The Opportunity of Underachieving Franchisees

For every above-average franchisee, there is a below-average franchisee.

Franchisors spend 80% of their time and resources worrying about the bottom 20% of performers in their system.

Not only are underperforming franchisees time and talent consuming, but they also present other strategic challenges:

  • Weak operators usually pay the least in royalties.
  • Poor franchisee operating results adversely impact the operating metrics of the entire system.
  • Under-performing franchisees leave customers doubting the brand’s products, services, and value.
  • Struggling franchisees embolden competitors to go after more markets and attack the livelihoods of other franchisees.
  • Average franchisees can be pulled down as they observe peers struggle or fail.
  • Struggling franchisees make it more difficult for franchisors to recruit new franchisees.
  • Failed franchise locations can sour landlords on the brand, limiting access to the best real estate.
  • In the worst case, failed franchisees can lead to litigation.
While franchisors and franchisees are highly motivated to address the issue, teams with the necessary capabilities are rare and often unaffordable.
Corlex’s combination of operational expertise and financial markets and transaction acumen provide the ideal solution for franchisors and franchisees by putting the assets in the hands of an operator who can maximize value while providing the franchisee an exit at a fair price.