9 Potential Landmines in the Franchisor-Franchisee Relationship Relationships of any kind are volatile and a franchise is a powder keg — a long-distance relationship with financial ties.
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This is part 2 / 5 of The Wealthy Franchisee: Section 5: Managing the Franchisor-Franchisee Relationship series.
Franchising isn't immune to bad leadership or unethical behavior. If you sometimes question your franchisor's actions, it's possible your concerns have merit. Franchises, like any other business, are institutions run by humans. Not all of them are good partners. I've absolutely encountered some that don't operate in their franchisees' best interest, and most unhappy franchisees are convinced that's who they're in business with.
But those franchisors are the exception. The overwhelming majority of franchisors are smart, ethical people who want to make money by building a strong franchise system. They genuinely want their franchisees to thrive and work tirelessly to support their local partners while trying to manage their own corporate enterprise. And they have a tough job. If you've run a business, you know how hard it can be to manage employees. Now imagine having to wrangle hundreds or thousands of independent, strong-minded personalities spread out over millions of square miles. We franchisees can be a real motley crew!
Franchisors and franchisees are equally responsible for building trust. But franchisors are people, just as we are. They feel joy, frustration, excitement, and fear. They get upset when they're yelled at. Sometimes they lose their temper and do the yelling. Ideally, they'll behave professionally—and so will we—but everyone makes mistakes. We're all out there living our lives and doing our best.
Here, we're going to focus on the franchisee's role in the relationship. It's the only part you can control, so make sure you're operating in the most constructive manner possible. Do that, and you'll have a more positive influence on your corporate partners—and hopefully enjoy a much more productive relationship.
The Importance of Trust
Trust is the foundation of any relationship. The essence of partnership is a belief that someone else has your back, and a willingness to put yourself in their hands. It's the single most important element of franchising. Here's how that word breaks down:
I discussed this issue at length with Tropical Smoothie Cafe CEO Charles Watson. His company believes so deeply in the importance of building trust that they even use the word as an acronym to encourage the following qualities in their franchisees:
- Transparent: "Be honest about what's going on."
- Responsible: "We've got our responsibilities, and you've got yours. We have to build the bicycle, but you have to ride it."
- Unique: "There's value in you being your unique self." Charles called this "bringing your whole self to work"—celebrating your true self.
- Service-oriented: "We need to drive a servant leadership mentality all the way through the organization."
- Tenacious: "A great franchisee in a poor system can still be successful because they're really going to get after it."
After she left PIP in 2008, Catherine Monson went on to become CEO and president of Fastsigns and chair the International Franchise Association (IFA). She defines the three criteria of franchisor excellence as the following:
- Franchisee profitability/economic viability
- The franchisor has high moral character and focuses on franchisee success
- Positive franchisee-franchisor relationships
How awesome would it be to have a franchisor who focuses on these three elements? Many franchisees actually do—they just don't realize it. Our trust level isn't just based on someone else's behavior; it's also based on our perceptions. A person can be completely well-intentioned, but if you doubt them, your level of trust decreases. That doubt could be the result of something they said, did, or didn't do. It could also be because of a rumor or an incorrect assumption on your part. It doesn't take much to cloud our perspective.
The Tension Between Franchisee and Franchisor Perspectives
Franchisors struggle with franchisees they believe are noncompliant, resistant to change, or unwilling to invest what it takes. Franchisees feel their corporate office doesn't care, doesn't understand their market, or doesn't know what they're doing. They think the franchisor's only priority is selling more franchises. These perceptions say less about either side than they do about the delicate connection between them.
Relationships of any kind are volatile. A franchise is a powder keg. It's a long-distance relationship with financial ties. The model is loaded with tensions, areas where franchisees and franchisors can easily be at odds. Consider the issues below and the different perspectives each side might have.
All these land mines are there, waiting to be tripped. When you throw in personality clashes, it's a miracle any franchise functions. But many do. There are countless franchise families where all parties enjoy profitable, flourishing relationships. They work through their differences on all the above issues to find common ground and ensure everyone's needs are met. Sales are made, bills are paid, royalties are taken, and supplies are purchased. Both franchisee and franchisor grow their companies, and at least once a year they have a pleasant drink together at the annual convention.
But this doesn't happen by accident. As with any relationship, franchises must be deliberate about building their culture and attentive to the human factors that influence social interaction.