The performance of a region or unit is very important when a franchisor grants exclusive territorial rights because in so doing it is in effect selling off all rights for its own brand in this particular market.
Alluding to high incomes is a short term strategy
The moment a franchisee and its franchisor disagree as to the views regarding the targets which got missed the franchisor might eventually want to terminate its franchisee and avoid storing up problems in the future.
The franchisee will accuse mis selling of the franchise or personal prejudice and the belief is purely business reasons are motivating the franchisor.
Multiply this underperformance by the total number of franchised outlets and the problem becomes ginormous.
Before a franchisor can begin to fix minimum performance targets it should formulate agreed development schedules with a written development plan set by the regional/master franchise owner in writing and in join authorship with the franchisee or frankly I don’t see any meaningful sense in forced individual unit franchisees, having the target set at a minimum level of turnover if it is not both agreed and achievable.
In the case of a development franchisee, it is usually a combination of the number of outlets to be opened and their turnover as a combined goal. For a regional/master franchisee, the target is usually the number of sub-franchisees it is able to attract and in new markets that have not seen success before I say tread with care.
Whilst some would also argue that a franchisee who achieves a certain level of turnover simply because a piece of paper requires it to do so, does not necessarily make a good franchisee, I would suggest that a goal was set and they have achieved it. End of conversation.
However, the same cannot be said of franchisors driven by development and regional/master franchisees.
Individual unit franchisees should agree minimum performance targets and also in the case of development and regional/master franchisees as set number of units shoud be set on an annual basis.
Both parties should take a huge amount of care when they are selecting development and regional/ master franchisees. Where the relationship between the franchisor and this type of franchisee is a good one, franchisors are more amenable to revising minimum performance targets in favour of a franchisee who has under-achieved for some good reason, for example because premises in its territory have become difficult to acquire and even some awful personal issue catches the franchisee unexpectedly. We are just people and a layer of humanity is always a statement most high priests of franchising like to define themselves.
It can be as complicated or a simple as one might want to make it!