A new franchisor will often find the nature of his relationship
with his franchisee to be unique and even, on occasion, daunting.
While you will have the right and the obligation to enforce system
standards, your franchisee will often view themselves as an independent
business (which they are) with the ability to call their own shots
(which they are not). And while the relationship is contractual
in nature, if you are ever forced to bring out the contract, the
relationship is already in jeopardy.
Thus, the franchisor must pay particular attention to the franchisor-franchisee
relationship from the very start if he or she is to create a long-term
and mutually prosperous undertaking.
The Nature of the Relationship
Time and time again, we have often heard people compare the
franchisor-franchisee relationship to that of a marriage. They will
talk about the "honeymoon" period and how the franchisor
and franchisee are in "partnership" together for a common
purpose. And while this analogy may have some merit, our feeling
is that a marriage is exactly what the franchise relationship should
When we think of marriage, we think of a joint venture relationship.
In a joint venture, there are partners. The partners do start out
in a honeymoon phase. Because of the relatively equal footing of
the "partners," the typical joint venture starts out with
a negotiation - and is often a series of ongoing negotiations. Like
a marriage, there are the "who does the dishes issues,"
and there are the more serious issues usually surrounding "where
do we live," and, most important, money. Because each joint
venture is unique, every one of these issues is usually subject
Because a joint venture partner typically is compensated based
on how much money goes to the bottom line, one concern that most
"spouses" will have is how the accounting gets completed.
On a one-off basis, this is fairly easy to monitor. But on a massive
scale, it is almost impossible. Without an audit, the non-operational
partner has little way of knowing if the spouse is paying for the
corporate groceries, driving the corporate Mercedes, and driving
to the corporate country club every afternoon. And when your joint
venture spouse does cheat on you, it can become a battle among equals
in divorce court. In fact, that is one of the big differences we
find between franchising and joint ventures.
Unlike partnerships, franchising is much more like a parent-child
relationship. The franchisee, like the child, will go through a
variety of growth phases during the course of their life.
When they first come on the scene, they are typically very dependent
on their parent - relying on them for the education and training
that will allow them to survive in this world. And as they grow
older, they become less dependent, and you will begin to allow them
some latitude - first playing in the yard and eventually crossing
the street on their own. As they get older still, they will begin
to test the boundaries of their relationship, pushing a little around
the edges - trying to change or influence the system that you have
set for them - and perhaps breaking some of the rules. But they
still live in your house, and what you say goes. It is simply a
question of how forcefully you choose to put your foot down.
How to be a Good Parent
When I was young, I remember being envious of one of the kids on
my block. Mike's parents were rarely home, and when they were, they
let him do whatever he chose. At 15, we would sneak over to Mike's
house and drink beers and smoke cigarettes. I thought he had the
best parents in the world. But when my mother found out, I was grounded
for a month.
Before I had served my mother's "sentence," Mike had
found his way into a real sentence - at a juvenile detention center.
And I began to understand that sometimes being a great parent means
you cannot be a good friend.
Likewise, a franchisor needs to start by establishing the boundaries
of the relationship. It is important that the franchisee understand
that your first role as "guardian" is to guard the system
and the brand - so that all franchisees can continue to thrive.
Thus, one of your most important roles as a franchisor is that of
disciplinarian. To do that, you need to clearly communicate the
rules and your intention to enforce them from the start.
At the same time, it is important to understand that as a franchisor,
discipline can no longer be meted out the way you may have when
you owned all of your operations yourself. If you try to give a
franchisee the "it's my way or the highway" speech that
worked so well before, you will quickly find yourself with alienated
franchisees - the first step on the road to real trouble.
Franchisees are business owners, and as such, require you to communicate
with them in a professional manner. While you will want to be firm,
unlike working with managers, that often means providing them with
an explanation for your various "requests." A key need
of most franchisees is the desire for their opinions to be heard.
A franchisor should thus avoid making decisions in a vacuum, and
providing direction to franchisees without a clear explanation of
why the direction is being given.
Effective Communication is the Key
The key to being a good franchisor starts with communication. And
that means more than the occasional newsletter and a visit from
the Field Representative.
In today's Internet society, it is all too tempting to rely on
the Internet for all of our communications. But in a franchise context,
that would be a big mistake. All too often we have seen well intentioned
emails ignite a firestorm when they are misinterpreted.
Relationships are built with dialogue. So it is important that
the franchisor encourages dialogue in every aspect of the relationship.
Good franchisors are careful to create multiple venues where constructive
dialogue will occur. Annual conventions, regional meetings, and
Advertising Councils all provide for this two-way communication.
The accessibility of your senior staff is also vital. I have known
the senior executives of some fast growing franchisors who will
not go home for the night until they have returned every franchisee's
One of the most important tools at a franchisor's disposal is the
Franchise Advisory Council. As the franchisor, creating this council
not only allows you to control the agenda, but it assures you a
voice on it. The last thing you want to do is find out that your
franchisees have formed an organization without you - as that is
usually a sign that something is wrong and they have excluded you
from the process of resolving the grievance. Whatever comes next
will usually not be pretty.
To be effective, the communication needs to be more than frequent.
It needs to be honest. While there are some things that you may
choose not to share with your franchisees, the key to a long-term
sustained relationship is trust. And trust starts with openness
and honesty. Get caught in a lie once, and you have destroyed that
Lastly, to be effective, you have to genuinely care about the success
of your franchisees. Good franchisee relationships start with a
franchisor that is, first and foremost, committed to franchisee
success. That commitment, more than anything else, needs to permeate
the franchisor organization at every level.
If your franchisees do not sense your commitment, the relationship
can quickly become adversarial. If, on the other hand, your franchisees
see you breaking your back to help them achieve their success, there
is almost nothing they won't do for you.
This article first appeared on entrepreneur.com and is reproduced
here with permission.