• Rhys Green

How to Franchise: 5 Things to Measure to Grow Your Franchise Business


It’s important to have a vision for how to franchise your business. If you don’t, how do you know what you’re building? It’s like a mountain in the distance—you can see it, but it can be tough to know if you’re actually getting any closer. So how do you know you’re on the right path?


“WHAT GETS MEASURED, GETS DONE.” -UNKNOWN

You’ll have a pretty good idea if you set measurable goals that align with your big picture, and you regularly check how you’re doing against them.


How To Franchise: Measuring Key Performance Indicators

KPI’s are like the main points on a compass. They will help you to know that you’re at least heading in the right general direction. The difference here is that you have to choose what “true north” is for the future of your business.


If your goal is to grow your franchise system, here are some KPIs below that can help you get there.


1. NET PROMOTER SCORE (NPS)

This is a measurement that quantifies how much of your customer base is happy to promote you or give referrals to you. The calculation is a little in depth, but when you’re getting enough responses it is an excellent measure of how you’re doing.


A world-class NPS is considered to be 70+. I love this number for three reasons. The first is because it’s cheaper to keep a customer than find a new one. The second is that referral customers are more profitable than completely cold ones. The third is because it gives you direct feedback on how well your franchisees are delivering on their end of operations.


Recency bias means that most of the feedback you get through NPS will be based on the last interaction the customer had with your company, and that’s usually your franchisee.


2. SALES CONVERSION

No matter what your sales process is, measuring how many total contacts you’re getting against how many you turn into customers or franchisees, is an important number to be tracking. It’s a major driver of profitability. Tracking it will show you how skilled your salespeople are and how well your marketing efforts are doing attracting qualified prospects.


3. SYSTEM-WIDE REVENUE GROWTH %

This is the sum of topline revenue for all of your franchisees over a comparable time period. It’s important as a franchisor because this is where the money comes from. It’s also important for your franchisees because a growing system increases the value of their assets. This is a true win/win number.


4. SAME LOCATION GROWTH

This one is a good indicator of the health of your franchisees. You can grow your system-wide revenue by selling more franchises. However, if the franchisees you have aren’t growing, you’re building on a foundation of sand. Same location growth will remove this potential pitfall by keeping you focused on what’s most important as a franchisor. Healthy, growing franchisees.


5. REVENUE PER HOUR

This one is a measure of efficiency and a great way to keep an eye on gross profit in your franchises. It’s the total revenue billed, divided by total hours worked for a single employee, crew or location. The higher you drive this number the better ROI you’ll get on each of your vehicles.


In thinking about how to franchise, there are many more metrics you could be looking at in your business that will help you grow. If your goal is to grow your franchise system, these KPI’s are certainly a great place to start.

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