FW Focus: Franchise Relations
Strategic Planning with System Franchisees
It will be exciting for franchisees and the system because it will reap great rewards.
By Philip Friedman
Strategic planning is essential for the long-term success of operating
organizations. The best planning is accomplished when the organization’s key
constituencies are included. In a franchise system the franchisees are a primary
constituency, making it imperative to include them when building the strategic plan.
Franchise systems are dynamic, continuously-evolving competitive
organizations, designed to succeed through the accomplishment of shared goals
executed by a diverse group of owners. While each system has its own unique
business model, all share the challenge of consistent operations directed to a common
purpose—one that keeps owners focused on the system’s goals and objectives. As
competitive pressure and economic environments change, strategic planning is a tool to
keep the system on track to achievement of these goals and objectives.
Franchisee involvement in the planning builds the common purpose required for
success as the group gains understanding of the plan’s rationale, develops a personal
commitment to its success and learns the execution steps required to make the plan
work. Failure to gain franchisee commitment to the plan, and thus their commitment to
the system future, would be a major mistake and an opportunity lost.
What is Strategic Planning?
Focusing the decisions and actions required to achieve the common purpose of
the franchise system is the responsibility of the franchisor. Systemwide strategic
planning, planning in concert with franchisees provides the means to develop decisions
and action plans effectively and efficiently. By embracing the concept of strategic
planning, the franchisor is starting the process of strengthening the long-term prospects
of the franchise system.
Simply described, strategic planning is a process that establishes a franchise
organization’s long term direction by:

evaluating the internal and external situations faced by the franchise system,

establishing common goals for the system,

evaluating and choosing alternative courses of action,

setting near term and long objectives for the system,

detailing the supporting action plans required to meet these objectives, and

gaining support and commitment throughout the system through execution of the
plan.
Why Plan with Your Franchisees?
Strategy could be done solely at the corporate level and then communicated to
the franchise community. This would establish direction as it accomplished the first five
benefits of planning detailed above. However, this “corporate down” approach would
not accomplish the sixth benefit, losing a major opportunity to build the mutual respect
and commitment that comes from working on the process with and jeopardizing the
successful execution of the plan.
The importance of franchisee participation can best be described by what it
provides for the system:

an opportunity for franchisees to express their insights on how to best improve
the performance of the concept,

a sounding board for corporate developed initiatives,

participation in developing strategic alternatives,

improved systemwide communication and understanding, and

systemwide commitment to the plan.
Done honestly and correctly the trust and commitment created by the planning
process will provide a foundation for the continued growth and prosperity over the years
to come.
How Do We Get Started?
Initiating the strategic planning process will require some system preparation as
the franchisor and franchisee must come to the process with understanding and open
communication. The required preparation includes:

establishing franchisee representation,

pre-strategy corporate-level planning,

gathering and evaluating existing research, and

franchisee satisfaction and understanding.
Effective planning is done best with a relatively small leadership group made up
of approximately four franchisor representatives and four franchisee representatives. If
the system has an active committee process the committee members can join the
planning team. If such a structure does not exist, the franchisor will have to work with
the franchise community to determine the franchisee representatives.
Active Franchisee Committees
Since it will not be possible for all franchisees to participate directly in the
planning, a committee structure enabling franchisees to participate through fellow
franchisees should be established.
To facilitate representation (for planning and ongoing management of the
system) it is best to have established an ongoing communication structure. This can
best be achieved through active franchise committees. The committees will have an
ongoing business purpose within the system which will prepare them to be involved in
the planning work.
For example, at McAlister’s Corporation, there are three active committees
representing franchisees in different areas, these being the:

Franchise Advisory Committee,

Marketing Committee, and

Purchasing Committee.
The committees have four to five franchisee members, appointed through
elections by the franchisee membership. Each committee meets quarterly operating
with a published agenda and follow-up meeting minutes. This working structure
provides widespread representation and ongoing communication with the franchisor.
The Strategy Committee is the Franchisee Advisory Council. The other committees
work on specific components of the plan throughout the year as their work becomes
part of the corporation’s business plan. The committees are kept up-to-date on the
system’s overall performance and all research being conducted by the franchisor.
Pre-Strategy Corporate Planning
To prepare for the strategy work, the franchisor must engage in pre-strategy
planning. This work will establish the goals and objectives the franchisor will bring to
the planning table. The corporate business plan will be prepared for presentation to the
planning committee. It should anticipate the various franchisee perspectives. The
preparation work will include:

recent performance of the business,

forecast of the business,

franchisor’s goals and objectives, and

strategic initiatives planned by franchisor.
This work provides the starting point for the strategic planning with the
franchisees. All presented materials should be considered open for discussion.
An Understanding of Existing Research
Evaluating and understanding existing research will provide valuable planning
insight. In the planning process this information provides objectivity and a means to
focusing the range of alternatives discussed to affect decisions. It is the franchisor’s
responsibility to ensure the understanding is achieved by the planning committee as a
starting point for the planning.
Franchise Satisfaction Survey
Strategic planning in a franchise system must begin with an evaluation of the
internal situation of the franchise system. A basic understanding of the current
relationship between the franchisor and the system membership (individually and as a
whole) is an essential starting point for the situation analysis.
The best approach for gaining these insights is a professionally-prepared
franchise survey. It should be designed to detail the essential areas of interaction
between the franchisor and franchisee. An easily understood quantitative measure area
of interaction will be used to determine the relationship’s strengths and weakness. This
knowledge provides a solid starting point for the planning to begin with your franchisees.
Using a Planning Professional
Strategic planning with your franchisees will be a major milestone in the system’s
evolution as well as a serious commitment of human and financial resources. It cannot
be led well by those involved in the business, as they are too close to the daily activities
to facilitate an open dialogue and an exploration of alternative courses of action. As
with any new endeavor, it is best to have an experienced guide to show participants the
way. To achieve value and impact for the system, a professional strategic planner is
required. He or she will understand planning methodology, manage sequence of events
and be skilled at channeling diverse interests to a common goal.
The planner should be familiar with franchising and have some knowledge of
your industry. The planner will not have the answers to your questions, but will be
skilled at facilitating the process leading to those answers.
When to Begin?
There is no time like the present. The strategic planning process will take a full
year. By beginning today and by letting franchisees know that the system intends to do
the planning and have them involved, you will begin to create the excitement and
renewed commitment expected from the process. It will be exciting for franchisees and
the system because it will reap great rewards.
Philip Friedman is president and CEO of McAlister’s Corp., franchisor of the McAlister’s
Deli restaurant chain, operating 170 restaurants in 20 Southeast and Midwest states.
He can be reached at 601-952-1100.