On the eve of the 2011 Franchise Convention, I want to thank, in advance, all of the participants who are making the convention possible. Thanks first to the franchisee presenters – those franchisees who are sharing with their peers their insights into how to build more and more successful centers. Thank you for your generosity of spirit. Thanks also to each contributor from the HQ team – and especially to Mary Feldman who leads the effort. We appreciate your hard work. And, of course, special thanks are due to each of you who are participating as attendees. We acknowledge the sacrifices you are all making by traveling to Long Beach. We salute and commend you for your commitment to learning. Participating will help you make your centers more successful.

As you know we provide ribbons at the convention. These designate the revenue clubs franchisees belong to. We also provide awards based on franchisees’ revenue performance. I’ve been asked: Why the stress on revenue? What about achievements like student or parent satisfaction? Teaching quality? Student performance? How long students stay in their centers? Or profitability?

The fact is that all these indicators are important. But to recognize achievement in these areas we need to have “hard” numbers. We not only need more numbers from franchisees, we need to verify them. This way we could make sure all numbers are being calculated the same way – and correctly. Over the next year we hope to introduce a level of functionality to M2 and other reporting systems that will enable to us get precise indicators in several areas. This way we’ll be able to help you to analyze your center in greater depth, and compare aspects of your performance to averages; similar groups; etc.

Even when we can look at data more comprehensively we’ll continue to make overall revenue the important number. That’s because it is the best single indicator for all franchise systems – and all companies. Most metrics are a subcomponent of overall revenue.  Centers that provide outstanding instruction, have more satisfied parents and students, and achieve great student performance – all have the same effects. Students stay more months – which means their parents pay for more months. The centers grow because they get more referrals. And how much the centers charge can be higher. All this adds up to higher revenue.

We look forward to gathering more and more data from franchisees – and doing so like larger franchisors. Data needs to be transparent and precise. This way we can not only celebrate the “top-line” numbers but also the contributing numbers. For example we’ll be able to see if better demographics has as much as a 20% impact on revenue. Or more. Or less. And – extending the example – by looking at franchisees’ expenses we’ll be able to see if the additional rent paid for centers in high revenue areas results in higher profit, or only higher revenue. After all, higher profit is what we seek. And if franchisees are reasonably deferring profit by investing in higher growth (marketing; etc.), that should be clear by looking at the detail behind the franchisee’s expenses.

This level of analysis is in front of us but hopefully not too far in front.  It would be wonderful to celebrate profitability, in addition to revenue, at our 2012 convention!

Wishing you all safe travels to Long Beach. We look forward to seeing you.

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