Franchises

The Key to Working Well With Your Franchisees

The Key to Working Well With Your Franchisees
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In Franchise Your Business, author and franchise consultant Mark Siebert delivers the ultimate how-to guide to employing one of the greatest growth strategies ever -- franchising. Siebert shares decades of experience, insights, and practical advice to help grow your business exponentially through franchising while avoiding the pitfalls. In this edited excerpt, Siebert explains why learning to communicate well with your franchisees will help your franchise be successful.

The key to successful franchise relationships is trust. And trust starts with communication. Communicate openly and honestly with  your franchisees, and be as concerned with their profitability as you are with your own.

The best franchisors diligently provide their franchisees with frequent, useful communication, which means more than the occasional email, newsletter, or perfunctory visit from their field representative. Today, it's all too tempting to rely on the internet for communications. But depersonalizing the franchisor is a big mistake. Time and again, well-intentioned emails or texts ignite firestorms when they're misinterpreted. Don't make the mistake of believing an email can substitute for human contact. When your franchisee made the leap, at least part of their investment was in you. They bought into your ability to help them grow a business.

Relationships are built with dialogue, so it is important to encourage dialogue in every aspect of your relationship with your franchisees. Good franchisors are careful to create multiple venues for constructive dialogue. Annual conventions, regional meetings, and advisory and advertising councils all provide for this two-way communication.

To be effective, however, the communication needs to be more than frequent. It needs to be honest. Get caught in a single half-truth, and you've destroyed trust with your franchisees forever.

Finally, to be effective, you have to genuinely care about the success of your 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 organization at every level.

If your franchisees don't sense your commitment, the relationship can quickly become adversarial. If, on the other hand, your franchisees see you breaking your back to help them succeed, there's almost nothing they won’t do for you. And even failing franchisees are reluctant to sue someone they really like—especially if that individual has demonstrated a real commitment to their success.

Following are some recommendations on best practices in franchisee communications:

  • Whenever possible, take calls from franchisees rather than letting the calls go to voice mail.
  • If possible (once you've created a staff organization), have a dedi­cated franchise support line where a receptionist answers calls rather than having all calls go into an automated attendant loop.
  • If you get a message from a franchisee, always respond the same business day. Unless the message involves a simple issue, default to calling the franchisee rather than responding via email.
  • Each day, pick up the phone and call at least one franchisee you haven’t spoken to in a while. Ask how they’re doing, how their family is, and what else your team could be doing to support their business.
  • Never speak negatively about franchisees to an employee in your company. If you or other people on the management team say negative things about franchisees in front of other employees, that tells your staff they can do the same thing. Communications relating to franchisees should always be respectful.
  • Use a technology platform to track all communications (e.g., copies of emails, summaries of phone calls) with franchisees. Maintaining a record of all communications will provide valuable information to staff members when they prepare to interact with franchisees, and it will be important should a dispute ever arise with a franchisee.
  • Appoint one person in your company as the communications man­ager, and have all system-wide communications filter through that person to ensure consistent tone and accuracy of information.

One of the most important elements to support positive communications is the Franchise Advisory Council (FAC). Almost every healthy franchise system has an active advisory council program.

A good FAC is:

  • Generally established by the franchisor
  • Designed to facilitate communication between franchisees and the franchisor, and between franchisees themselves
  • Meant to provide a vehicle for franchisee involvement and leader­ship
  • Run with a specific agenda
  • Responsible for communicating its minutes with franchisees
  • Governed by bylaws that address such issues as communication, confidentiality, composition, term limits, and purpose

A good FAC is not:

  • A decision-making body
  • A negotiating body
  • A vehicle for franchisees to forward their personal agenda or resolve individual franchisee conflicts

And FACs can be:

  • Made up of elected members or have members appointed by the franchisor
  • Chaired by the franchisor or franchisee delegates
  • Attended (or not) by franchisor management
  • Paid for (travel, food, and lodging) by the franchisor

Franchisors, for their part, are often afraid that open communication may encourage franchisee unrest. The flaw to this thinking, of course, is the assumption that franchisees won't find a way to communicate about any possible dissent without these tools. It's far better for the franchisor to hear about potential problems and address them before they become major issues, and FACs provide that opportunity. The last thing you want is to discover your franchisees have formed an association without you: That's usually a sign that something's wrong and they've excluded you from the process of resolving a grievance. Whatever comes next will not be pretty, and it often involves legal counsel representing the association.

A FAC is most often made up of franchisees who are elected by their fellow franchisees. FACs typically meet two to four times per year, and their bylaws (covering eligibility, voting rights, limitations, etc.) can vary considerably. But the subjects that are typically discussed remain the same: consumer marketing and advertising, new products and services, and any issues of concern to the franchisees in general. In effect, the franchisees act as delegates on behalf of all the franchisees in the system. In larger systems, the franchisor may use a series of regional FACs that will feed into an overarching FAC so all the franchisees feel they're getting an opportunity to participate. In some FAC programs, all franchisees in the system (or region) are invited to attend meetings.

Trust, but verify

In many ways, the internet has been a tremendous boon to franchising. Intranet sites, blogs, chat rooms, emails, enewsletters, real-time reporting, and online training have made communication faster and more frequent. And they've unquestionably improved a franchisor’s ability to train and coach franchisees.

But it's not without its drawbacks. The ubiquitous and sometimes intrusive nature of the internet can all too easily transform a franchisor from the friendly beat cop into a menacing Big Brother in the eyes of a franchisee. Real-time access to the franchisee’s POS system, remote video, and form-letter emails can substitute for dialogue—and in the process create an us vs. them environment.

So where's the middle ground? As we said in the beginning, the key to successful franchise relationships is trust. As a franchisor, you need to trust that your franchisees are paying all required royalties and properly reporting revenues. But, as Ronald Reagan often said, “Trust, but verify.”

So at what point are you going too far with that verification? First, understand that verification is in the best interest of franchisees as well. Franchisees suffer when brand standards aren't met. They suffer when other franchisees cheat, as that means less advertising funds and royalties to support the franchisee community.

In short, it's a question of transparency. If, for example, you use mystery shopping to uncover violations of standards and under-reporting of revenues, your franchisees should know about it. Hide this from your franchisees, and it will foster distrust and conflict.

Strong franchisee relations will necessitate that your franchisees respect your leadership. At the same time, franchisees want to be heard. And, in fact, the best franchisors make a point of knowing how their franchisees feel. So be sure you actively listen to what your franchisees have to say. Solicit their feedback on a regular basis. Conduct formal surveys if need be to supplement other feedback mechanisms.