The passions we pursue are not based on data. Children don’t consult labor market data before aspiring to be astronauts, football players, or firefighters. Musicians create their art with passion – and don’t rely on data for that process. Our passions – be it basketball or painting or basket weaving, are not things we decide to spend our time on based on data.
Most people who open a business do not do so based solely on data. They open it based on their passion and talents - the desire to do things differently, to command their own course in life, because they believe they can do something better than anyone else.
However, data does become an important factor in opening a business. All the passion in the world doesn’t guarantee that a demand exists, that a business can be competitive and profitable. Most business owners do consult data before making an investment.
In the world of franchising, data becomes of the utmost importance. While many businesses make the decision to franchise based on passion and talent – the thought they can provide a better or different service than anyone else – data has to support that decision, or else the franchise will fail to grow – or worse.
Legal Implications of Data
Fifteen states in the US require that a Franchise Disclosure Document be provided to prospective franchisees before a sale of a franchise unit can be executed. Even when it’s not legally required, a franchise disclosure document is expected by most prospective franchisees – the purchase of a franchise is a major investment in terms of not only financial resources but a major investment of time and energy.
In many ways, it’s less like investing in a company through conventional means such as the stock market; and much more like choosing a university – it’s more than a financial investment. If a stock you purchase takes a downturn, you can sell and recover some of your capital. If a franchise is a bust, franchisees find themselves not only with sunk costs from the franchise fee but find themselves with assets such as equipment and real estate that are much harder to liquidate.
Financial performance representations require a franchisor to disclose relevant information about the potential income associated with the operation of a franchise business. While franchisors are not required to disclose potential income, if they do disclose these figures they need to have a reasonable basis for their claim which is substantiated by data. Not disclosing this information is often a red flag for franchise fraud.
While franchise fraud cases are rare, and most legal proceedings are eventually dismissed or arbitrated – they often spell disaster for franchise networks who are involved. The Coffee Beanery is one such franchise: after being brought to court by a Michigan couple for making false claims about potential income and operating costs, The Coffee Beanery was found not guilty, but the damage to their image and their growth was already done. In the past ten years, The Coffee Beanery has gone from 120 franchised units to just 50. Both the stories of their aggravated franchisees and declining growth figures serve as major red flags to potential investors. Quizno’s finds themselves in a similar case – after being brought to court by franchisees who felt they were deceived by franchisors; the franchise has fallen from grace, losing 2,500 units in just 4 years between 2008 and 2012 while other franchise networks in the same sandwich-slinging space such as Jersey Mike's have seen strong, consistent growth.
In order to attract quality franchisees and avoid legal battles, you need data to support financial disclosures and the operational status of your network. Being able to prove not only revenue and costs; but proving customer retention, marketing ROI, growth rates, average order value – the more data that can be disclosed helps potential franchisees make the right decision, leading to happier franchisees and ultimately a stronger, faster-growing franchise network.
Those who win never stop improving. A famous story involving Kobe Bryant – winner of 5 NBA championships, 2-time Finals MVP; 18 time All-Star, 2-time Gold Medal Winner – describes him waking up at 4 AM to practice his shooting before an Olympic scrimmage. Not a medal game – just a scrimmage.
When his trainer came back at 11 AM, after being there with him at 4 AM, the trainer asked Kobe when he finished practicing last night. He hadn’t stopped. He worked on his shooting for 7 straight hours before a scrimmage when he was already one of the best basketball players in the world.
Winners never stop improving. But what’s important is improving in the right way. Work without progress is a poor use of time and effort. And the greatest players not only focus on making themselves better, but focus on elevating the game of their teammates. A single player alone can not win a championship – there has to be 5 on the court.
Michael Jordan – arguably the greatest basketball player of all time, one of the greatest athletes and competitors ever; said it best:
Talent wins games, but intelligence and teamwork win championships.
This mindset is easily translated to a franchise network – talent gets you noticed. A great concept, a great brand or idea can put your business on the map. But to win championships – to build a nationwide presence and a robust network where both franchisees and franchisors are consistently succeeding – you need not only talent but intelligence and teamwork.
The most successful franchises recognize the need for teamwork at every level of the organization – from the franchisor headquarters to the field technicians, as with any organization, everyone needs to be motivated and working towards the same goal to find success. The right team is built with a number of components – the right people, the right tools, and the right attitude.
Even with the talent and people in place – you need intelligence. The data and knowledge to make the right decisions so that your franchise can continue to grow. With the right data in place, franchisors and franchisees can analyze their performance, understand weaknesses, and adjust their strategy to spur continued growth.
At ServiceBridge, our field service franchise platform provides franchisors with a unified view of their organization – giving headquarters personnel the opportunity to see the performance of every location, run global reports on work orders, customers, revenue, costs, job time and more. All of this data serves as intelligence for franchise networks – giving them insight and the ability to make data-driven decisions which ultimately guide them to continued growth, happy franchisees, and higher revenues.
Reaching Data Nirvana
A recent webinar by Scorpion Internet Marketing discussed a common issue for franchisors – disconnected systems being used to run their business, having data in up to a dozen different programs. Fractured data is difficult to analyze: the more fragmented the data is, the harder it is to run accurate reports on what’s going on. Data fragmentation is often a major obstacle for organizations of all sizes, not just franchises.
At ServiceBridge, we’ve run into this problem as well – disconnected sales and marketing platforms making it difficult to understand what’s going on in our organization, and our customers struggling to integrate their data from ServiceBridge into other programs.
One of the key features for any software that you’re going to use to run your business, especially a franchise network, is a Public API and data standardization. At ServiceBridge, our native integration with QuickBooks Online helps service businesses of all sizes keep their accounting data accurate. But often, they need other integrations – to a program unique to their industry, maybe to an in-house system. A Public API such as what’s included in ServiceBridge allows these businesses to push data into other programs; creating a more unified system and giving a clearer picture of the business to decision makers.
Not all decisions are data-driven – but the ones that will ultimately decide the success or failure of your business should be.
Data-driven decisions are common in every business today. But for franchise networks, data and the decisions they inform can mean the difference between robust growth and catastrophic failure.