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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 has been my
experience to observe and participate in a number of activities
related to the subject of 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 take this opportunity 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 are not
constructed in order that its franchisees are financially unsatisfied,
some allow virtually 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 or some other way.
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.
This article was written by Ed Teixeira,
President of FranchiseKnowHow, LLC a franchise consulting firm with
offices in New York and China. Contact
ed@franchiseknowhow.com
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