Top 5 Questions Franchisees Are Asking
Apr 01, 2025
I’m a truth-teller, and I always strive to provide you with genuine insights and strategies -no fluff- to help you lead, grow, and thrive with your franchise.
In this week’s blog post, I’ll share the top five questions that franchisees like you are asking about rising costs, improving efficiency, embracing technology, developing their teams, and adapting to changing consumer behavior.
Perhaps you are also wondering about these inquiries, and hopefully, by reading this, you will find the answers you seek.
But first, please subscribe to our YouTube channel and Podcast, and follow us on all social platforms!
How to Manage Rising Operational Costs Effectively?
We have had a lot of volatility in the past few years. So much so that inflation seems to be a reality in our lives. Hopefully, things will change soon and reverse because franchises' profitability is really shrinking as a consequence.
This first question that franchisees are asking has many answers. Rising prices is one strategy, but you don't want to use it too often because it can also affect your transaction count or the customer base.
One thing we instead advise our franchise clients to address the rising cost is looking at their product cost on a monthly basis. That way, they'll know how much the costs are really increasing, in which products, and how much that impacts their business.
- This is critical because you must have a clear picture of the cost of your business, and the only way for you to know that is by analyzing your costs exactly the way they are.
Have a place where you can document the invoice cost for your products, especially if you have a cost of goods every month and you are either in food service, personal service, or any type of service where you use products.
Create a list of your top 10 or 15 products or items, or whatever you think is appropriate within the product mix you use, and review those invoices each month or each quarter. Record the pricing for that initial period, and repeat the process the following month/quarter to compare for any changes, analyzing which products changed and how much the prices increased.
That way, you'll have a clear perspective backed by hard facts rather than just a gut feeling or intuition. This will help you make the proper decisions, especially around pricing.
It's a reality that rising costs are usually passed on to customers, but if you can find other ways to minimize the impact on them, even better!
For example, you can study how much waste you have on your labor cost and other significant expenses in your business and try to minimize it. This will not only help you overcome some of the price increases but also make you a better operator.
You can also examine which products or services are the most profitable, meaning the ones that have the least cost to deliver. Those are the ones that should have strategies around marketing, upselling, or promoting. This will allow you to manage your cost and have your bottom line remain the same even though the cost of other products has gone up.
Don't miss: 6 Key Financial Insights for Multi-Unit Franchisees
How Can I Enhance Value Without Resorting to Excessive Discounting?
I strongly encourage you not to become a discount company! Otherwise, you might end up rarely selling any products without having to give a coupon or a discount of some sort. And trust me, you do not want to be in that situation.
- Enhancing value without discounting is all about the culture and the customer experience.
There are companies like Chick-fil-A that have a lineup of customers, double drive-thru, and an amazing business because of the experience in service that they deliver. What they do is not magical; it is something that anybody can do, but you need to be committed to delivering that type of service and experience to your customers.
What sets you apart from other franchisees or competitors? What draws customers to you? As a franchisee, there may not be much you can change regarding brand operations, but there's plenty you can do in terms of customer experience!
Focus on that as a strategy to add value to your customers so that when they visit your store, they can feel a real connection to the brand and to your business, which will encourage them to come back over and over again.
How Will Technology -Particularly AI- Impact my Operations?
Franchisees cannot do much in terms of implementing AI in their operations because that will be driven by the brand (hopefully, franchisors are getting all over AI and finding ways to enhance the brand and how it's delivered to the consumers).
However, you certainly can use AI or technology for business management in many ways. You're free to use whatever platform you want for labor scheduling, communication among team members, payroll, your team members' experience, or HR relations.
Those are areas where you can explore different platforms and processes to strengthen your team and improve the quality of their lives and work. Don't hesitate on this: most people today expect to utilize some form of technology, personalization, and experimentation with AI in their jobs.
- Technology will help you get ahead in your business. And remember: if your team member's experience is great, the customer's experience will be better.
In case you missed it: The Power of Business Texting: How & Where to Use It
How Can I Develop Leadership within my Teams?
Many franchisees train their leaders in the day-to-day operations of the business, but they do not go beyond that when it comes to formal training and the development of leadership skills that, I must say, do not come naturally to most leaders.
You could, for example, start a book club. Each month, choose a short book, video, or podcast that discusses leadership, followed by a monthly discussion with your leaders regarding that content. This can even take place on Zoom or through a remote call. It's an easy, low-hanging fruit that you can implement quite quickly.
Another low-cost, high-impact strategy is to dedicate a part of the weekly meetings with your leaders (which, hopefully, you are having) to teach them something about leadership or management skills. You can provide this training by yourself, and if you make it simple, you're more likely to consistently execute it every week or every month in your organization.
If you are not quite a good teacher, you can look for formal training programs where your leaders can learn, grow, and improve their leadership and management skills beyond what the brand or you can offer.
One option is the elite programs we offer at the American Franchise Academy. We can help you develop your District Manager and Unit Managers skills and knowledge so they can be successful at their roles.
It's worth the effort. I have to say that when it comes to leadership and management skills, every investment in your people will be returned to your business tenfold because making them better leaders and better managers will improve the results in the units they run.
Don't miss: #1 Way To Increase Profitability in your Franchise
How Can I Adapt to the Changing Consumer Behaviors and Preferences?
I find it interesting that this was one of the top five questions from franchisees because the reality is that franchises don't really have much power over changing consumer behaviors or preferences.
Within the brand, you are limited by the standards they define and the products or services you have to deliver. What you can do, though, is understand how preferences are changing.
When I was running operations, I used to study a report called Product Mix (it might be called Service Mix for service-based operations), where I could see how much of each product was being sold. I looked at it constantly to understand what customers were buying and how their behaviors and preferences changed.
Search for reports related to your industry and focus on their insights to grasp what's happening with your customers. For instance, if 10% of your sales mix comes from facials and the report indicates that this category has risen to 15%, you may want to consider promoting your skin care services and products, as more people appear to be interested in this type of service.
Keep learning: 6 Infallible Tips to Increase Sales in Your Franchise
Adapting to what your customers want goes beyond promotions and marketing. You must also train your team members in upselling and constantly reminding the customers that you have those services that resonate with their needs and desires.
If these answers to the top five questions franchisees are asking have helped you, don't forget to like and subscribe to our YouTube channel and Podcast. And if you have a particular inquiry, follow us on our social media and drop a question for us! I may just answer your question next week.
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