This article appears in the November/December 2013 issue of Business Franchise Australia & New Zealand
Couples celebrating their golden wedding anniversary (ie. 50 years together) often state that the secret to a long marriage is communication.
Most franchise systems have been in existence for much less than 50 years, so it is unlikely that there will be many, if any, franchisees celebrating a union of 50 years with their franchisor.
Like marriage, the success of a franchise relationship is often attributed to communication between the parties. The quality, quantity, timeliness, honesty and relevance of the communication in any relationship will determine how effective communication is as a long-term determinant of franchise success.
But communication is a broad term that describes many interactions at different stages of any kind of relationship.
Communication is expected to be a two-way street, but can often encounter blockages and detours which limit its ability to maintain a relationship.
So here’s an alternative way to look at successful franchise relationships (and marriages): They are based on mutual respect, and it is this respect that maintains the effectiveness of communication.
Respect is an interesting concept for humans. While we may be prepared to offer a token amount to one another on first contact, we need to interact over time to give (and receive) more.
Using respect as an analogy to understand the effectiveness of communication during a franchise relationship requires a better understanding of the stages of the relationship, and how the relationship matures with each stage.
The following acronym for respect can help franchisors and franchisees better understand how respect evolves – and how it impacts communication effectiveness – over the course of a franchise relationship.
RESPECT = Recruit + Educate + Support + Profit + Engage + Challenge + Together.
These are explained as follows:
The early courtship phase, where the franchisor and franchisee are sizing-up one another, is the Recruit phase. Franchisees wield significant influence during this phase based on the significant resources franchisors invest to attract them. Penalties for misleading representations may encourage franchisors to provide the bare minimum of information about their franchise offer, while potential franchisees are often surprised at the amount of information they must provide about themselves in order to be assessed by the franchisor.
Lasting first impressions that determine the future course of the relationship are made during this phase.
If the franchisee and franchisor decide to proceed together, the franchisee needs to be trained in the operational details of the franchise. During this education phase, the franchisee learns “how to run the business”, but should also learn “why it is done this way” and how this links with the organisation’s culture.
The education phase should involve constant assessment of franchisee learning so that the franchisee is fully-equipped to tackle the challenges of operating their own business. Equally, this phase provides feedback to the franchisor about the adequacy of its training program and the effectiveness of its delivery.
After a franchisee has joined a system and been educated in its effective operation, the franchisor will usually provide support to help the franchisee maximise operational efficiency and to improve overall business performance.
Support in franchising can vary greatly from one system to another, and is often not quantified by either franchisor or franchisee. The level of support a franchisee expects can be completely unrelated to the franchisor’s capacity or skill in delivering it.
While the Recruit and Educate phases are still the honeymoon period of the relationship, they can lead to problems in the Support and later phases, as franchisees potentially find themselves unsuited to operate the business because of attributes that should have been identified during recruitment, or as a result of failures in the training and induction program.
Of all the reasons commonly stated by franchisees for joining a franchise, making profits rarely appears at the top of the list. Likewise, franchisors commence franchising for many reasons, but not primarily to make profits for their franchisees.
As the franchise relationship develops, franchisors and franchisees alike must address profit issues. Not enough profit for franchisees makes the relationship unsustainable. Too much profit by franchisors creates tension with franchisees, especially if they are struggling to be profitable themselves, or are not receiving the levels of support they expected. A franchise relationship is doomed to failure if profit isn’t part of the equation.
A key element of any mutually respectful relationship is the extent to which the parties engage with one another, particularly when making decisions that affect each other’s interests.
Franchisors are expected to have management protocols in place that seek the active engagement of franchisees via meetings, conferences, surveys and franchise advisory councils, among others.
Similarly, if franchisees are to get the most out of the franchise relationship, they should seek to engage with the franchisor via existing methods, or identify room for improvement and actively suggest these to the franchisor.
When both parties engage with each other, they can better understand each other’s goals and how they can help one another achieve them.
An extension of the concept of engagement is that of challenging one another to higher levels of performance. Without even being conscious of it, franchisees will challenge franchisors to achieve higher levels of performance right from the outset as they explore the system and test the boundaries of the education and support available to them, especially if profits fail to meet their needs or expectations.
Franchisors may also unconsciously challenge franchisees by introducing changes to the system without adequate explanation, or by conducting ineffective marketing campaigns. Neither of these are the types of proactive challenges that help a franchise relationship grow.
The most effective challenges in franchise relationships are where the parties recognise there is room for improvement, and positively encourage one another to reach higher levels of performance. Such challenges come from high levels of engagement, and all the other elements of respect listed here.
Ultimately, franchisors and franchisees need one another. Despite the occasional bump in the road in a franchise relationship, franchisees can rarely do what they do without franchisors, and franchisors would never achieve the growth and market presence they have without franchisees.
Acknowledging this partnership (however difficult this journey can sometimes be) is the final element that contributes to the giving and receiving of respect in a franchise relationship.
The mutual respect of a healthy franchise relationship creates an understanding of each party’s perspectives, and their relative needs and wants. It creates two-way communication where the parties are heard and understood.
But most importantly, it creates the basis on which a relationship can prosper and endure for a long time, just like those old married couples who celebrate golden wedding anniversaries.
Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for 20 years at franchisee, franchisor and advisor level. He advises both potential and existing franchisors and franchisees, and conducts franchise education programs throughout Australia, and publishes Franchise News & Events, a fortnightly email news bulletin on franchising issues and trends.
Contact Jason at:
Phone: 07 3716 0400