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  • 3 simple reasons why Franchisees are not making money?

    3 simple reasons why Franchisees are not making money?

    The blood of any business is currency. Cash has to keep flowing through the Cash Flowsystem, or the business will fail. There is nothing more frustrating than when a good chunk of your franchisees are not making money!  Poor performing franchisees can be like a virus in the business system.  The virus can spread, and affect other parts of the system. How can you, as a franchiser and leader determine why segments of your system are unhealthy?

    From our research and experience, we noticed that most systems, regardless of the industry, struggle with franchisees who are mediocre or poor performers. These weak links, need to be understood.

    There are three important reasons why franchisees do not make money.

    They are:

    1. They may actually have a great marketing plan, but they are not converting their sales.  This is a sign of poor sales strategies, a poor sales processes and little to no follow up. Marketing pans do not translate into business unless a sales team on the ground can execute them.

    2. They do not have enough new customers coming in.  This is a sign of poor marketing and sales. Nobody knows about them! There are very few business, if any at all, that can survive without marketing. People have to know about your service or product, before they can knock at your door. People have to know that your business is within their reach. Has the franchisee worked on getting the local community to know them? Are they networking? Is there a marketing plan in place so that people can learn about them?

    3. They are not loving their current customers enough, so they are not getting them to refer or buy more often. Your employees are your ambassadors for your business, and your clients must know like and trust you while feeling you and your employees show them love. Without trust, you have no relationship and without a relationship, your reputation suffers.

    Can these issues be turned around? Of course, they can. Start by tackling the weakest links. Learn where they struggle the most, and see if they are committed to making change. If they are committed to change, help them and hold them accountable. If they are not committed to change, help them exit the business.  If you can identify your franchisees problems, and get their commitment to change, you are halfway to the solution, and heading back to profitability and health. Cash will start flowing through the system again.

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