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Building and Maintaining Positive Franchise Relations

by Ed Teixeira

Franchise relations is the term typically used to refer to the state of the relationship between a franchisor and its franchisees. It is perhaps one of the more important matters that franchisors deal with in addition to growing the franchise network and increasing sales and profits.

After spending a number of years in franchising it’s been my responsibility to observe and participate in a activities related to the promoting positive franchise relations. I’ve introduced newsletters, organized franchise advisory councils, held meetings and engaged in dispute resolution, all with the intent to either preserve or foster positive franchise relations.

However, for these efforts to result in a positive outcome requires a strong foundation that must be constructed by the franchisor. I would like to present the components that go into building that strong foundation. Without these elements I would dare say a franchisor will be constantly dealing with unhappy and disgruntled franchisees.

1. The fundamental franchise program must afford each franchisee the opportunity to reach their financial expectations. If franchisees "follow the program" yet are not successful, the franchisor will be faced with franchisee turnover, litigation and numerous other problems. Although franchise programs shouldn’t be constructed such that its franchisees are financially unsatisfied, some franchise programs allow no margin for error. A franchisor must be sure that the franchise program works. The franchisor must have a way to gauge the success of its franchisees by surveys, collecting income statements and utilizing other ways to evaluate franchisee results.

2. The franchisor must "listen" to their franchisees and put ego aside when necessary. If a franchisee with a legitimate complaint can’t communicate to the higher levels of franchisor management and receive a reasonable and well thought out response then be prepared. It's not always necessary to have a F.A.C., especially for smaller franchise companies, but there had better be a process in place for feedback from the franchisees.

3. Be sure that there is an ongoing process to monitor franchisees through field reps, surveys, meetings or conference calls. The greatest mistake a franchisor can make is to be "out of touch" with the pulse of its franchisees.

4. The President or CEO should have a routine of staying in touch with select franchisees. Even in a large system there is always a way for the leader of the franchisor to maintain contact with certain franchisees and know what is taking place within the network

Positive franchise relations are an important element of a successful franchise company. Following the steps that I’ve outlined above represents the building blocks of a solid franchise relations program.