8 Pillars of a Strong Franchise Network
Editor’s Note: This article is excerpted from “Greg’s Tip #203.” The full article can be found here.
Franchise relationships must be constructed and maintained with care or the consequences can be catastrophic. Here I address eight specific areas we’ve identified through extensive research that significantly affect the health of franchise relationships. Consider these as foundational design pillars on which strong franchise networks are built. I list them here as opportunities for continuous monitoring and improvement while we work our way through our current challenges.
#1 Help franchisees to manage their stress. Our research shows franchisees are the most stressed they have ever been, largely driven by relentless change, economic and social uncertainty, and financial pressures.
#2 Manage the change process. As franchisors work to implement essential changes at an unprecedented rate, they need to also use proven methods to effectively gain franchisee buy-in and commitment to these initiatives.
#3 Improve two-way communications. While we all know good communications are essential for success, franchisors typically rate their communications as being twice as effective as their franchisees do. Enough said.
#4 Maintain credible leadership. Confidence in leadership, driven by a culture of transparency, competence, and care, is a powerful predictor of high franchisee satisfaction, whereas low confidence is associated with high disputation and low advocacy to recommend the franchise.
#5 Focus on franchisee profitability. Sound financial management processes such as benchmarking, business planning, and performance groups, combined with effective field support, can make a significant difference to the success and satisfaction of franchisees.
#6 Use sound franchisee recruitment practices. Despite the high stakes for both franchisees and franchisors when entering into a long-term franchise relationship, both parties often rely more on emotion and gut feel than on solid recruitment practices.
#7 Regularly clarify mutual expectations. Because the franchise relationship is unique and complex, it is not uncommon for franchisees and franchisors to become confused about their respective roles, needs, and obligations, feeding dissatisfaction on both sides.
#8 Manage the Franchise E-Factor. This is the name of a model I developed in 1992 to explain how the quality of the franchise relationship moves through distinct stages, starting with a state of “Glee,” then to the parties wanting to break “Free,” and finally embracing a philosophy of “We.”
If this has piqued your interest, I am currently leading a Franchisor Excellence Masterclass. Beginning last week (Oct. 30) the class consists of five weekly 2-hour sessions, exploring these eight areas in some depth with a group of franchisor leaders. You can learn more here or contact me to inquire about future classes.
Subscribe here to Greg’s Tips, or to learn more about franchisor-franchisee relationships.
Until next time,
Greg Nathan is Founder and Director of the Franchise Relationships Institute, based in Australia. He is a registered psychologist and recognized globally for his pioneering research into the factors that create a healthy franchise relationship and success for both franchisors and franchisees. He has written 5 best-selling franchising books, including Profitable Partnerships and The Franchisor’s Guide To Improving Field Visits, and has developed a number of groundbreaking models such as The Franchise E-Factor, which are used by franchisors and consultants worldwide. Contact him at firstname.lastname@example.org.
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