Be On Good Terms with Your Franchisor

Be On Good Terms with Your Franchisor


It’s not a marriage

  • What is the main challenge facing any new franchisee?
  • Is it the rental of a business space?
  • Is it managing the daily running costs?
  • Is it finding the right staff members?
  • Or perhaps the difficulty of dealing with established competitors?

No, it’s none of these. Sure, these are all important issues that need to be addressed, but there is an even bigger challenge: Managing the relationship with one’s franchisor, according to the 2014 Franchise Association of South Africa (FASA) Franchisee Survey.

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Of all the franchisees questioned during the survey, 28% cited the relationship with the franchisor as being the main challenge.

This makes it, by quite some margin, the biggest issue facing new franchisees (second place is a tie at 13% between managing staff and paying franchise fees).

The main problem is that franchisees (and even many franchisors) define the nature of the relationship incorrectly.

Far too often, it is described as a marriage, but it isn’t that at all. It is actually more of a parental relationship than anything else.

Why it’s not a marriage

We’ve often heard people compare the franchisor-franchisee relationship to that of a marriage.

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They will talk about the ‘honeymoon’ period and how the franchisor and franchisee are in ‘partnership’ together for a common purpose. And while this analogy may have some merit, a marriage is exactly what the franchise relationship should not be.

When we think of marriage, we think of a joint-venture relationship. In a joint venture, there are partners. Because of the relatively equal footing of the ‘partners’, the typical joint venture starts out with a negotiation – and is often a series of ongoing negotiations.

Like a marriage, there are the ‘who does the dishes’ issues, and then there are the more serious issues, such as money. Because each joint venture is unique, every one of these issues is usually subject to negotiation.

Because a joint-venture partner is usually compensated based on how much money goes to the bottom line, one concern that most ‘marriages’ have is how the accounting gets done.

On a one-off basis, this is fairly easy to monitor. But on a massive scale, it is almost impossible. And when your joint venture spouse cheats on you, it can become a battle among equals in divorce court.

In fact, that is one of the big differences we find between franchising and joint ventures.

Unlike partnerships, franchising is much more like a parent-child relationship. The franchisee, like the child, will go through a variety of growth phases.

When children first come on the scene, they are very dependent on their parents, relying on them for the education and training that will allow them to survive in this world. And as they grow older, they become less dependent, and parents begin to allow them some latitude.

As they get older still, they will begin to test the boundaries of their relationship, pushing a little around the edges, trying to change or influence the system that parents have set for them, and perhaps breaking some of the rules.

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But the child is still a dependent. It is simply a question of how forcefully the parent chooses to put their foot down.

The good parent


The franchisor needs to start by establishing the boundaries of the relationship. It is important for the franchisee to understand that the franchisor’s first role as ‘guardian’ is to guard the system and the brand so all franchisees can thrive.

Thus, one of the most important roles of the franchisor is that of disciplinarian. To do that, it needs to clearly communicate the rules and the intention to enforce them right from the start.

At the same time, it is important for the franchisor to understand that discipline can no longer be meted out exactly as it was before franchising took place. If franchisors try to give a franchisee the ‘it’s my way or the highway’ speech that worked so well before, they’ll quickly find themselves with alienated franchisees — the first step on the road to real trouble.

Franchisees are business owners, and as such, require franchisors to communicate with them in a professional manner. Being firm with franchisees, as opposed to managers, also means providing them with an explanation for various ‘requests’.

Most franchisees have a key desire for their opinions to be heard. A franchisor should thus avoid making decisions in a vacuum and providing direction to franchisees without a clear explanation of why the direction is being given.

Communication is key

The secret to a good relationship between franchisor and franchisee starts with communication. And that means more than the occasional newsletter and a visit from the field representative.

In today’s technology-centred society, it is all too tempting to rely on the Internet for all communication. But in a franchise context, that would be a big mistake. All too often, we have seen well-intentioned emails ignite a firestorm when they are misinterpreted.

Relationships are built through dialogue, so it’s important that dialogue be encouraged in every aspect of the relationship. Good franchisors are careful to create multiple venues where constructive dialogue can occur.

Annual conventions, regional meetings and advertising councils all provide opportunities for two-way communication.

The accessibility of senior staff is also vital. There are senior executives of some fast-growing franchisors who would not go home for the night until they had personally returned every franchisee’s call.

To be effective, the communication needs to be more than frequent. It needs to be honest. While there are some things franchisors may choose not to share with their franchisees, the key to a long-term sustained relationship is trust. And trust starts with openness and honesty. Get caught in a lie once, and you have destroyed that trust forever.

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Lastly, to be effective, franchisors have to genuinely care about the success of their franchisees. Good franchisee relationships start with a franchisor that is, first and foremost, committed to franchisee success.

That commitment, more than anything else, needs to permeate the franchisor organisation at every level.

If franchisees do not sense true commitment from franchisors, a relationship could quickly become adversarial. If, on the other hand, franchisees see franchisors breaking their backs to help them achieve their success, there is almost nothing they won’t do to assist.

Mark Siebert
As a franchise consultant since 1985, Mark Siebert founded the iFranchise Group, a franchise consulting firm, in 1999. During his career, Mark has personally assisted more than 30 Fortune 1000 companies and over 200 startup franchisors. He regularly conducts workshops and seminars on franchising around the world. For more than a decade, Mark also has been actively involved in assisting U.S. franchisors in expanding abroad. In 2001, he co-founded Franchise Investors Inc., an investment firm specializing in franchise companies. He's on the board of directors of the American Association of Franchisees and Dealers and the board of advisors to Connections for Community Ownership, which encourages minority business and job development through franchising.

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