Meetings With Remarkable Chairmen

By Greg Nathan posted May 5, 2016

Over the past two weeks I’ve had the privilege of spending time with two remarkable people, both newly appointed Chairmen of their respective franchise associations. The first of these was International Franchise Association (IFA) Chairman, Aziz Hashim, who blew everyone away with his incisive insights and advice in a series of meetings with multi-unit franchisees and franchisors while visiting Australia. Here’s three things I learned from Aziz.

  1. If you are a franchisee and want to expand into more units, be very clear on why you want to do this. If you aren’t prepared to develop the mindset and infrastructure needed to work ON the business, you may end up making less money than if you just operated one unit really well. That being said, multi-unit owners who do invest in expanding thoughtfully will make a lot of money, enjoy a better life and have the satisfaction of contributing significantly to their teams and communities.
  2. Franchisors who want to expand their crop of successful multi-unit franchisees need to up their game, both in preparing these people for expansion and the ongoing support provided. In particular multi-unit owners need focused help with location set up, structuring of staffing and performance management systems, financial planning and data monitoring systems. While some franchisors are doing this well, our research shows most franchisors could implement better quality processes around how they are working with their more established franchisees.
  3. Franchisors who want to maximise the value of their franchise network to potential investors must focus primarily on the profitability of their franchisees, not just the profitability of their head office. Franchise networks with strong unit level economics achieve significantly higher price to earnings (PE) ratios than those with a high proportion of struggling franchisees. The tangible expansion opportunities that are underway (also driven by strong unit level economics) will also impact significantly on a franchisor’s PE ratio.

The other impressive person was the Honourable Bruce Billson, a former Federal Minister for Small Business and Executive Chairman of the Franchise Council Australia (FCA). I and some other members of the Australian Franchise Hall of Fame met with Bruce over lunch to discuss all things franchising. What impressed me was the quality of his thinking, his awareness of the people around the table and his strategic insight into the issues being discussed. When I commented on this, he said he had trained himself in Situational Awareness (a psychological concept I have written about in a previous Tip).

This thinking technique has three levels and was developed by the USA air force to train their fighter pilots to think ahead and to be aware of all contingencies. It’s something I regularly talk with my own team about because, to make a difference, we need to stay aware of what’s going on around us. I loved the fact that the new FCA Executive Chairman has been consciously training his mind in this way.

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