Preparing your franchisees for the journey ahead
THE SIX STAGES OF THE EMOTIONAL JOURNEY
Around 20 years ago I developed a model that maps a franchisee’s emotional journey, called The Franchise E-Factor, which predicts a franchisee’s relationship with their franchisor will move through several stages.
Firstly the franchisee is in a state of “Glee” but becomes increasingly disillusioned with their franchisor as they gain more confidence in their ability to run the business. After “Glee” the relationship moves to the “Fee” stage where the franchisee questions the value they are getting for their ongoing franchise fees.
Satisfaction continues to decline as they reach the self-centred “Me” stage, where they attribute any positive results to themselves, but negative results to the franchisor.
The model predicts satisfaction will continue to fall and bottom at what is known as the “Free” stage. This is where the franchisee is most likely to try and shake free of the restrictions they feel from the franchisor or the franchise system. The relationship is also most likely to be characterised by overt conflict at this stage.
If a franchisor sets up a conversation of genuine two-way listening and respect, there will be a breakthrough in the relationship, which is called the “See” stage, where both parties are able to listen to each other and see each other’s perspectives.
Finally, if the franchisor demonstrates empathy and assertiveness to properly address the franchisee’s legitimate needs, (while not giving into unrealistic demands), satisfaction returns to a realistic level of equilibrium, somewhere inbetween the Glee and Free stages.
PUTTING THE FRANCHISE E-FACTOR TO THE TEST
Last year we conducted a large scientific study into the predictors of franchisee success and satisfaction called the Franchisee Success Study. It involved over 2,000 franchisees from four countries who completed a 210 item questionnaire on their backgrounds, work patterns, attitudes to life and business, as well as their satisfaction with being a franchisee.
One finding from the study is that the average tenure of a franchisee in Australia and New Zealand today is quite long at 7.1 years, with many franchisees still in their franchise relationship after 15 years.
As part of this study we decided to put The Franchise E-Factor model to the test by tracking how satisfaction changes with tenure. In theory, franchisees in the early stages of the relationship should be more satisfied, but satisfaction levels should drop as tenure increases. If the model is correct, at some point, satisfaction will bottom out and then again increase.
Using a statistical technique called a locally weighted polynomial regression we were able to create a “best fit” curve for how satisfaction changes over time. The chart below shows the curve that emerged from the data.
(See image in PDF below).
While it was exciting to see The Franchise E-Factor validated, the tenure issue raised fresh questions around the experience of a franchisee over time as they move from being a naive rookie into a seasoned operator.
THE SIX STAGES OF THE BUSINESS JOURNEY
I am now going to share a new model that has emerged from this latest research, which we call The Franchisee Journey. Rather than map a franchisee’s satisfaction with their franchisor, as The Franchise E-Factor does, this new model maps the six stages franchisees move through in their business journey, as shown below.
(See image in PDF below).
Stage 1: Investigation
Irrespective of the type of franchise they join, all franchisees start their business journey trawling the internet, reading the various franchising publications and seeking out people able to point them in the right direction. At this Investigation Stage of the journey the prospective franchisee is asking “Could this be the right type of business for me?” while the franchisor is asking “Is this a person we should continue to talk to?”
What many franchisors fail to recognise is the franchisee induction process has already started. Should this person become a franchisee, the expectations that are being set up in their mind at this stage will stay with them for the rest of their journey which, as I mentioned above, is likely to be well past seven years.
It is critical that the franchisor has a checklist of attributes they are selecting against and a method for assessing prospective franchisees against this checklist. In the Franchisee Success Study we were able to identify a number of attributes that make a huge difference to a franchisees later success, such as ‘positive outlook’, ‘business acumen’ and ‘pro-activity’.
Stage 2: Initiation
Once the franchisee has signed the franchise agreement and is about to start their training, they are likely to be enthusiastic and listen politely to what you have to say. The bad news is they are going to forget 80 per cent or more of what they hear. What they will retain is the way they were treated and the experiences they have during their training and induction.
This stage is called Initiation because it is mainly about initiating the franchisee into your culture and your brand, rather than just training them in your business systems. In the Franchisee Success Study the attribute of ‘brand passion’ was the single biggest predictor of franchisee performance and satisfaction. So if nothing else, make sure they absorb lots of ‘brand passion’ at this stage!
Stage 3: Perspiration
While getting the franchisee into their business may be mission accomplished for the training department, the journey now takes on a whole new level of significance for the franchisee. They are going to be facing the challenges of difficult customers, unreliable staff, long hours and unpredictable cash flow. This is where the proverbial rubber hits the road. The franchisee is also now moving from a state of unconscious incompetence (they don’t know what they don’t know) to a state of conscious incompetence (they begin to realise there is much they do not know). This can be a particularly stressful period with franchisees sweating it out, which is why we call it the Perspiration Stage! The main role of the franchisor at this stage is to provide practical support, encouragement and to revisit the basics of running the business as now the theory they learned earlier will make more sense.
Stage 4: Consolidation
As the franchisee moves from a state of conscious incompetence to conscious competence they enter the Consolidation Stage. There will probably be a base of customers who are returning regularly or recommending the business to others. This means the business has a steady cash flow and, providing the customer experience is being delivered as it should, sales will continue to grow.
The franchisee is now able to take their hands off the controls and step back to review their progress and reset their goals. At this point the franchisor’s focus should be around reviewing their plans with them and helping them to improve productivity and systems. Getting them into good business habits, such as measuring their key performance indicators, will also help them to maximise their success at this stage.
Stage 5: Maturation
The word “maturation” implies that something is fully developed to its capacity and is ready for the next step. The Maturation Stage describes both the maturity of the business and the franchisee. We are now likely to be five to seven years down the track.
The mature franchisee will probably have been toughened by the ups and downs of running the business, worked with several field consultants (some more competent than others), heard numerous franchisor executives proudly roll out a raft of new initiatives (some more effective than others) and seen a number of fellow franchisees come and go. While they may not be cynical, they are likely to be sceptical of new ideas, preferring to hear the evidence of their worth before making any commitment to invest time or money on these.
While this can be a time for the franchisee to enjoy their hard work – golf, fishing, holidays and purchasing the things that represent success for them - they can also become complacent. This is a dangerous time, especially if the business is successful, because nothing in life is forever, and maturity is always followed by a levelling out of performance and then decline.
The franchisee now needs to start planning for some type of reinvention, before the decline sets in. The role of the franchisor at this stage is to inspire, and if necessary provoke and challenge the franchisee to work out a reinvention or succession plan.
Stage 6: Reformation
One definition of reformation is “An intended improvement in the existing form or condition of an institution or practices, to make a striking change for the better.”
A franchisee in the Reformation Stage has taken a decision to make a striking change for the better. This may be to reorganise or restructure their business or take on additional units. The energy needed to initiate change should not be underestimated. There are also likely to be many unknowns, and with the unknown comes a certain level of risk.
Franchisees who take the decision to go through a reformation should be supported appropriately. This does not necessarily mean financial support. Assistance with planning and mentoring can be more valuable. For instance providing access to people who have been through a similar process would be useful. A thorough diagnostic can also be invaluable, especially if they are moving into multi-unit operations.
In many ways the reformation stage will take the franchisee back through the process of investigating what the future business will look like and perspiration as they come to terms with how the restructured business will function. And so the Franchisee Journey repeats itself, but at a higher level. In this sense it is like a spiral of continuous improvement.
The point for franchisors to consider when reviewing this Franchisee Journey is that franchisees at different stages will have different learning needs. The type of support they need and the nature of the leadership they will respond to will also be different at different stages. Perhaps in future articles we will explore this further.
While franchising is a journey with inevitable ups and downs for franchisees, it is also an exciting and challenging journey for franchisors where your capabilities will be tested. Good data is invaluable along the way and with this in mind we have made the full findings of the Franchisee Success Study available as a report that can be purchased from www.franchiserelationships.com.
We wish you well on your journey.
Greg Nathan is a psychologist and Founder of the Franchise Relationships Institute (FRI), leading global providers of learning programs for franchisors and franchisees.