With the tax season upon us, and April 15 just around the corner, it can be a very stressful time of year. Finalizing receipts, payments, documents, interest records, and many other tax items your accountant, CPA, or bookkeeper might be asking from you.
This is also a good time of year to be reminded about, and to think about, your Franchise Tax, also known as your royalty. As a franchisor (or if you are a company considering franchising your business) you should be reminded that each month, or each week, your franchisees have their royalty payment drafted they are thinking, “What have you done for me lately?” As a franchisor, you should have some good answers for this if one of your franchisees decide to be so bold to ask.
Here are 4 reasons you can look to use (or implement) to help you answer the question all of your franchisees are thinking, “What have you done for me lately to help me justify my franchise tax?”
- Operational Support
Operational support should be one of your top reasons why a franchisee should be pleased with their franchise royalty payments. Examples and suggestions for providing quality support include:
- Regularly scheduled site support visits
- Regularly scheduled phone consultation and support
- Reviewing monthly/weekly royalty reports
- Open communication
- Progress reports and tracking for franchisee
- P&L monitoring and review
- Training manual updates
- Coaching and guiding them with strategic, financial, and other daily business decisions
- Marketing & Sales Improvements
Franchisees are always looking for ways to increase sales and one of the greatest values you can provide to your franchisee is to provide new ways to market and sell your services or products. Make sure you are keeping your brand current as well as your current messaging. Hire consultants and marketing experts to review your brand and collateral for suggested improvements. How are your sales processes and sales systems? Review your current CRM systems, point of sale systems, and other marketing and sales tools. How is your marketing collateral? Are you reviewing this annually and refreshing frequently? Have you updated your website lately? Are you working with an SEO/PPC company or a publicist? There are so many things you can do in this category. Remember, you can start with one or two items. Your franchisees will see that you are making progress and it will be viewed as a positive change.
Is your technology up to date? How are your internal communication systems for the franchisees? How is your shared document storage? Are you using a shared drive such as OneDrive, Dropbox, or Google Drive? When is the last time you reviewed your operational controls and systems? Can you move systems and processes to an electronic format using tablets, cell phones, apps, and other tools? There are many things you can be looking at in this category. The great thing is that many technology driven solutions have come down in price significantly over the last several years.
- New Products and Services Innovation
What have you done in the last 12 months to develop, implement, or ad new products or services to your franchisees offerings? Which products are selling and which are not? Are you discontinuing products/services which are not producing and replacing with new options? There are so many low cost/no cost options you can look to implement in this category which can make a significant difference for your franchisees.
If you are not paying attention to your franchisees’ needs and improving your support, marketing, sales, technology, and innovating new products and services there is a chance your brand is getting stale. When your brand gets stale, your franchisees do too. Your franchisees will follow your lead as the franchisor. There are many stories about franchisors which become irrelevant and eventually fade away. In our opinion, this can be avoided by continuously building value for your franchisees.
When you are building value for your franchisees they will build value for your brand. It is important to remember that your franchise royalty may be revenue to you, but it will always be a tax to your franchisees.