Brand Systems vs. Business Systems: The Franchisee Gap

Why does the American Franchise Academy exist? To answer that question, I first have to explain our view of the franchise business. 

For us, the franchise business is a collection of Brand Systems and a collection of Business Systems. Together, those two will give you what we believe is a successful franchise business.

What is each system composed of? Who’s responsible for each system? What does it imply to have a Franchisee Gap, and how can you close it? That’s what we’ll explore in this blog post.

But first, subscribe to our YouTube channel and Podcast, and follow us on our social platforms.

Franchise Brand Systems

The first part of the franchise business is the Brand Systems, which include everything that Franchisees acquire when they buy the rights for a franchise. The Brand Systems include:

1. The product or service that a founder, creator, or innovator created, and that they found customers want and are willing to give their money in exchange for that product or service. 
2. The necessary service processes & procedures to deliver that product or service. 
3. The brand image and everything customers see, touch, and smell around the brand. This goes beyond just the logo; it also includes uniforms, furniture, equipment, packaging… Literally, every physical element they experience.
4. The brand marketing to create awareness. The efforts can be either regional or national, depending on the brand maturity and the payment of the marketing fee.

The Franchisor is responsible for providing their Franchisees with these four elements, as well as for maintaining and innovating on them so that the franchise brand stays up to date and up to speed with the changing times.

But that is not enough to have a successful franchise business. 

Keep learning: What is a Proven Franchise Brand? 7 Characteristics

Franchise Business Systems

To have a successful, profitable franchise business, you also need to have what we call the Business Systems. These include all the elements, processes, and procedures that Franchisees must implement to manage the people and the business, as well as their profits and growth.

• The Franchise Business Systems are the machine that helps the Brand Systems become profitable. 

Beware: nowhere in the franchise agreement or the FDD will the Franchisor say they guarantee sales or profits. That's because a lot of it has to do with how you manage your Business Systems. 

Yes, when you buy a franchise, especially from a well-known, proven brand, you are going to have automatic sales. But the truth is that your sales growth year over year will really be based on how you and your team manage that franchise unit daily.

Other aspects that will determine your business success, no matter what brand you have, are:

• The type of team and leadership you build.
• How well you and your people do the work, manage the business, and execute the brand.
• The kind of community involvement you have.
• Your local business reputation.
• How well you manage your labor costs, your cost of goods, and your maintenance, and all the other business expenses.
• Your scalability, because if you want to have time and financial freedom, you have to have the systems, processes, and procedures to grow into a multi-unit enterprise.

All of these elements build the Business Systems, and you, as a Franchisee, are responsible for them. The Franchisor can’t and won’t provide or guide you on any of these; it is up to you to create and develop them.

The Franchisee Gap

I’ve discovered that one of the scariest moments for a Franchisee is the day that their FBC (Franchise Business Consultant) leaves. Up until then, they were accompanied by this sort of coach who represents the Franchisor within the franchise network and helps them navigate the first days of running their business. However, at some point, they have to go. 

That’s when the new Franchisee realizes that they don't know everything they need to know, and now they are responsible for a business and everything that happens to it.

Then, all the questions start coming in. How do I hire the right people? How do I discipline them? How do I pay them? How do I manage inventory effectively? How do I make sure I control costs? How do I read the profit and loss statement? And how do I know how to calculate the break-even point? And how long will it take me to reach break-even?

And if Franchise Owners don’t have the answers, the issues start coming in.

Sadly, too many Franchisees fail not because they didn't have a great brand, but because they didn't have the business experience, the business acumen, or the business knowledge to ensure that they were profitable and successful.

That’s where the Franchisee gap appears. 

You may ask why the Franchisor does not provide this information. Well, there are two very clear reasons:

1. For them to give you the business management knowledge, tools, and resources, they would have to give you a lot more than a proven brand. They would have to give you a degree in small business management. But they don’t have the resources, structure, or time to give you that! Plus, they would have to charge you a heck of a lot more money than they actually do. 
2. The joint employer rules. What this law says is that if the Franchisor gets involved in the Franchisee's day-to-day management of their team members, they will become joint employers, and therefore, liable for everything that your employees do.

Why the American Franchise Academy Exists

As you can see, the Franchisee gap is the Business Management Systems. But I have to say I didn't really understand how deep and how big this gap was until I started helping Franchisees 10 years ago, when I founded the American Franchise Academy.

The American Franchise Academy exists to fill that Franchisee gap. And we have created training programs to share everything we believe you need to know to have a successful franchise business.

The very first program that we developed was the COMMAND Program, a 12-month Multi-Unit Ownership Certification specifically designed for Franchisees who want to grow and be in command of their businesses. They can do that because they have the systems, processes, procedures, and policies that allow their leaders to manage the business so that the business owner can be the true leader and commander of their organization.

We started with one-on-one coaching and eventually moved into a group coaching mastermind, and little by little, we have added elements we realized Franchisees need. 

As time went by, we realized that this was not enough because, as Franchisees grow into a multi-organization, they need a District Manager. After doing some research, it surprised me that there was no structured professional training focused on the tactical and practical implementation of that job in the franchise industry. 

So, I put my hands and my mind to work and, after a year and a half, I developed the LEAD Program, a 10-week Multi-Unit Leadership Certification focused on the education, responsibilities, and tools a District Manager needs to be successful. 

This is one of our most popular programs, and we have graduated over 400 District Managers. Plus, we have found that this training for multi-unit leaders works whether it's for someone who works for a Franchisee or for a Franchisee who oversees multiple units.

We didn’t stop there. Once we launched the District Manager program, our clients requested a Unit Manager program too, because while some Franchisors do provide a little bit of training, joint employment prevents them from going deeper. 

I also realized there was a strong need for frontline team members and Single-Unit Franchisees to get the knowledge they needed to run one unit successfully. So, we created MANAGE, the Unit Management Certification Program, to train people on how to run one unit profitably and successfully.

This curriculum is so extensive that we divided it into two: unit management basics, which is four weeks long, and unit management advanced, which provides a higher level of learning and is five weeks long. To date, we have graduated over 200 Unit Managers and Franchisees from that program. 

What we have done with these programs is close the gap that existed in the franchise industry. That way, the Franchisors can continue to provide Franchisees with their amazing brands and the customers with an amazing experience. And we provide the Franchisees with the business management systems they need to turn that amazing brand into profitability, success, and scalability under their own organization.

We see the difference it makes for Franchisees to have those tools and systems for proper business management. We see them go from one unit to three to four, then jump to 10 and 15 units, and keep growing not only their presence but also their teams and their profits. Because a lot of the time, confidence is exactly what's missing to give Franchisees the courage to scale. And that is a lot of what the Academy does for Franchisees.

If this resonated with you, reach out to us! Or if you think we could be the answer for someone you know, whether it’s a fellow Franchisee maybe or even a family member who has a small business and is struggling, please tell them about the American Franchise Academy! We're here to stop that struggle, and with your help, we can help a lot more people. 

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