Remodeling Franchise

The Client

This client is a growing franchise organization in the remodeling industry with over 100 Franchisees.

Background

The client is a strong franchise organization with a heavy focus on the growth and development of its individual franchises. The organization knew each of the franchises had the opportunity for considerable growth, but as the client evaluated and refined their growth and development plans, they became aware of a significant difference in revenue between top performing Franchisees and those at the bottom. While the client had been using the results of a prior benchmark study to assist in the selection of Franchisees, Caliper felt it was important to review the old benchmark not only to determine how well it was working, but to also increase the sample size. At the time of the original study, the size of the Franchisee community had limited the number of participants to only 24. With such a small sample, results from a study can be misleading or incomplete. Now, with a much larger sample size available, they had the opportunity to develop a more accurate benchmark that could help them achieve their goal of consistently identifying and hiring individuals who share the same significant traits as those who run the most successful franchises.

The Business Challenge

Running a franchise involves a unique set of responsibilities. New Franchisees must act as entrepreneurs in order to run a business with limited support and very high levels of accountability. Yet, at the same time, they cannot be so independent that they ignore franchise rules and fail to follow the well-designed business plan developed by the organization.

Furthermore, a franchise starts out with very little support staff, so a new Franchisee must be a jack-of-all-trades early in his or her career and then evolve into a small business manager who can support a more specialized service and sales staff as the business grows. The client wanted to work with Caliper to identify the specific personality traits most associated with running a successful franchise. With this information, the client and Caliper could create a job-matching process to precisely identify individuals who would be a good fit for this complex role.

The Strategic Solution

A few years prior, Caliper had conducted an initial study with a small group of 24 Franchisees to establish the validity of the Caliper Profile traits in predicting franchise performance. This study identified six traits – Aggressiveness, Empathy, Risk Taking, Urgency, Accommodation, and Thoroughness – that differentiated between high and low levels of performance. Three years later, when a large sample size became available, Caliper ran the study again and was able to gather franchise performance data and Caliper Profile results on 75 current Franchisees.

In addition to using the results of the participants’ Caliper Profiles to generate a Top Performer Analysis that reflects the traits that are most important in predicting successful Franchisee performance at the organization, Caliper felt it was also essential to gain a thorough understanding of the Franchisee role from the viewpoint of key stakeholders and current Franchisees. So Caliper and the client worked together to do a job analysis, setting up informational interviews with the stakeholders and successful, reasonably experienced Franchisees from across the clients Franchisee network. During these interviews, the duties of the job were reviewed and the challenges and rewards associated with the Franchisee role were discussed. Franchisees were also asked if they perceived themselves as well-suited to the role in terms of things like temperament and lifestyle. Additionally, information was gathered on the experiences that the interviewees brought to the organization that they saw as critical to success.

Next, based on the data gathered from all the informational interviews, a survey was created that would be given to all prospective Franchisees. It consisted of questions about experiences, attitudes, and personal preferences, and included a scoring system that helped potential Franchisees better recognize the degree to which their experiences and attitudes fit with or diverged from the experiences and attitudes of existing Franchisees who enjoyed the job. This provided them with brief, but clear, guidance regarding their suitability to the Franchisee role.

Then, with the data from the job analysis of current Franchisees, Caliper created a structured interview for the Franchisee role. With customized questions and ratings standards that directly related to the Franchisee’s job, the reliability and accuracy of the clients selection process would be greatly improved.

The Results

Caliper’s follow-up study confirmed and extended the results of the previous study. The traits that were most important for predicting top performance in the Franchisee role included Aggressiveness, Risk Taking, Urgency, Empathy, Flexibility, Gregariousness, Accommodation, Idea Orientation, Thoroughness, and Self-Structure. While Caliper found that success as a Franchisee is most consistently related to a willingness to work hard, follow the business plan developed by the franchise organization, and focus on completing key tasks, it was also determined that individuals who are highly structured or detail-oriented are not as successful as those who are able to just get things done quickly.

This study made quite apparent the positive effect of using the Caliper Profile. After finishing the earlier study, the client was able to use the initial findings as a guideline for hiring new Franchisees. Between the first and second studies, the client effectively hired and retained people who were much more in line with the Top Performer Profile identified for a successful Franchisee. Also the average monthly sales for people who fit the Profile were substantially higher than for those who did not fit. By selecting the people that Caliper recommended and passing on candidates whose personality characteristics did not fit with the Top Performer Profile, the client was able to generate long-term positive results.

In reviewing the performance of individuals who had been hired or retained after Caliper’s first study, the client found that Caliper’s job-matching recommendations were strongly related to performance. As shown in Table 1 below, individuals who received a positive recommendation had, on average, over $100,000 more sales per month than those who were not given a positive recommendation.

Table 1: Average Monthly Completed Sales for Franchisees with Positive versus Negative Caliper Profile Recommendations.

*This difference in sales is statistically significant (t (22) = -2.36; p< .05).

As the table indicates, by going against Caliper’s advice and providing 11 individuals who were not recommended with the opportunity to open a franchise, the client essentially lost an average of over $1,000,000 per month in sales.

With the creation of the Top Performer Profile, surveys, customized interview questions, and the knowledge that the Caliper Profile is valid for predicting Franchisee performance, the client is able to confidently and effectively hire and develop Franchisees who can take advantage of the considerable opportunity for growth and succeed at the organization.