24 - The measures that matter and how to manage with them Flashcards
What measures are specific to franchise systems?
Measures used to evaluate franchise outlet performance and manage the overall franchise system
These measures complement traditional retail performance metrics.
What is Average Unit Volume (AUV)?
A measure of revenue, sales or turnover reported weekly for each outlet
The term refers to the franchised unit or outlet, not the unit of sale.
Why do franchise systems typically use weekly performance tracking?
It matches the sophistication level of franchisee operators and aligns with promotional cycles
Weekly tracking is preferred over daily or monthly metrics.
How are AUVs reported in franchise systems?
In local currency or the franchise system’s ‘home’ currency
For a US-based system, AUVs would be reported in US dollars.
List some comparisons made using AUVs.
- This week compared to the equivalent week last year
- Between outlets
- Benchmarked against the system’s average
- Compared to previous week or month
- Compared to equivalent outlets
Comparisons help in evaluating performance and growth.
What does the Index for AUVs and Units measure?
A comparison of this week’s performance to the equivalent week last year expressed as a percentage
It helps assess growth trends.
What are Customer Count and Transaction Count?
Measures of the number of customers or transactions at a franchised outlet
The sophistication of the Point of Sale system affects the accuracy of these counts.
What is Average Cheque in a franchise context?
The typical spend of a customer in a single transaction
It is equivalent to Average Basket for a retailer.
Define Connect Rate.
The ability to add incremental sales to the core unit
For example, encouraging customers to buy a drink with their meal.
What are the major cost categories tracked by franchise outlets?
- Cost of goods sold
- Labour costs
- Royalties
- Fixed costs
- Local marketing costs
- Miscellaneous costs
These categories are standardized by the franchisor for comparison.
What is the focus of profitability measures in franchise systems?
The equivalent of EBITDA (earnings before interest, tax, depreciation, and amortization)
It reflects cash generated from operations.
True or False: Lower prices always lead to higher percentage margins.
False
Lower prices may increase volume but can decrease percentage margins.
What traditional method is used to assess customer satisfaction in franchise outlets?
Mystery shopping conducted by trained observers
This method evaluates various aspects of the customer experience.
What is a limitation of mystery shopping?
It provides intermittent feedback and may not reflect genuine customer input
Feedback can be perceived as compliance checks rather than constructive.
What do new systems for customer feedback aim to achieve?
Real customer feedback relevant to each outlet on a continuous basis
Customers are incentivized to provide feedback through low-cost rewards.
Fill in the blank: The major cost categories in franchise systems are defined by the _______.
[franchisor]
What does productivity measure in franchise outlets?
The number of Units sold per hour worked
It reflects staff efficiency and scheduling effectiveness.
What is the significance of the Average Wage measure?
It indicates the average hourly rate paid to the service team
This helps understand labor cost dynamics.
What is a key benefit of customer feedback obtained via mobile phone?
Real customer feedback relevant to each outlet that can be obtained continuously.
What does till receipt identification allow in customer feedback?
It relates feedback to a specific store, date, time, and server.
What are the three main objectives of franchise system-level measures?
- Understanding overall system performance
- Identifying parts of the system performing well or poorly
- Identifying best practices to improve performance
What is a primary tool used by franchisors to manage performance?
Rolling up measures from franchise outlet level to provide system-wide averages and league tables.
List the different groupings used to track and manage franchise business.
- Ownership (multi-unit, single unit)
- Areas of responsibility (area managers, regional managers)
- Geography
- Location type (rural, city, airport, etc.)
- Market maturity (emerging, transitional, developed)
- Market density (below 1 per 10,000, etc.)
- Time as franchisee (less than 2 years, etc.)
- Performance rankings (top 10%, bottom 10%, etc.)
What correlations might be investigated in franchise performance?
- Customer service and profitability
- Compliance ratings and profitability
- Store densities and profitability
- Hours open and profitability
- Average cheque and profitability
- Customer service and average cheque
- Productivity and customer service
