How to Develop a Strong Franchisor and Franchisee Relationship

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Franchisor-franchisee relationship

A healthy franchisor/franchisee relationship is essential to a functional, profitable, and successful franchise. If these two important individuals aren’t able to cooperate and work together, there’s a good chance that conflict will soon surface, and insurmountable problems will begin to arise. Consequently, franchisors and franchisees need to work to develop a strong relationship that can survive the inevitable issues that blight all business partnerships. Here, we take a look at several different ways in which you can strengthen this relationship.

Understand the nature of the relationship

The relationship between franchisor and franchisee is unique in many ways. However, it also shares similarities with other types of business partnership. If you’re to develop a strong franchisor/franchisee relationship, it’s essential that you understand the nature of the partnership, how the power dynamics operate in such a partnership, and why it’s been designed in this way.

Some experts will tell you that this relationship is extremely one-sided and that franchisors have a kind of ‘duty of care' to the franchisee. If this were true, the franchisor would be solely responsible for the franchisee's success and failure. This is patently not the case, as a great franchisor can be let down by an under-performing franchisee.

Other experts argue that the relationship is essentially an equal partnership. This isn't entirely accurate, either. The franchisor enters into the partnership from a position of strength – it’s their business model that has to be implemented to the letter, and it’s their support that can be withdrawn whenever they wish. The franchise agreement is typically weighted in favour of the franchisor, too.

The reality is that the franchisor/franchisee relationship is complicated, varies from organisation to organisation, and requires hard work to maintain. The franchisor and franchisee have to collaborate on a relatively equal footing, even though the franchisor holds all the cards. In this respect, the franchise model depends on trust more than most other types of business arrangement.

Research your counterpart

To enter into a trust-based relationship, it's necessary to know the individual in question. This goes for both the franchisor and the franchisee. Thorough research will be required if you’re to feel comfortable entering into a long-term business arrangement with your counterpart.

This means looking into their financial and employment histories, talking with those that have worked with them previously (existing franchisees in the case of the franchisor and previous employers for franchisees), and delving into past business ventures. Leave no stone unturned in your pursuit of the truth and make sure that there's no hidden history that you're not aware of. Not only will this help you avoid making a terrible business decision, but it will also offer greater peace of mind.

Be open and honest

Strong relationships are built on open and honest communication. This goes for all types of relationship, be they personal or professional, between individuals or institutions, or relatively new or decades old. If a relationship doesn't benefit from honesty, many things could go wrong.

First and foremost, dishonesty often results in the individual who is being misled developing unrealistic expectations. Eventually, unrealistic expectations develop into disillusionment and disappointment. Second, there’s always the chance that the dishonesty is discovered. In most cases, this proves terminal for the relationship. As they always say, honesty is the best policy.

Ensure there are established means of communication

Most successful franchises implement communication protocols and policies. They typically detail the precise circumstance in which a problem should be escalated to management or the franchisor, as well what modes of communication should be used in specific contexts.

Developing this type of framework limits and reduces the amount of ambiguity in the relationship. There are no doubts as to when your counterpart should be contacted and there can be no blame should a miscommunication occur. All of the guidelines have already been clearly established.

It’s also a good idea to schedule regular communication times. Franchisors and franchisees may email regularly throughout the week but should always call each other at least once a week for a more extended, more detailed conversation.

Understand your responsibilities and own your actions

Many relationships suffer because there’s ambiguity surrounding both parties’ responsibilities to the other. The franchise model usually deals with this issue very well. The franchisor’s and franchisee’s responsibilities are set out in the franchise agreement, which is read and signed by both individuals.

However, trouble typically arises when the terms of the agreement are vague, or one of the individuals refuses to take responsibility for their actions. Both the franchisor and franchisee need to understand exactly what they owe the other and what the expected minimum standards are. Both parties need to be honest and own their actions. If they do so, they minimise the chance of conflict and strengthen the relationship.

Respect the franchise model

Finally, the franchisor/franchisee relationship is stronger if both individuals respect the franchise model. For the franchisee, this usually means not deviating from the franchise business plan and acknowledging that the franchise model depends on all franchisees operating in the same way, to the same standards. For the franchisor, this usually means providing the franchisee with all the support, guidance, and equipment promised in the franchise agreement. In other words, honouring the sales pitch they used to attract the franchisee in the first place.

At times, the franchise model can be delicate. It doesn’t take much for the franchisor/franchisee relationship to deteriorate. Consequently, both individuals need to carefully consider how they can strengthen the relationship and ensure it remains healthy.

A functional franchisor/franchisee relationship is dependent on many qualities. These include honesty, the ability to communicate in a clear and concise manner, respect for the franchise model, and an understanding of both your responsibilities and the responsibilities of your partner. Finally, both parties need to understand how the relationship works, why it's different from other types of business partnership, and how they can maintain it. Though it often takes a good deal of hard work, a healthy relationship is key to franchise success.

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