Avoiding the "Whoops" Factor

We’ve all had those “whoops” moments when we remember what we forgot.  Some slip ups are innocent, like forgetting to buy milk. But in some situations they can be fatal. One of my favourite books is The Checklist Manifesto by the surgeon, Atul Gawande. In it he explains how the number of people dying unnecessarily in hospitals is now decreasing because of a simple, well researched checklist. While checklists are saving lives in hospitals, they can also be used to reduce mortality in business.

The power of checklists

In 1995, after hearing some really horrible “whoops” stories from franchisors about their franchisee selection practices, or lack of them, I set out to develop a checklist that might prevent later problems or even failure. As we systematically collected data on the common causes of franchisee performance problems we discovered a number of recurring mistakes. “Whoops we didn’t think to ask how their partner feels about the business.” “Whoops we didn’t check who would actually be running the business.” “Whoops, we forgot to check how much money they expected to make in the first year.” And so on.

Based on these findings we created a detailed franchisee selection checklist, known as The Final Check, used by many franchisors today to help them prepare their new franchisees for the journey ahead. If you are a franchisor, deciding whether to allow a franchisee into your network is an important decision which you will have to live with for many years. 

As a guide, any decision with important consequences that cannot be easily undone needs a checklist. For instance our research work involves much data handling where a simple mistake can lead to the wrong conclusions. So we have what we call “cross checks” where a different person checks the data at specific points in the analysis and interpretation process.  This has paid off big time.

Preparing multi-unit franchisees for success 

Another valuable opportunity to use a quality checklist would be assessing whether existing franchisees are ready to expand, and identifying what they need to do, to prepare themselves for success. Multi-unit franchising is an attractive growth option for franchisors and franchisees but there are many pitfalls for the unwary. With this in mind we have been working with hundreds of franchisors and franchisees over the past three years to identify the critical success factors in multi-unit franchising. The result is a new 68 point checklist, called The Multi-Unit Diagnostic. If you allow existing franchisees to expand into additional units, do yourself a favour and check this out (excuse the pun). Here are some important areas we have identified:

• Do they have the personal characteristics and support networks to perform at a high level as a multi-unit franchisee? This includes decision making ability, leadership, stress resilience, relationship skills and outlook on life. 
• Have their existing operations been performing at a high level? This includes key measures, compliance, culture, people management practices, their relationship with the franchisor team and their business systems.
• How thoroughly have they planned ahead? This includes their goals, structures, systems and the implications of the expanded operations on their current business and lifestyle.
• How will they fund the expansion? For instance whether an existing business is being used for cash flow or capital raising, and whether they have prepared realistic budgets and forecasts.

In conclusion, checklists have been used in the construction, aeronautical and other industries for years to improve safety and prevent potential disasters. The development and use of quality checklists in your business, whether you are a franchisor or a franchisee, is a smart investment.

Whoops, nearly forgot to mention! If you are involved in multi-unit franchising (as a franchisor or franchisee) we are running a free webinar where we’ll share the lessons from our recent Multi-Unit Summit and a sneak peak of the new Multi-Unit Diagnostic. Click here for details.