Franchise Relationships - The real facts of life

Copyright Nicholas A. Bibby, all rights reserved

PART ONE OF TWO

When relationship problems occur, the first, easiest and most natural thing for human beings to do is shed personal blame as quickly as possible. "You don't..." "You won't..." "If only you..." and of course, "I've had enough." Sound familiar? If you have heard or made these statements relative to a franchise relationship, you have experienced one of the worst pitfalls of the industry and most likely have cast a jaundiced eye at this struggling adolescent giant.

Having "lived" franchising for over 20 years and having experienced it from virtually every perspective (franchisee, franchisor, consultant, writer and counselor), I have witnessed almost every relationship issue possible within the industry. In addition, as an adult counselor in the world outside of franchising, I have also worked with many individuals as they attempt to understand, come to grips with, and resolve personal problems resulting from relationship problems. The following perspectives on franchise and business relationships emanate from my dual experience of counseling individuals with both business and personal issues.

COMMON, WORTHLESS "BLAME":
Things aren't working out because of YOU!

"Blame" has been, and continues to be the number one claim and justification for hard feelings, thoughts of dismissal from the kingdom by franchisors, and a call to arms among disgruntled bands of franchisees seeking bountiful rewards based on unfair treatment, poor support and broken promises both real and imagined. You can read chapters about real life fighting in most franchise publications.

For years, "blame" has been recanted in courtrooms. No doubt there will always be litigation in franchising, but there is no need to create relationships that will most assuredly end in hard feelings, lost money and lost time.

A realistic take on most franchise relationships is: "This is a marriage; I will love and honor you forever, until divorce do we part."

There are two major players in franchising, and all that is to be good or bad in the future hinges on how well they serve each other. Unfortunately, the franchisee franchisor relationship always begins with the parties coming from two totally different levels of experience, knowledge, insight and power. From the outset, the relationship is unequal and always will be - that's the way the system is designed to work no matter how much we may want to tinker with it.

Player 1(A): The New Franchisee. Consciously, and with near blind trust (in spite of varying degrees of due diligence), wide-eyed, prospective franchisees make a brave decision to enter a new relationship filled with the expectation that security, fondness and success will follow and strengthen the bond for at least the term of the initial franchise agreement. Their commitment is time, money, trust and ostensibly hard work and dedication to a "proven system." Most often the franchisee approaches the signing alter with a virginal understanding of business ownership, P&L responsibility and real life knowledge of the "chief cook and bottle washer" method of survival. The franchisee may have come to believe the old saw of "in business for yourself, but not by yourself," but in fact, franchisees are still business owners and all the franchise support services in the world will never equate to on-site, day to day management responsibility. They are going to run the gauntlet, but they really don't know it yet. Most prospective franchisees have never owned a business and can only imagine what life in the owner's seat is truly like. They are simply entrepreneurs at the first stage of launching forward who can only hope that they are entering a well-balanced relationship with an older, more mature, and experienced partner.

(Note: Of the 2,500, plus or minus, franchise concepts offered in North America, the words "only hope" applies in too many cases. There are however, some stunningly great franchises that by the nature of their quality, integrity and well designed systems, almost guarantee success if the franchisee fits the mold.)

Player 1(B): The Experienced Franchisee. Somewhere between the adrenaline rush of opening day and the close of the first year of business, franchisees emerge from their "in-training" mentality and begin to relax with the "system." These owners are becoming part of the "cadre" and for good or bad, the dye of trust has been cast. With rare exception, these experienced franchisees are finding it more difficult to justify writing monthly royalty checks. Although this "I don't need you anymore" mentality can exist in any franchise network, it is predominantly found where royalties cannot be justified/offset by improvements/programs or direct provable savings/income from special purchasing discounts, referrals, etc. While it is possible to maintain satisfaction based simply on name recognition, that name would have to be so powerful as to convince franchisees constantly that no independent could draw as well if the franchisor's signs came down.

(Note: Healthy people will not tolerate forever an unbalanced relationship. However, what one person sees as fair, another may not find tolerable; what one sees as perfectly satisfactory, another may revolt against. The point is quite simple. Even if a franchisor is keeping his promises and can justify on-going payments through increased trade, system's improvements, savings, etc., certain personalities will rebel while other personalities will happily maintain friendly relationships over time. A quality franchisee is one who expects contracts to be fulfilled on both sides and can see the "real" value of continuing the relationship. What should you expect a quality franchisee to say? "Help me if I need it, but otherwise leave me alone." Great franchisees are neither employees nor independent entrepreneurs. To understand this point is to understand why perfectly fair systems might be upset by some franchisees and not upset by others. When the wrong "type" becomes a franchisee, there are numerous cures that fall far short of litigation, but one must know how to identify brewing problems and the reasons behind them.)

Player 2: The Franchisor. Visions of exponential growth and thoughts of directing a sea of franchisees from the Captain's bridge capture the imagination of every franchisor. They might truly enjoy (and be committed to) teaching, mentoring and supporting their franchisees, but in addition, each of them is hoping (and working hard) to grow their network. Therefore, consciously and usually without malice, ambitious franchisors can find themselves promising the world (emotionally not contractually) each time they meet an inviting prospect. Once the sale is made, franchisors understandably fill themselves with pride that "one more" has entered the family. Almost unnoticeably, the stage has been set for something very different from a traditional relationship of one-to-one bonding. This is only the tip of the iceberg in terms of relational differences and expectations. Make no mistake; ordinarily franchisors are not predators greedily snatching up hapless opportunity seekers. When you consider that usually more than 100 prospects are required to make a franchise sale, it is easy to see that no franchisor could stand with a frozen, false smile after the initial stages of franchising, they are just trying to compete. In fact, selling franchises is as difficult a task known, if done honestly and correctly, because the virtue of patience is worn thin. After the sale it is time to train and service the new life that "joins the family." Franchisors may be experts in the business concept they are franchising, but the fact that they have begun franchising does not mean that they are experts in franchising. This single point makes all the difference in the world between success and failure in franchising, but it is a point rarely examined. In other words, wanting to deliver and delivering are two different animals. A critically important issue in franchising is "people" and the discovery of "who" as well as "what" it takes to succeed. Quality selection, support and mentoring techniques require franchise insight and experience; one must shift from employees to franchisees; that shift is enormous.

PART TWO 

Copyright Nicholas A. Bibby, all rights reserved.