3 Signs It’s Time for a District Manager

Many Multi-Unit Franchisees ask me ‘When should I hire a District Manager?’ While the answer depends on many factors, such as the number of units and the maturity of the business, I know that these three signs will let you know if it’s time to bring this leader into your organization.

Throughout my career, and having been a District Manager myself and a Director of Operations overseeing seven District Managers and 60 restaurants across three states, I know for a fact that there is a lack of resources and training for this leadership role. Even legacy brands don’t have the tools and the resources not just to select them, but also to develop them to be successful. 

I know how challenging it is to hire for this position, especially when you are a new franchisee or about to have two or three units, and you realize that the work doubles and triples when you go multi-unit. But I also know that timing is crucial.

As I explained back in this 2021 blog post, if you bring this leader before your organization is ready to implement that position in an effective and productive way, your operations, workload, and finances can suffer. 

So, if you are in a growth mode and considering hiring a District Manager, make sure these three signs are true in your organization. That way, you will know that the timing is right and the outcomes will be positive for your franchise organization.

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Sign #1: The Right Number of Franchise Units

How many units do you have? If you only have one, two, or three units, hiring a District Manager will just increase your expenses significantly. 

You need to have the right number of units before hiring a District Manager. You must also consider the distance between those units and the complexity of your business operations. Think about it! It’s not the same to have a District Manager overseeing, for example, Subway stores in a small neighborhood compared to Olive Garden restaurants that are far apart, each with 125 employees and 5 million dollars in sales.

You must also take into account how challenging each unit is. Do half of the units have big significant issues, is only one in trouble, or are they all running tip-top and doing great? 

Those are the things that you need to consider in terms of the number of units to determine whether you can hire a District Manager. 

Don’t miss: How Many Units Should a District Manager Oversee?

Sign #2: Enough Cash Flow 

You must be aware that having a District Manager will increase your expenses. So, only consider hiring this leader if your units produce enough cash flow to pay for that District Manager’s salary, which could be anywhere between $60,000 and $100,000, depending on where you are.

• But beware. The unit’s cash flow should also leave you enough money to make a profit. 

Before you expand into a multi-unit organization, you must become a true expert at your business's financials! You must understand how to: bring revenue and own your sales; manage your labor costs and the cost of goods (if that's part of your business); and maximize the profitability of your units. 

You also have to ensure you have business systems in place to make these units run like a machine. That way, you can increase your profitability as you grow and continue to open more units.

Keep learning: The 3 Most Important Numbers in your Business

Sign #3: You Want Freedom (and are willing to pay the price)

The third thing you need to consider when hiring your first District Manager is how much your freedom is worth.

If you own multiple units and you don’t have a District Manager yet, that means that you are (or should be) doing:

• Effective unit visits. 
• Building relationships with the teams.
• Building a leadership bench.
• Following up on the execution of the business and the brand systems. 
• Collaborating on the local store marketing plan.
• Guiding your Unit Managers and staffing the units

In summary, you are executing all the responsibilities of a District Manager. 

However, the moment you hire a District Manager, all of those day-to-day operational activities will no longer be on your side, which is amazing, but it costs money. 

The question is, how much money are you willing to give up in exchange for your freedom?

I had a franchisee client who only had four units, each averaging about $2 million in sales, so she had pretty healthy cash flow. And yet, when I met her, she was working like crazy, running one unit and overseeing the other three. She knew she wanted to have her freedom back, which is why she reached out to us. 

When I asked her if she would give up $70,000 or $80,000 to be free from the daily operations, her answer was ‘Heck yeah!’ 

So, we then guided her through a careful process: first, hiring Unit Managers to take over her role, and then selecting someone from her team to promote to District Manager. Next, we trained that District Manager so she could delegate her responsibilities, step away from the operations, and focus on growth. 

And guess what? She is now able to go on vacations, which is something that she really wanted but couldn’t do before because of her full involvement in the business.

So, how much is your freedom worth? When deciding when to get that first District Manager, you need to ask yourself this question.

Don’t miss: District Managers, your Ticket to Freedom!

Systems and Processes for District Managers

Before you hire a District Manager, remember that you need to have in place the systems, processes, and procedures you want them to follow. 

If you just hire them and don’t give them any guidance, you will set them up for failure, especially if you just promote someone from within with no experience in this position. 

You must define what you want in your organization and your expectations for them, as well as the routines and habits they should follow to make them successful. 

If you don't know what those are, or you don't have experience in the District Manager’s role, reach out to us! The American Franchise Academy offers LEAD, a best-in-class training program for District Managers. 

This program gives clarity to these Multi-Unit Leaders, and their Franchisees and Direct Supervisors, on the role, critical responsibilities, and routines that a District Manager must have to be successful. 

To learn more about the program, visit https://afalead.com/ or click below to register for a free information session on the LEAD Program:

Reflections:

• Is your organization and operations prepared to bring on a District Manager?
• How could your company benefit from having one?
• Are you willing to bear the financial cost of hiring a District Manager?
• Have you documented the systems, processes, and procedures your District Manager needs to follow?

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