Fourth Step: continuing review of the operating results and market results of the strategic plans.

The goal of this step is to ensure that the strategic planning process keeps the business
responsive to the ever-changing needs of the market.

4.5 Set Priorities for Strategic Decisions

Six Desired/Targeted Outcomes or Strategic Priorities

1. Build a franchise system and its infrastructure to establish and maintain high
performance at the home office as well as corporate and franchise locations.
2. Be state of the art in products and services; look for continual product and service
development.
3. Seek to gain and maintain market share with quality service to customers.
4. Continually improve processes and procedures to ensure efficiency, standards of high
quality, and strong financial return.
5. Develop a competent and committed workforce within the corporation and build a
supportive environment and identity for franchisees.
6. Position the franchise system for the long term by identifying issues and trends that may
provide opportunities or produce threats to the franchise.

Often, strategic initiatives will fail because they are seen as extra work to be accomplished in
addition to existing work. A successful strategy does not “add to,” it replaces.

Successful strategy execution is a dynamic process. It begins as a set of agreements among

the home office, corporate units, and franchisees about markets, products, growth rate, and so
on. The rest is execution. Without execution, the initiative dies.

Four Types of Growth Opportunities for Consideration

1. Retain your existing performance. Reducing attrition is the same as growth.
2. Stimulate more purchase/use of your product/service by existing customers to satisfy the
basic needs to be met – but more often.
3. Generate increased sales with existing customers by cross-selling complementary
products or services that meet a new or different combination of the existing needs.
4. Bring in customers from your competitors or those who are totally new to your type of
product/service offering.

Rationale: “If I know my customer in detail, I will know not only how to market to him/her but also
how to please him/her.” Know who your customers are as well as how you can reach them.

4.6 Planning Should be Organized

Planning helps the franchisor keep a proper perspective on individual whims and personal
aspirations. Formal planning is the initial process, the completion of which enables the
remaining elements of the process of management to be utilized. Solid strategic planning
demands that all the pieces of the franchise development plan fit together. Planning is the
primary responsibility of the owner-manager. It concerns the following:
● Determining the overall goal, mission, and objectives of the franchise
● Formulating policies, plans of action, and procedures for attaining the objectives of the
franchise organization.
● Developing standards for costs, sales targets, and performance for incorporation into a
budget and sales forecast, which can be used as an operating control.
● Developing the franchise’s line of products, services, and processes in the long run to
ensure continuity for the organization as well as adaptability to the ever-changing needs
of the marketplace.

As a franchise system, the franchisor typically relies on two income streams: (1) franchise fees
and (2) royalties based on franchisee sales. Franchise fees need to be sufficient to cover costs
of marketing the franchise system to prospective franchisees, site selection and approvals.
Most, if not all the funds, generated by franchise fees are expensed in the marketing of
franchises and the development of successful start-up ventures by new franchisees. As a
franchise system grows, royalties should pay for the franchisor’s administrative and support
programs as well as profit as the return on investment for helping franchisees become and
remain successful.

Organizing is the coordination of human, financial, and physical resources deemed necessary to
reach the objectives set forth in the planning phase. Activities in the organizing function include
identifying the jobs required to be performed, staffing each job with qualified people, determining
how much authority and responsibility each person should have as an employee of the
business, and clearly defining the authority-responsibility relationships to avoid confusion and
overlap of authority. Job descriptions and an organization chart describe and graphically
represent these relationships.

An organization chart is particularly useful for showing these relationships as well as indicating
the formal decision-making and communications channels. Business growth implies change to
reflect new franchisees, territories, and required staff assistance.

A multi-unit franchisee (MuF) is one who owns and operates more than one franchise, often in
an urban area. The MuF generally will begin with one unit and utilize the proceeds and profits to
expand into the second, third, and fourth units. MuFs are generally granted geographical areas,
primarily designated market areas (DMAs) as developed by the A.C. Nielsen station index.
The DMA is a television market coverage area rating system, and is a common method of
allocating geographical territories based on a market’s media for advertising and promotion. The
DMA is simply a map that outlines television viewing markets exclusive of one another based on
measurable viewing patterns.
One of the most popular ways to create multi-unit franchises is to simply draw up an area
development agreement. With this development agreement, the franchisee is given the right to
develop and operate multiple units in a given area. This right generally is accompanied by