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KPIs: Critical for Your Franchise Business and Suppliers

Franchise employee working on laptop

My takeaways from moderating roundtable discussions at the 2024 IFA Annual Convention in Phoenix.

At this year’s International Franchise Association (IFA) Annual Convention, I had the honor of moderating two roundtable discussions on the value and importance of KPIs on your business. Leaders from top franchise brands and suppliers participated, including Gold’s Gym, Profit Soup, Clean Brands, Timber Pizza Company, The UPS Store, and more.

Meaningful, measurable, and actionable was the mantra I used to kick off the conversation. With these three key words in mind, the industry leaders immediately started comparing notes and best practices. Here are my top takeaways:

KPIs are key to a business, for the brand/franchisor. KPIs are in place for measurement and for performance improvement and should be looked at accordingly. Missing a KPI should not be met with punishment, rather viewed as an opportunity for performance improvement. Examples of KPIs mentioned include EBITA, Turnover, Slip Rate and even Net Promoter Score. The key is to answer, “What drives success in a company and how to manage it?” with your KPIs.

How to achieve the KPIs was a component of the discussion. The pros and cons of taking orders in person vs. online is a contributor. When the sale is in person, the leaders found it easier to upsell once they got the prospect on site, whether in a store, fitness facility, or restaurant. While not directly mentioned, the classic “Would you like fries with that?” was hinted at. Conversely, online purchases, while always welcome, resulted in lower additional purchases. These results are not surprising. The challenge is finding the right mix between the two for your business.

From a sociological perspective, KPI leaders have been found to be motivational to those not at the top. Other system franchisees will look at the KPI leaders as inspiration to do better. Franchisors can capitalize on the objective data to identify deficiencies, inefficient processes, etc., and then provide training to the system. In fact, successful franchisees are often the source of process improvement, ideas, and innovation that the entire franchise system can benefit from.

Sharing KPIs amongst the franchise system seems to be a best practice. Several systems share weekly KPIs, which include sales, invoices, and top-line revenue, either in a weekly call/webinar, their intranet, or other communications methods. They find this motivating and it holds people accountable when corporate is involved.

KPIs apply to service providers that serve the franchise industry.  At Hughes, we have crisp service delivery KPIs, as well as service level agreements (SLAs). These metrics can apply to system availability, install time, customer service, and provide peace of mind to the franchise that their Hughes service is available, online, and working for your business to keep the revenue stream flowing.

Whether working with your corporate team, franchisees, or suppliers, KPIs are an objective way to measure performance. Successfully managing KPI results can lead to increased revenue, and increased customer satisfaction, including supplier and employee satisfaction. Not sure if you’re measuring the right items or using the right metrics?  When in doubt, it is always OK to take a step back and ask if the KPIs are meaningful, measurable, and actionable.