Franchise Relationships - The real facts of life

PART TWO OF TWO

It is quite easy to clear up a simple misconception about franchise marriages. They don't exist! This franchise article explains why.

Franchising, even if capable of reflecting some of the nicest parts of marriage (which it is not), will never qualify under the definition of true monogamy and equality. Those enthusiasts who must insist that franchising can be a marriage should at least define this type of marriage as planned, open and legalized polygamy.

None of this is to say that franchisors are wolves or that franchisees are shy, retiring innocents; they are both necessary ingredients in a potent formula that will succeed if basic truths are recognized, accepted and acted on by both players. It is a simple fact of life that in order for franchisors to grow they must acquire more franchisees. The more times franchisors enter "quality" franchise relationships, the more they win. They are also more experienced in what they do than the franchisee; if they were not, there would be no value in what they offer. The fact that franchisors and business seekers need each other to achieve their objectives does not suggest that any form of equality must be part of the agreement. In order for the relationship to last, there must be fairness and equity, but equality is a different story. Franchisees join a "system" created by a franchisor; they become members. As such they enjoy certain legal and operational rights, but they still must conform. Franchisees can buy in and then choose to leave, but they are not the policy makers. Franchisors, on the other hand, must fulfill their contractual obligations or they can loose; not only in court, but in a much bigger way. Poor franchisor performance kills future franchise sales through negative comments issued by existing franchisees. The bottom line is quite simple: franchising works when people understand their roles and fulfill them.

The truest, and most honest similarity between franchisors and franchisees is that they are both in the business of repetition under the same commercial symbol. Franchisors repeat the sale and installation of their system and franchisees repeat its use. (Franchising, like every other industry is simply a production machine that retools according to the dynamics of supply, demand and technology.) When that mechanism is working flawlessly, success results. Therefore, the most fair and equitable relationship is one where franchisors install their system as promised, and franchisees execute it as promised. It doesn't have to be any more complicated than that, but as human beings we can find a variety of means to complicate that which is very simple.

“OK, if the whole thing is so simple, why can't franchise relationship problems be easily overcome?”

Like the man said, "Nothing happens until someone sells something," and that is the basis of the problem. Franchising at its very best means placing quality people in a quality business and nurturing the relationship through quality, updated, on-going programs and support systems.

Certainly deception and unfair play exists in franchising as it does in any industry, but the bulk of relationship problems are due to poor fit between franchisor, franchisee, and the business concept that brought them together.

Years ago, while serving as VP of Franchising for a large international firm, I thought of the term "profile" during a training session for the sales and marketing departments. I defined the concept as I visualized it, yet all ears seemed to be hearing "how can we sell more franchises?" I understood that, but at the same time realized that franchise sales were only going to be as good (long term) as the person and the system sold. Today I hear the word "profiling" tossed around like a baseball, but with all the lip-service given, I rarely see it employed as a legitimate tool for making good choices. Profiling, fit or matching is not solely the franchisor's responsibility either; it is the job of every serious minded prospective franchisee to perform not only franchise analysis, but quality self-analysis. This analysis by the way is NOT possible through gimmicky "quick tests" that bait the public and promise to rate one's entrepreneurial skill. Neither is the depth of analysis required available through "free franchise counseling" services that are designed to do one thing, talk the client into buying a franchise and collect a commission. This is serious, hard work that cannot be accomplished in a few minutes or an evening seminar. It can take weeks or months to arrive at the right conclusions, but that time is insignificant compared to the cost of rushed, poor choices that steal years and thousands of dollars. There are no "free rides." We will pay for the knowledge of what is right and wrong for us in one way or another; therefore, the most logical thing to do is invest time on the front end to minimize future upset.

If a person is interested in quality franchising either as a franchisee or as a franchisor, they must adopt an approach that simply spells out "fit relationships." How does one achieve the ultimate? By analyzing needs and benefits to the extent that they know what a "fit" means within a business concept. Having counseled with so many entrepreneurs over the years, I know that it is very possible to reach the right conclusions regarding "who might be a good business owner, and who might fit with what system," but it is very difficult to convince people that the process is necessary. Surprisingly, the same people who reject the cost of analysis (time and money) when deciding on their entrepreneurial path eagerly mortgage their homes to pay for attorneys when things don't work out down the road. (We humans are a stubborn lot.) "Fit" is the key to franchise relationships, as it is with every aspect of life. When franchisors and franchisees reach the achievable state of knowing who and what works for them, and then act on that knowledge, they will enjoy quality, mature relationships.

If you as a franchisor, franchisee, or group of franchisees are experiencing stressful relationships with one another, consider our franchisor franchisee counseling and resolution services for solving franchise relationship problems as opposed to the expensive alternatives of franchise mediation or litigation. Or, at least test this approach before using the alternatives. Our goal is franchise problem resolution by reaching common, practical grounds.

Part One of this series.

Copyright, Nicholas A. Bibby. All rights reserved.