The Franchisee/Franchisor Relationship
Understanding Franchisees 101
All business is about profitability. Ever wonder why your franchisees seem to resist your honest efforts to improve their profit line? It’s almost as if they think you’re not on their side.
The relationship between franchisee and franchisor is a unique one—and a bit like answering to an authority figure who doesn’t understand that you are a free, independent thinker with your own brilliant ideas about how a business should run. So here’s the challenge: the franchisee must follow the systems set out by the franchisor as per contract, even though the franchisee thinks of it as their own business.
Having been on “both sides of the counter” i.e. the corporate side as well as a franchisee, I get both perspectives on what’s required for success in a franchise business. Out in the field, representing the corporate world, I’ve dealt with the emotional power struggles that accompany the good intentions of franchisees just trying to make a living. And my more recent experience “behind the counter,” as a franchisee for the past 16 years, has given me the view from the other side.
Whether you’re an established franchisor or soon-to-be one, here’s a five-point guide to how franchisees think. I call it “Understanding Franchisees 101.”
- Us Versus Them Mentality
While franchisees know there is a contract and system in place, they still want some control over how they run their business. They often feel like the franchisor is all “corporate rules” and no collaboration.
Tip: Like most relationships—it’s all about transparent communication. Here’s what happy franchisees need to know:
How money is being re-invested to grow the company;
The franchisor is on the franchisee’s side (when the franchisee does well, the franchisor does well!);
And territory expansion makes a strong corporate brand.
When the lines of communication are open and flowing, everyone feels ‘in the loop’ about what’s best for both parties. Some franchisors are starting to call franchisees “Franchise Partners” for this very reason!
- The “Know-It-All” Complex
When the franchisor acts like they know the local market better than the franchisee, who by the way actually live and work in the local community, egos get a little bent out of shape.
You might hear a franchisee muttering under his breath: “Don’t come into my store and tell me to….”
Tip: R-E-S-P-E-C-T! Look people, right up there with communication and trust, we all know a little respect goes a l-o-o-ng way in improving any relationship—and franchisees are no different. Their experience and knowledge of their own local market is one of the main benefits of the franchise model! As a franchisor, if you want to be helpful (without being thrown out of the store) offer examples of what has worked in similar markets or give some information on why you are proposing a particular strategy.
- Start with Why.
Franchisees want to know the reason behind corporate decision-making. Face it, we all like to be “in-the-know,” especially when it relates to our own business! If you are going to de-list a product or implement a new procedure, let franchisees know the reason for the change. There’s nothing worse than having to tell a client or customer, “We don’t know why we’re not selling your favourite product anymore!”
Knowing that the product is no longer being produced, or overall sales are weak, makes it much easier to accept the change.
Tip: Provide background information about why specific changes to systems, products, services, etc. are being made.
- “You’re Not the Boss of Me”
The franchisor is not the employer of the franchisee or their staff, and that’s important to remember and respect. I recently heard a story about a company representative calling a franchisee’s employee to request she come in for her shift a half-hour early. This created confusion in the employee/franchisee relationship and blurred the line of authority.
Tip: Respect the lines of authority between the franchisee and their employees. Remember the employee is being paid by the franchisee and must be clear on who is ultimately giving them direction.
- “Can’t I Do Anything Right? “
Franchisees get the importance of constructive criticism but coming into the store to nit-pick and find fault about little things, will place you in the category of “Field Insultant” rather than “Field Consultant.”
Tip: Recognize the franchisee’s efforts and loyalty to the brand. Remember the franchisee has invested their life savings and wants to succeed, and a little praise, coaching, and support will help them get there.
Using franchising as a growth strategy can be a great option for business owners looking to leverage the local knowledge and investment of its franchisees, but the key is to understand how these franchisees think and feel. Like all valuable relationships, it requires effort on the part of the franchisor, but if done well…it could be franchise love!