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The Wealthy Franchisee

7 Most Common Stresses (and Relief Strategies) for Franchise Owners Understanding the sometimes tense dynamics between franchisees and franchisors will help you navigate the relationship in good times and bad.

By Scott Greenberg

Opinions expressed by Entrepreneur contributors are their own.

This is part 3 / 5 of The Wealthy Franchisee: Section 5: Managing the Franchisor-Franchisee Relationship series.

Tension between franchisees and franchisors is normal and predictable. It's more of a reflection of human psychology than a statement about the qualifications and morality of the players involved. When you know this going in, you'll be less alarmed when it happens. Social scientists know that people go through normal phases of development. So do groups. We can look at the maturity level of a franchise system and pretty accurately anticipate the social dynamics that will occur.

Understanding these dynamics will help you navigate through them more peacefully. One of the most famous models of group development was created by psychologist Bruce Tuckman in 1965. Tuckman defined four stages (which he eventually expanded to five) that normal, healthy groups go through as they come together and collaborate. Here's what happens at each stage:

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This is the creation of the group. In the beginning, people figure out what their combined purpose is, what the rules are, and what everyone has to do. For a franchise, this includes Discovery Day, signing the franchise agreement, and setting up shop. At this stage, everything is new, and people tend to be on their best behavior. Often this is called the "honeymoon period." Either there hasn't been enough time for disagreement, or people aren't yet comfortable expressing it.


After some collaboration, there tend to be growing pains. The reality of life together is beginning to set in and emotions start coming to the surface. Idealism has worn off, questions arise, and personalities clash. Group members begin to test boundaries. Most of the tension is around personality styles and approaches to work. Everyone is excited when they buy their franchise and open. They trusted the franchisor enough in the beginning to make the investment. But once they get going, franchisees start to perceive the difference between their expectations and the reality of running a business. It's common to experience dissatisfaction, and that causes friction. This phase is scary to people who aren't secure in their group. They see tension as a failure in the relationship when really it's just a deeper level of engagement. It's the next step forward in the process.

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With communication, patience, and perseverance, groups can resolve their differences. Roles are clarified, culture and group norms are defined, and trust is rebuilt. This is the stage where everyone clears up misperceptions and figures out how to work together. One of the advantages of attending your brand's convention and regional meetings is to be able to speak with your franchisor face-to-face to address any issues in the most direct and productive setting possible. Well-run franchise advisory councils (FACs) and associations can also promote better relations. Sometimes all it takes is one good phone call between an owner and the corporate office to get to this stage. Norming requires both franchisor and franchisee to be honest, polite, and committed to collaboration.


Here the group experiences flow. Everyone knows their role, what to expect from each other, and how to accommodate different personalities. This is where they become most productive. Franchises in this stage are characterized by harmony, productivity, and hopefully, profitability.

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Adjourning or Mourning

Tuckman added this fifth stage to his model years later. Some groups have a stopping point, such as a team that reaches the end of a season or a committee working on a finite project. It would also include a franchisee who departs the system upon selling the business or when the franchise agreement expires. This can be an emotional phase. Saying goodbye to franchise partners, colleagues, and employees can be difficult. There's a need for acknowledgment and closure. Many people in this stage are in transition and feel uncertainty, especially when there's a change in ownership. They must now enter a new "forming" stage and repeat the process, probably with new people.

There's a lot more information out there about group dynamics you can explore. The important thing to know now is that experiencing some dissatisfaction, mistrust, and tension in your system doesn't necessarily mean the relationship is broken or that you've partnered with the wrong people. It means you've partnered with people. Cooperation is tough—throw money in the mix and it's really tough. Don't let this scare you. Stay constructively engaged in the relationship, and you're more likely to break through to a prosperous partnership.

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Franchise Triggers

Tuckman's group development model tells us to expect conflict in the "Storming" stage, a little while after a new group comes together. But in franchise systems, storming doesn't just follow the formation of the partnership. It also occurs when, after a comfortable period in the "Performing" stage, something changes. New systems, new policies, or new leaders throw people off and trigger tension.

Change is uncomfortable and threatening. It could also cost a lot of money without an adequate ROI. At the same time, we're paying our franchisor to innovate and keep us successful in an evolving, competitive marketplace. Putting aside for the moment the question of whether a specific change is good or bad, it's important to understand that the change itself may cause us to storm. I've observed a lot of changes in franchises and the conflicts they create. Understanding that these are normal sources of tension may help keep things in perspective. Here are the most common:

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New Policies

As franchises grow their network and acquire more exposure, they become more bureaucratic. Ad hoc policies will no longer cut it—they need more structure to support the larger system. That's hard to adjust to if you're used to looser practices. A good franchise will also continually change the way it does things to improve, stay relevant, and respond to market conditions. It's easier to embrace new policies when we know the reasons behind them, but some franchisors do a better job explaining them than others. Just because the policy doesn't make sense to you doesn't mean it doesn't make sense. Ask questions with an open mind and remember that your franchisor is looking out for the entire system. Withhold judgment until you have all the facts.

New Ad Fund Contributions

If you haven't previously had to make them, or if they've been kept lower than the requirements in your franchise agreement, being forced to fork over another point or two doesn't feel good. It's worse if you don't know or don't agree with how the money is being used. At first, many new franchisors don't ask franchisees to contribute to an ad fund, even when their franchise agreement allows for it. That's because they want to make it as easy as possible for franchisees to come aboard. There may also not be enough contributors in a new system to accumulate a meaningful sum. If it's in your agreement, expect to start contributing at some point. But the ad fund is actually one of the benefits of franchising. Pooling your marketing dollars can help pay for ad campaigns you probably couldn't afford on your own.

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Many franchisees don't put money aside for capital improvements. While the concept of freshening up your retail business makes theoretical sense, who wants to pay for it? Well, there's evidence to suggest that remodeling correlates with an increase in sales, even if that possibility is rarely comforting for the franchisees who are forced to fund it. Many go into remodeling kicking and screaming. Chances are your agreement requires periodic upgrades and makeovers. Expect it to happen, and expect to dislike it. Still, it's necessary, it's standard, and it's most likely best for the business.

New Products and Services

Do they make sense? Will people buy them? Everyone has an opinion. It was always controversial at Edible Arrangements when our franchisor introduced a new fruit. We had to learn how to source it, store it, clean it, and prepare it for arrangements. Then we had to sell it. None of us really knew how the new fruit would sell, but we all had feelings about it. Every business needs to innovate to keep customers interested, and that means creating new offerings. Hopefully, your franchisor has a good process for testing them. Some of our new fruits sold better than others. Some were surprising successes and others were disappointing duds. All of them got people talking. Your brand's innovations may or may not generate profits, but they'll definitely generate emotions.

New POS/Computer Platforms

People get attached to their software environment, so learning a new system is hard. The switchover can be really stressful. Expect to feel this and don't judge the system until you've learned it. New Leadership In some cases, franchisees are extremely grateful for a new CEO, CMO, or field rep. Other times they mourn the loss of a trusted partner. And if a private equity group comes in, that brings a whole other layer of mystery that leaves folks uneasy. You can't control who comes and goes at your corporate office. But you can actively work to build a productive relationship with them. Expect there to be changes and always be ready to form new partnerships.

Drops in Sales

It's tempting to blame the franchisor. "They're not innovating enough." "They're not marketing enough." Maybe that's true, maybe it isn't. Whatever the real reason for the falling sales numbers, they put franchisees on edge. There's going to be tension. Keep the lines of communication open. Keep your mind open. And always find constructive ways to address the problem.

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Changing Suppliers

If you like what you're getting and who you get it from, being told to get it elsewhere doesn't feel good. These dynamics are common points of contention in the franchise world, so you can see the importance of good communication from franchisors. If they consult the franchise advisory council, keep franchisees informed, and be clear about why they're changing suppliers, they can do a lot to minimize pushback. In reality, their strategy may be sounder than their messaging. Many well-intentioned franchisors get this wrong all the time. Help them out by not rushing to judgment. Your business is their business. It's all they do. They're working with a lot of data, so ask questions, try to understand their reasons, and be open to their ideas. Contribute to the conversation, but don't feed into the drama.

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