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The Brand is King..Are you a worthy subject?

Canadian Business Franchise, May/June 2008. David Lipton

Consistency, Consistency, Consistency – when your customers arrive at your franchised business, it is likely this that drew them there. Franchising is a successful and growing business model because it builds loyalty to a brand, not just loyalty to one location. This means a customer eating his or her favourite dish at one franchised restaurant can come to yours and order it from you, too. Perhaps someone’s aunt in British Columbia found a great toy at a franchised retail store - she should be able to find that same toy at your local franchise in Nova Scotia. 

For franchisees, a well maintained franchise in another city (or even country) can positively impact their own business. Here’s the downside: should a customer have a bad experience at someone else’s location, he or she will likely avoid yours, too. Franchisors know this, so many have developed detailed standards franchisees are expected to follow. These can cover anything from general cleanliness and food preparation to customer service protocols. They can also mandate service of a certain speed, or even “touchpoints” the employees must cover in the course of a customer interaction. For a restaurant franchise, this may mean asking each customer if he or she would like to purchase a combo, rather than a hamburger alone; for a retail store, it may mean asking if the customer has a discount card – and if not, would he or she like to buy one?

How are these things measured? Both franchisors and franchisees have found ways to do it, but too often, they rely solely on methods that measure customer feedback. Now, it’s always good to gauge your customer’s opinions, and doing so is often quite cheap. However, cheaper isn’t always better; there are many ways your franchise can deviate from the required standard without customers having any idea. Rest assured, your franchisor will be far more aware. The most important customer data for you to monitor is that related to your brand standards, and there are several ways to do this.

Internal Auditing
This approach is exactly what it sounds like – a behind-the-scenes appraisal of every aspect of your operation. It is common for a franchisor to send an inspector to its locations, sometimes unannounced. This individual, often an area manager, will evaluate your franchise according to a pre-determined checklist, though you will certainly be aware of it requirements long beforehand. The purpose of an internal audit is to ensure your business is upholding the level of service expected of its brand. An internal audit can evaluate, even measure, a wide range of products, services, and practices. Does your establishment have a properly stocked first aid kit? Does your franchised restaurant keep the temperature of the grease too high in the deep fryer? Perhaps there is too little syrup poured from the pop machine, too much heat in the refrigerator or too little signage in your retail space.

An auditor can check all these things and rate you according to how closely you align with your franchisor expectations. For example, an auditor will recognize if your franchised pub has failed to update its bar menu to offer the new items head office approved last year – something a customer would not notice if he or she only frequented your location.

Auditors not only understand your franchisors needs, they are also familiar with the needs of the law. That is, the evaluators know exactly what to look for, both in terms of what is important to the brand and what is legally required of your location. A thorough health and safety inspection can clear up any problems before a mandatory government inspection is due. Do your fire extinguishers work (and are they ovedue to be checked)? Do your employees wear hairnets or safely shoes? Do you have a workplace safety poster displayed clearly for their use? Internal audits can even address security issues – are the washrooms properly lit? Are the doors opened and closed at the right times? Are the staff change rooms clearly marked?

Internal audits needn’t be your franchisors responsibility alone - you can do them, too. Many franchisees take the initiative and conduct their own audits, hoping to be more prepared for the franchisors inspection, or just as a means of keeping tabs on their business and its employees. Others feel more comfortable hiring an objective, third-party auditor to inspect on their behalf. The cost of contracting an outside company varies widely - anywhere from $150 to $1000. Higher priced audits usually involve more detail, e.g. 1000 questions instead of just 100 or 200. Audits may also be more expensive if the evaluation requires an auditor with specialized training, such as someone with background in fire safely, food handling or first aid. For most audits, the questions could be asked by anyone. Auditors paid by the hour, with the audit itself taking three or four hours, plus another two hours for the results to be written up.

Mystery Shopping
Hiring “mystery shopper” – third-party evaluators who pose as customers within your franchised business – can tell you many things about how your business really runs, especially as it relates to employees.

Mystery Shoppers evaluate your business based on the specific criteria and standards set by you or your brand; whether it be the courtesy with which customers are greeted, the selling techniques of personnel or simply the cleanliness of the space. The advantage of mystery shopping is that it evaluates your business from the customer perspective. With no obvious indication that an evaluation is taking place, your employees with act as they normally do, allowing you to make decisions based on how your business really operates. While one might argue they provide merely a “snapshot” of the business on a particular day, its unlikely a mystery shopper’s experience will be totally atypical.

This type of assessment is most useful when evaluating specific, often confidential, brand standards. For example, it can help determine if your staff is “upselling,” e.g. if a customer orders a small popcorn, does your employee ask if the customer would like a medium for 25 cents more? Another technique mystery shopping can evaluate is “suggestive selling,” which requires an employee to mention a product the customer has not even considered. Restaurant examples include “would you like fries with that?” and “care for dessert, too?” In clothing retail, an employee might say, “Sir, for nine dollars more, we can sell you a silk tie with that shirt.”

These types of evaluation provide useful information to both the franchisee and the franchisor and mystery shopping companies are often hired at both levels. Generally mystery shops for a retail store or restaurant cost $100 to $125 per visit.

Half-way there?
For some franchisees – and more commonly, franchisors – a focus group is an effective way to gather information. Focus groups bring together people felt to be typical of the franchise’s current demographic (or the demographic the franchisor wishes it could reach). This group is then presented with a new product or service and their reactions to it are recorded and analyzed.

Depending on the questions asked, a focus group can function either like an elaborate customer survey card or a fairly detailed evaluation of brand standards (though likely not for your franchised location alone). Their downside is expense. Focus groups often require a moderator, who needs to be paid. The participants are often paid as well, since the focus groups may take several hours.

Most focus groups are franchisor-driven, because they often consider company- wide issues, such as the launch of a new product. Some franchisees form their own “advisory boards” to gauge issues among their own customers but that is rare.

If the focus group or advisory board has a good moderator who asks relevant questions, you can get excellent feedback. However, the opportunity to make an easy $100 (plus gift certificates, perhaps) may attract people who are more interested in their own gain than the good of the company. Selecting good participants is key.

Interviews, in-person or over the telephone, are a cheaper way to get some of the same information. Unfortunately, they can be highly irritating for participants, especially if they’re delivered via an unsolicited phone call.

The customer point of view
The simplest, cheapest way for a franchisee or franchisor to evaluate a business is through customer comment cards. Today’s comment cards need not be “cards” at all – they can also be done online, allowing for even greater cost savings. There is nothing wrong with gaining voluntary customer feedback, but it is a mistake to rely on such feedback alone. Though it sounds counter- intuitive, a satisfied customer is not always indicative of a well-run business.

“Extreme” Feedback
Due to limited time or simple disinterest, most of your customers will not participate in a voluntary feedback system. Those that do will often feel particularly motivated, either because they’ve had a very good experience or a very bad one. The data you’ll collect can therefore be very skewed and poorly represent your average customer.

Lack of brand- orientation
The biggest concern with these simple feedback systems is their inability to gather statistical information about brand standards. Bob in Halifax and Chris in Edmonton may both have had great experiences at franchised hardware stores of the same brand. What they can’t tell you, however, is that these two patrons had completely different experiences, with only one meeting the franchisor’s expectations.

As a method of data collection, customer comment cards aren’t terribly detail oriented. For example, they may tell you that your customer feels he or she received a drink in a reasonable time, but they will not tell you the drinks were received 15 seconds later than the franchisor’s standard of one minute. An online survey can indicate your service staff is making appropriate and helpful suggestions in terms of menu choices (perhaps the customer will score them a “five out of five”). However, hiring “mystery shoppers” to evaluate your service based on specific brand standards would tell you your staff is only suggesting appetizers and wine to customers about 20 per cent of the time.

Nevertheless, focus groups, interviews, comment cards and online surveys are always helpful, if only for the good will they generate by allowing your customers to feel their input is valued.

No one method tells all
When franchisees aren’t “on the same page” with their franchisors, consistency is compromised and customers may make a judgment about your location before ever setting foot inside. However, there’s no need for doom and gloom – poor patterns of services or product preparation can be corrected with a little effort and reasonable expense. As long as you know that no one evaluation method can tell you everything, it’s just a matter of spending accordingly.

Building Your Brand – Customer feedback is essential to establishing and maintaining standards

Food Service and Hospitality, September 2007. David Lipton

The success of your business is built on your brands image, standards and reputation. What are you doing to protect them? If you don’t know the answer to that question, your business may already be in serious trouble. But if you have an answer, you still need to make sure it’s the right one.

Anybody can open a restaurant - so why do investors pay large premiums for recognized brands? Why do they invest millions of dollars to keep their brand visible and to define a brand promise? The reasons are simple: a strong, healthy brand makes for a better investment, and is better for business. The same things that will make a franchise popular with investors : consistency, familiarity, delivering on a brand promise - are what ultimately make a franchise popular with its customers.

So, how do you do it? The obvious answer is to get feedback from your customers. Some common tools companies’ use for this are:

  • In-store comment cards
  • Online questionnaires
  • In-person surveys
  • Telephone surveys

Programs like these are inexpensive, easy to maintain, and require little effort to administer. This makes them an attractive solution for the cost efficient owner, but it doesn’t make them the right solution.

Too many companies go for short-term savings, failing to protect the one aspect of their business that matters most - their brand. For one, the customers who volunteer to participate in these programs are going to be the ones with very strong reactions to their experience. You’ll hear primarily from customers who were either very satisfied or very upset. This leaves the vast majority of your customers - whose experiences lie somewhere between the two - without a voice.

But you should consider something far more important. You need to recognize that even though they’re similar in many ways, your expectations as an owner or investor are significantly different, and more demanding, than those of your customers. Generally speaking, customers do not:

  • Expect employees to suggest appetizers, sides, dessert, larger drinks, and other things to increase the amount of their purchase
  • Complain if staff attire isn’t impeccably clean, bright, pressed and matching.
  • Expect menu panels to be laid out in a specific pattern that’s identical in every store in the chain.
  • Make complaints when employees mix them a drink with more alcohol than they’ve paid for.
  • Notice when they aren’t handed a frequent customer card or other kinds of promotional material with their purchase.
  • See the need for a receipt to be offered after every transaction.
  • Know when they’re being given the wrong information about the ingredients of a menu item.

That’s not to say it isn’t extremely important to listen to what your customers are telling you, or how they feel about their experience. And it doesn’t mean that voluntary feedback programs can’t help a business understand where it’s succeeding and where it’s falling short. It’s simply that the feedback you get may say the experience satisfied your customer, but that’s not all that is required to satisfy your bottom line.

Owners and investors must understand that customers are not trained to notice many of the details that are vital in assuring brand standards are being met. A brand promise only has value if it’s being delivered consistently, every time a customer visits a location. Flaws that may go unnoticed in any number of areas, minor as they might seem, can dramatically impact business in the long run.

Believe it or not, the idea behind this is quite similar to a theory called “Broken Windows,” which is famous for having helped facilitate the revitalization of New York City in the mid-1990’s. The theory posits that if a building has one or two broken windows that don’t get repaired, over time, it is likely more will be broken. Because of what was first an unattended minor problem, the condition of the building deteriorates. Thieves soon find there is little to deter them from breaking in, and from there, things get worse.

The same pattern can happen to a business. Small problems get overlooked until they become bigger problems, patterns that aren’t corrected become the norm, and before long the location has become a weak link in the chain. And little things don’t just wreak havoc on a single location, but on the franchise as a whole. A huge part of what makes franchising work is uniformity and familiarity. Customers expect the food, the service, the attention to detail and price, to be the same whether they’re in Pembroke, B.C. or Paris. When one location is bad, the entire chain looks bad. The impression is that the chain itself has low standards, and for that, the entire chain suffers.

So, what should you be doing?

When it comes to brand image, don’t play games with your investment or cheapen the business. A proper, comprehensive assessment should include:

The successful owner understands that for their business, they need to know more than whether or not the customer was satisfied. Successful owners keep control of their business by setting specific standards and ensuring they measure up to them. They know they must invest now to maintain their standards and image in the long run, which is vital to developing a thriving business in the future.

So, what kind of owner are you?

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