Michael Paul, founder and CEO of Pack & Send, has been sharing his vision of profitability at franchise workshops.

“We take a view the brand will be, in the long term, tied to the profitability of individual franchisees. We collect profit and loss reports each month from every franchisee, as well as other financial reports such as how many sales are cash and credit versus accounts.

“We benchmark information and provide feedback too on performance of the individual against key perfomance indicators (KPI); we also publish a summary of information on our intranet. Franchisees will be able to compare their gross profit with every other site in Australia.”

At Pack and Send the first step is to identify the best in the class and where franchisees are placed. The feedback reports include initial steps on how to improve but franchisees receive more personal guidance from their business consultant who analyses the benchmarking and the feedback report.

“ItÕs been pretty much part of our culture to embrace financial benchmarking. WeÕre continually investing in new systems to get better reports,” says Paul. The company is now upgrading the system that compares benchmarking.

Paul insists dedicated people and robust systems are pivotal to financial success. “ItÕs a big investment but there are big returns on getting it right. You have to take a serious approach. I guess I would say profit doesnÕt occur by chance. Any business must craft a good strategy for clear cut profits.”

And he believes optimum profit can only be achieved if there is franchisee access to all profit and loss.

So how should a potential franchisee deal with the question of profit in meetings with the prospective franchisor? “A good question to ask would be ‘Do I need to provide profit and loss on a regular basis?Õ Also ÔAm I in a position to know the gross profit of every other franchisee in the network?Õ”

The answers, he says, can identify whether or not a franchise system is embracing financial benchmarking.