CFXO: The New C-Suite Position Franchisors Don't Know They Need
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CFXO: The New C-Suite Position Franchisors Don't Know They Need

CFXO: The New C-Suite Position Franchisors Don't Know They Need

As a franchisor, it can feel awkward to refer to your franchisees as customers, right? But by and large – they really are. As the franchisor, you can control the things that are defined in your franchise agreement, but at the end of the day these franchisees are not your employees. Thus, influencing what they do daily and dictating how they run their business is entirely up to them.

The franchise experience conundrum

Most people enter franchising looking for success and a profit. But don’t fall into the trap of assuming that finances are the number-one thing keeping them up at night. What is the overall experience a franchisee has?

If you think about the journey of the franchisee, there is a starting point and invariably an ending point. We all would like to think that franchise relationships are forever, but if a franchisee is doing exceptionally well, their goal down the road could be to secure a buyer and exit the business with a profit.

They always start out with the understanding that they are new to the business and need to learn more about the product, technology, and marketing. However, those notions eventually may turn into things like business valuations and succession plans. Their customer experience has everything to do with where they are today, and in what phase of their franchise life they are in.

What is their experience when they need help or to have a question answered? Is someone ensuring that they are reading the operations manual, or suggesting that they may need more training and development?

When you are a brand-new franchisee, the general thought is that at that exact moment and time, you are making the smallest contribution to your franchise organization. You have zero to limited revenues and you are getting a lot of love, support, and visitations from your franchisor. As the franchisor, your main goal is getting this unit out of the gate and successful in their first year.

On the other end of the spectrum, you might have other franchisees, often the highest franchise revenue contributors, that end up being the ones who are most unhappy. It’s not unusual to hear a long-term high performer lamenting the fact that they pay the most money in royalties, put the least demands on a franchise system, yet get less relevant support than new franchisees and average performers.

This notion can leave a strain on the relationship they have with their franchisor. Depending on where a franchisee is in their franchise journey, it could require you to apply different tactics and attention to the various customers/units throughout your system.

Introducing the CFXO

The franchisor of the future should be introducing the role of a Chief Franchise Experience Officer (CFXO), the executive who wakes up every morning thinking, “How do we continually improve and deliver a better experience for our franchisees, and why is that important?” Harvard Business Review makes the case that every company should have a CXO – so why not a CFXO?

For starters, the CFXO would be the person responsible for understanding why so many franchisees within a system are operating in the lower performance quadrant, especially given that franchise systems already have franchise business consultants who are (or should be) held accountable for their assigned franchisees results. 

Is it worth a franchisor’s time and expense? It is when you also consider that:

  • Many finance companies will not lend to a system or to its franchisees that have greater than a 5% rate of turnover (aka regrettable churn).
  • Franchisees that terminate must be reflected in the FDD for a full year after their departure. This includes their name, address, and contact information for prospective franchisees to call when doing their due diligence.
  • The loss of franchisees can have a detrimental impact on the morale of your other franchisees.

The primary role of the CFXO will be to oversee every interaction a franchisee has with your brand. This will be accomplished with franchisee journey mapping. If you touch the franchisee or you’re supporting someone who touches the franchisee, you’ll need to really understand how to do a journey map, along with what the inputs are to that. This will help create empathy, and empathy is so important in moving toward a better future state and a better franchisee-franchisor experience and relationship. This will become a core competency, and not a function.

If we look at the franchisee customer experience on a chart to break down each of the steps in their franchise evolution, someone would be assigned and accountable for making sure that each step and experience is the best. Different from the franchise success manager, this person can ensure that other positions in the system are accountable for helping the franchisees succeed.

Having one person in your organization who knows what to look for and who is providing a situational success map for your franchisees of different stages and sizes can help all feel that the help they’re getting isn’t “one size fits all.”

This article first appeared on FranConnect’s website in November and is used here with permission. For more information, visit their website.

Published: November 26th, 2021

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