The Importance of Community Connections to Franchisee Success

The Importance of Community Connections to Franchisee Success

Franchise Owners Can Improve Sales and Recruiting Efforts with Increased Community Involvement

The one area of the franchised business model I consistently see as an opportunity amongst the franchise community, regardless of the brand, is a need for more focus on deepening ties into the community the franchisee operates in. It cannot be overstated that strong community relationships lead to enhanced sales results and a more attractive employer value proposition, increasing your talent pools in a very competitive labor market across much of North America. Let’s examine why community connections matter when building sales and how they help you with your recruiting and hiring efforts.

The Importance of Community Connections

A survey conducted by ZypMedia found that an impressive 84% of people want to shop locally because they know that spending their money with the small businesses within their community goes a long way to enhancing the community for everyone. Whether that’s because of job creation, more significant tax contributions that support local programs, or because they know the business owners and want to help them, tapping into the tidal wave of support for small businesses in a post-COVID world is essential to success.

Growing top-line sales is always on the mind of the most successful franchisees; they constantly strive to increase and enhance their business results. Yet often, their first approach is to look for new discounted offers to get the job done. While executing strong local store marketing programs has its place, it shouldn’t be at the expense of community engagement. It’s not one or the other. Ignoring the benefits that can come from a community that rallies around your business 365 days a year and not only during periods of deep discount offers is a critical mistake.

Community awareness drives word-of-mouth marketing, something not to be overlooked.

Strong community relationships and partnerships are extremely valuable to your franchised business. Community awareness drives word-of-mouth marketing, something not to be overlooked. An interesting study by V. Kumar published in the Harvard Business Review tried to quantify how valuable word-of-mouth advertising is. He found that the referral value of a happy, loyal customer was worth more than just their lifetime spends at the business; in fact, their analysis found that the referral value was often as much as double to four times their lifetime spends.

Understanding that every single customer you win over through strong community partnerships and support could yield up to four times the sales of that one customer is critical to making your community efforts count. To help customers who want to be advocates for your local business, you need to make it easy for them to provide feedback and testimonials to their friends and family that you can use in your social media marketing efforts.

Referral Programs

Consider implementing a referral program instead of or alongside your loyalty program, as the research suggests that most referrals came not from your most loyal customers, termed ‘loyalists,’ not even the second most loyal customers, called ‘champions’ the most referrals came from a third group of customers called ‘advocates’; they referred more new customers than any other group in the study. When understanding how vital building loyalty within your community is to your business results, the final consideration is how you execute your business operations.

None of the tactics you develop to deepen community ties will mean anything if your operations aren’t making customers happy. Your efforts will be wasted, resulting in the opposite of sales-building referrals, with people in the community actively sharing their negative experiences with friends and family. Consistent execution is critical to your success here. One cannot go without the other. So, before you start marketing your business on the outside and working to drive the community into your four walls, you must first ensure your business consistently operates to standard.

Attracting Gen-Zers

The Importance of Community Connections to Franchisee Success

Another benefit of strong community relations that gets even less attention from franchisees than the positive impacts they can have on your top-line sales is the impact on your ability to hire employees for your small business. Many franchisees understand that most of their business will come from those who work, live, and shop in their community. Yet, they fail to draw the connection that those same people could be potential employees or have children who could be potential employees. Your reputation is the driving force behind people determining if they want to work for you or refer someone they know to go and work for you. Additionally, your connection to and support of the local community drives how Gen Z decides where they work. They are not a demographic to take lightly. By 2026, this generation will be the largest generational cohort, so figuring out how to attract them to your workplace is critical, and community is a vital tool to help you.

Gen Z started out with a socially conscious perspective and didn’t have to adapt to it like the other cohorts.

Unlike the other generations, Gen Z started out with a socially conscious perspective and didn’t have to adapt to it like the other cohorts. They are incredibly passionate about how the businesses they support, either with their dollars as a customer or their time as an employee, act towards the environment, giving back and community service. Formal volunteering efforts top their list of ways to give back personally. If they see you and your business doing volunteer work in the community, primarily if geared towards at-risk groups or keeping the neighborhood clean with environmental work, you’ll likely earn their respect and trust, making your business somewhere they would feel proud to work.

It’s also worth mentioning that in many retail and hospitality franchises, it’s often young people, perhaps with their first-ever job, who work in these industries. Suppose your business aligns with its community-focused values. In that case, you could have a loyal employee for several years, perhaps even while they finish high school and college, decreasing turnover, an often-hidden cost on your P&L, once again enhancing your unit economics.

Takeaways of Community Connections

If you succeed at attracting these kids and create the right environment for them to thrive, enjoy their work, and make meaningful social connections, you could also consider implementing another type of referral program, but this one is geared towards your employees referring their friends to come and join the team. Numerous studies have shown that referrals are the single best source of hire across many industries and job functions because they are more likely to fit your business’ culture than those who haven’t been referred to you by an existing employee.

Don’t underestimate the power of your reputation within the community to build repeat and referral business. Its ability to enhance your recruiting efforts by attracting young, community-minded local talent could lead to a steady stream of referrals and new hires.

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Laura Darrell lives in Mexico City, and as a former leadership executive, she has over 25 years of senior leadership experience at some of the world’s most beloved brands like Starbucks and Apple. Her time spent working in franchised operations for large multi-unit franchisees at A&W Restaurants Canada complemented her executive leadership skills as vice president of operations and training at Boston Pizza Restaurants, Canada’s largest casual dining chain.

She prides herself on her ability to build strong, collaborative relationships between franchisees and franchisors. She is a regular contributor to FranchiseWire and other publications in the franchise periodical space, where she writes about the leadership skills required to lead in a franchised organization and many other topics relevant to franchisee success and strengthening unit economics. She holds a master’s degree in organizational leadership from Royal Roads University in British Columbia, Canada, where she conducted her thesis research on multidisciplinary collaborative leadership practices within franchised organizations that enhance business results for all key stakeholders.

She has written three books: The Principles of Franchisee Success – Apply Them and Take Control of Your Business Results; The Promotability Gap – The Real Reasons You’re Not Advancing in Your Career; and The Great Resignation – How a Culture of Coaching, and Appreciation Can Help You Win the War for Talent. She travels frequently in the US, Canada, and Mexico to speak at franchised organizations that are looking to develop strong and effective leadership talent as well as helping them to enhance their relationships with their franchisors. She is also the founder of Laura Darrell Leadership Coaching.
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