5 Important KPIs for Any Franchise Business

By Naranga

Would you like to know how to regulate the performance of your franchise business? KPIs are crucial when it comes to management, reports, and growth. Every franchisor must understand how to provide the most relevant information to franchisees. Some of these indicators may seem obvious to an experienced franchisor but many companies are struggling to improve with no basic knowledge. 

Gross Sales 

1 Gross sales

Gross sales are the core measurement of any business. Basically, it’s a value of total sale transactions within a certain period. Why is this performance indicator important to a franchisor? This metric is used to rank you and calculate royalties.

Every experienced franchisor uses gross sales to track customers’ buying habits and monitor growth patterns. This basic number is a part of many other KPIs, especially those which are connected to financial values in connection with net sales. Franchisees can calculate the production or promotion expenses over the same period. At the same time, gross sales mean little without other KPIs if you want to get full and deep analytics.

Sales Conversion 

2 Sales conversion

The number of visitors converted into customers is incredibly important to define the productivity level of each franchisee. Sales conversion is the percentage you get when you divide the number of purchases by the number of visitors within a location.

For example, let’s calculate sales conversion for one franchise spot within a day. Imagine, there were 300 visitors and 100 purchases... your franchisee sales conversion equals 100/300x100%, which is 33,3%. The next step is to compare this indicator for all your franchisees. This information is what you need to have a full understanding of how new processes are implemented. 

Growth Rate 

3 Growth rate

This KPI is useful to compare your sales performance, it’s a percentage change of variables for a specific time period. For a franchisor, growth rates stand for the revenue growth per location and earnings coming from the retail network.

A franchise that came from $100,000 to $120,000 in a month has grown by 20%. Such information enables franchisors to compare monthly or annual statistics. Franchise managers can track and predict franchisees performance. 20 percent from $100,000 and $200,000 are two different things. Also, as gross sales increase, it’s impossible to keep the same rate. 

Customer Satisfaction 

4 Customer satisfaction-1

This sounds simple... when your franchisees' customers are satisfied and engaged, they’ll eventfully buy their product. The most important thing is to always stay in sight, so a customer won't forget about your brand. Franchisees also must provide a proper service level, so a complete list of rules is required. 

How do you measure customer satisfaction? The most common way is to define the Net Promoter Score (NPS) or, in simple terms, customers loyalty. NPS is focused on a single goal within a simple question. Surveys and reports with a specific number between -100 to +100 must show the customer satisfaction rate. Obviously, the higher the score, the better. 

Employee Satisfaction 

5 Employee Satisfaction

Last but not least, the employee satisfaction KPI has a direct connection to the previous indicator. Many research correlations show online customer reviews and online employee job ratings are interrelated. In our case, franchisors should not only care about high business standards but create beneficial terms for franchisees. Franchisors monitor and measure the level of satisfaction. The easiest way to improve your communication with franchisees is by making correct suggestions, especially to the best of them. Remember, you are working with professionals. Surveys or even direct messages provide the insights you need.

As a franchisor, your prior goal is to create a chain where every employee will be a part of it. These KPIs wouldn`t be possible to improve with no lead management, an advanced communication system or marketing solutions. 

Naranga provides all necessary software services for your business in one place. To manage the most important processes you need right tools. That is how any franchisor will quickly identify the most successful franchisees and be able to analyze their success. Want to know more? Check the Little Medical School case study to learn more about franchise software and how it helps to enhance business. 

Tags: franchise mangement, Franchise Solutions, franchise growth