7 Ways to Track Your Franchise Success

🕒 Estimated Reading Time: ~4 minutes

I respect the value of performance data, but I’ll also be the first to admit that collecting data is not an enjoyable task, at least for me. It takes some time, it needs consistency, and it always seems to pull me away from running the business. But data illuminate us by highlighting where we are glowing in our business and where we have room to grow.

Developing a sleek and successful business demands attention to the details of our performance. So we must work on our franchise and much as we work in the franchise. A shift in focus will educate us on best practices to enhance your bank account and franchise even more.

So, how do you track your franchise success? There are many ways, but these seven data points are a good start. Yes, it may take time that you feel you don’t have, but the knowledge will help design a smarter and better business.

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1. Sales Revenue and Growth. You will probably know this number easily. Sales revenue doesn’t mean success, however, but as sales increase, it can indicate trends for your location, especially if your growth rate is within expectations for a new franchise. A franchisor might even rank you highly for sales and growth, but it doesn’t mean success without more data.
2. Expenses. Just as you want to increase sales, monitoring expenses and keeping them low is critical to profitability because every penny you spend reduces your profit by 100% of every penny spent. In a franchise, since royalties are collected based on gross revenue, a franchisee must control costs to maximize the dollar that stays in the coffers. A franchisor should provide benchmark goals of what is considered normal expenses for your type of franchise and then assist in developing a plan that meets or exceeds industry standards. Invest where you will see returns (like marketing and employee retention) and avoid overspending on rent, inventory, and labor.
3. Cost of Goods and Pricing. I once bought a service business where I discovered that while it was “doing ok,” no one could detail the service's cost. How can you price a service if you don’t even know what it costs to provide that service to the customer? It was a guessing game of immense proportions. Over time, the data collected led us to an important realization: a big customer who had negotiated a lower price based on volume was the one we had to stop servicing. Profit went up considerably when we said goodbye to a good chunk of revenue (that was not high enough to cover the cost). We made more money when we understood all of our costs.
4. Customer Numbers. Data will vary by industry, but every franchise must know their customers' data: customer totals, average spend, cost to acquire them (to see if they spend enough to keep around). Repeat customers are the lifeblood of a business, and they can help spread the word along with your marketing dollars. Ask every new customer where they heard about you so you can measure every marketing campaign and referral from an existing customer. Then, spend your marketing dollars where they are most effective at creating and keeping more customers.
5. Employee Sales. An educated and satisfied employee will sell more for your franchise. Track ticket averages to understand where their strengths lie. And measure employee satisfaction, too. The data on employee happiness will correlate with sales numbers. Engage, respect, train and reward your employees, and the data will show increased revenue. And you won’t spend money recruiting all the time, either.
6. Customer Reviews. Whether you send surveys or track online reviews, you will gather data or see ratings compared to other similar businesses. Top ratings and reviews will turn into more customers, more return customers, and higher sales. You must know what the public thinks of your franchise so tat you can keep your reputation stellar and your customers loyal.
7. Profit. Of course, the most important data point is profit. And it will be highest in number and margins if all the other ones are performing at peak levels. When you track, measure and improve your performance statistics in all the other areas, more profit will result. For a franchise especially, this number is the health indicator of your future success.

We know you are working hard in your business, but take the time to track the data on your business—then use it to make your hard work pay off. With a clear understanding of your performance data, you will be informed and ready to succeed.

Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.