedom as a franchisee is by delegating responsibilities to these leaders. But to do that, your unit managers and district managers must be properly trained, and have the correct tools, information, and knowledge to excel at their roles.
Don’t miss: Strategies for Staffing and Talent Acquisition | An Interview with Tom Spry
Cesar also advices to build a strong business culture, which implies hiring the right people, putting them in the right roles, empowering them to succeed, celebrating your team's great work, and encouraging them to keep improving because “things can always be better”.
Solid Business Management
Supply chain disruptions have impacted the franchise industry since 2020. Cesar’s Tropical Smoothie Cafe, for example, has encountered inventory shortages as well as an increase in the cost of goods. On top of that, franchisees and business owners have to deal with inflation and the threat of a recession.
We’ll continue to hear about these types of challenges in the following years, so you better be ready to ensure your business continuity and that you can provide your product or service the best possible way and at the correct time.
Smart strategy: Build healthy relationships with the approved brand suppliers but also, explore alternative sources, especially with suppliers that are in your area. By doing so, you’ll prevent shortages of the critical products you need and, if something happens, you’ll be able to serve your customers.
Also, you have to be really, really good at managing your business. I always remind my clients about that and how important it is to understand the business in great detail to detect what affects it, how and what to adjust, how to be flexible, how to manage the labor cost, the cost of goods, and everything in between.
Covid forced people into acquiring key business knowledge that they wouldn't have been exposed to otherwise, and it really changed people's perspective afterwards. Those who understood that and acted, like Cesar and his business partner, became better business owners because of that.
“Covid and everything that has happened since then forced us to get better at hiring, better with inventory management, to streamline our operations, and to embrace technology a bit more”.
He also advises fellow franchisees, whether new or experienced, to build systems for every single activity in the business.
“Build a process around it and document it. Analyze what causes you to have to do the action and then what the expected results should look like. And then decide if there should be a reward at the end of it. Also, define and track the metrics that will tell you if the processes are working because you only move what you measure”.
Being an entrepreneur is challenging. Your business is going to be vulnerable to local and global disruptions, internal issues are going to happen, and at times, you’ll feel more like a fireman putting down fires than a strategist who is moving the business forward. Cesar sure felt that way, but he has two final messages for you:
“I know at times, it may feel like you solve one problem only for another to arise. That's the life of an entrepreneur. And learning to appreciate the journey is the biggest lesson that I want to share. I know sometimes you don’t have time to stop. When you take a breath and look back, you’ll discover you’ve come a long way”.
He also strongly recommends business owners invest in their education and themselves “because ultimately, you are the business.”
“Self-development is a journey. It's a marathon, not a sprint. And there are a lot of business books and podcasts out there that it's so easy to gain knowledge. It's probably the easiest it's ever been in history. Aicha and the American Franchise Academy are an amazing asset to do that.”
He’s right. Just as we have done with him, we provide franchise business leaders with the knowledge, tools, and resources they need to be successful.
We have three elite training programs: one for Franchisees, another one for District Managers, and a third one for Unit Managers or Single-Unit Franchisees. Reach out to us to discover how we can help you:
WATCH THIS VIDEO INTERVIEW on YOUTUBE HERE.
