Franchisors have selected franchising as a distribution method to gain market share for their brands. The relationship between a Franchisor and Franchisee, on the surface, is a legal relationship based on a franchise agreement. The basis for creating this relationship is the business of the franchisor that the franchisor wants to grow and the franchisee wants to participate in. However, the moment you interject people, you are confounded with the complexity of the relationship, a combination of legal, business and people.
A Franchisor, in order to achieve its objective of increased market share through franchisees, has no choice but to make this relationship, regardless of the complexity, be effective by ensuring that results are obtained harmoniously.
A Franchisor cannot approach this important topic of Effective Franchise Relationships from the vantage point of ‘what will I (the Franchisor) only gain from the relationship’. Instead, the Franchisor must approach the relationship from “What must I (the Franchisor) do to make this relationship both harmonious as well as effective in achieving the intended results.’
At FranchiseMind™, we define Effective Franchise Relationships in the following manner:
“When the Franchisor and Franchisee work harmoniously together, respecting each other, appreciating and accepting the efforts and roles each has to play in their respective success, recognizing their dependency on each other, operating their businesses with integrity and the highest standards and putting forth their best effortto preserve and nurture their special relationship in order for both of them to achieve more than their intended objectives.” - Harish Babla, FranchiseMind™.
A good number of problems in the Franchisor-Franchisee relationship emanate from incorrectly labeling the relationship:
'You are responsible for my success'
'I cannot be refused because the customer is always right"
“Friends get special treatment’
'The importance of the inter-dependent relationship with roles, responsibilities and obligations for both parties'
In essence this business relationship should be kept business. There is nothing wrong in being friendly, gracious, warm and even to get to know franchisees and their families at a personal level. In fact there is nothing wrong in having a spirit of partnership, customer or family however labeling the relationship as such makes it difficult for a Franchisor to deal with the business aspects of this complex relationship.
Importance Of Effective Relationships
When the Franchisor-Franchisee relationship is effective and harmonious there are many benefits that emerge for the Franchisor as Franchisees will likely:
- Expand market share into other territories.
- Open additional units.
- Validate the company to prospective franchisees.
- Participate enthusiastically in company programs.
- Contribute ideas for overall system growth.
- Take a leadership role in helping other franchisees.
Culture Of Control
The company culture helps define the level of control a Franchisor wants to exercise. The two extremes would be:
- Independent (loose) control.
- Dependent (tight) control.
The Independent culture says to the franchisee ‘we will teach you our system, follow it to the best of your ability. If you need help, call us, we are available.’ A Franchisee has a lot of ‘freedom’ in this franchise system.
A Dependency culture on the other hand, says to a franchisee ‘You will do exactly everything we teach you and in the manner we show you.’ A Franchisee in this culture has very little ‘freedom’ in this franchise system.
Neither positions is ‘right’ or ‘wrong’. It is an issue of company culture and keeping sight of the objectives of the business. Where in the control spectrum is the Franchisor comfortable in ensuring the success of the franchise system, the consistency of the customer experience from one outlet to the next and the achievement of somewhat similar operating results from one Franchisee to another.
A Franchisor oriented towards tight control has the responsibility to ensure that every aspect of the business is addressed without gaps.
A Franchisor oriented towards loose control has to be comfortable that from time to time, a Franchisee may take actions that cause the franchisor angst.
Changing Nature Of The Relationship
As in any relationship, the Franchisor-Franchisee relationship goes through changes in thinking, in attitude and feelings towards each other.
FranchiseMind™ identifies four major stages in the relationship:
- Pre-franchisee stage.
- Pre-opening stage.
- Launch stage.
- Operating stage.
Since the Operating stage is the longest, Franchise Mind™ breaks this stage into 4 phases:
a) Confident phase: ‘I can do this’
b) Ego-driven phase: ‘I am great and the system is okay’
c) Resentment phase: ‘Its me and not the franchise’
d) Inter-dependent phase: ‘Together we can accomplish more’
Each of the stages and phases can be recognized by several criteria as perceived by the Franchisee:
- Overall satisfaction with the business.
- Sense of loyalty towards the franchise system.
- Confidence in the ability to meet their various goals and objectives.
- Confidence in themselves.
- Confidence in the business.
- Confidence in the Franchisor.
The Franchisor is the ‘senior’ in the Franchisor-Franchisee relationship and must take responsibility to make this relationship effective. This means that the relationship achieves the intended results and is harmonious.
When the relationship is effective the franchise system will derive many benefits and grow.
As in any relationship, this relationship too will go through different stages and phases. Recognizing those ‘highs’ and ‘ebbs’ will allow a Franchisor to deal effectively with the changing attitudes and feeling emerging from Franchisees.
I welcome your thoughts.
Harish Babla, Managing Director of Franchise Mind Corporation based in San Diego, USA.
Harish is a successful entrepreneur, a business visionary, an inspiring franchise leader, a mentor to many companies and a growth strategist who has honed his franchise skills in various capacities since 1983. Harish is passionate about growing franchise companies and helping others achieve their dreams of building successful global franchise companies by ensuring the highest standards of franchise excellence with a strong focus on growth and operating results.
Harish is a Certified Franchise Executive as designated by the International Franchise Association and conducts learning events and mentoring for numerous companies all over the world.
Harish can be reached at email@example.com.