Franchise Relationships – The Real Facts of Life (Part 1)

Franchise relationships will dictate the fate of a franchise system

Calm franchise relationships are a function of proper planning and execution.

Calm franchise relationships are a function of proper planning and execution.

Franchise relationships indicate how a franchise system is performing and where it is heading. Relationships are always complex and those in franchising are no different.

Just as in any other type of interpersonal action, emotions get in the way of franchise relationships. When relationships are good we experience respect, helpfulness and friendship in a franchise environment. When they’re bade we experience resentment, bitterness and conflict that may result in litigation. Both this and the following article explore some options and alternatives to a broken franchise system.

When relationship problems occur the most natural thing for human beings to do is blame someone else. “You don’t…” “You won’t…” “If only you…” and of course, “I’ve had enough.” Sound familiar? If you’ve heard or made these statements, you’ve experienced one of the worst pitfalls in the industry.

As you read, keep an open mind and hopefully you’ll find something new to consider. Flexibility is key to gaining a clearer understanding of relationship dynamics.

Quality relationships are the result of defining roles, creating trust, and keeping promises. Those are the same factors that cause franchise relationships to be good or bad. However, franchise relationships can be more tricky because they involve both personal and business dynamics.

The root of all bad franchise relationships is BLAME.

Blame is always the number one claim and justification for hard feelings. Thoughts of dismissing franchisees or disgruntled franchisees suing for unfair treatment, poor support and broken promises comes from blame. There will always be litigation in franchising, but there is no need to set oneself up for failure. One such mistake is found in the poor choices initially made by franchisee and franchisor when evaluating each other. Franchisor and franchisee selection decisions always plays a part in future relationships, but that is a subject unto itself. See this page on ‘buying a franchise and franchise due diligence‘ if so inclined.

Blame in franchise relationships is often an excuse for avoiding self-examination. It’s always easier to put a problem on someone other than ourselves and hope for the best. But things are rarely that simple. Because there are always two sides to a story, thoughtful, honest self-evaluation of a problem is a sound approach. Otherwise the odds are in favor of repeating the same behavior in the future. There will simply be different characters, times and places. (Why do so many second marriages fail? Why do so many franchisors continue to battle over the same issues?) When we stop putting all the blame on others and look at ourselves there is always a benefit. Blame draws a line in the sand, but it doesn’t solve much, if anything. This is why problems tend to continue.

Franchise Relationships Have a Set Number of Participants

There are three players in franchising and they have very different levels of experience, knowledge, insight and power. The relationship is unequal and always will be.

Player 1 is the New Franchisee. With near blind trust (usually the result of poor due diligence), franchisees set out with expectations of security and success. Their commitment is time, money, trust, work and dedication. And most often they begin with a virginal understanding of life as a business owner. While the franchisor offers support, the franchisee is responsible for implementing the system. This is often a rude awakening that can spark bad relationships. Most franchisees have never owned a business and can only imagine what that life entails. They are first stage entrepreneurs.

Player 2 is the Experienced Franchisee. Somewhere between opening day and the close of year one in business, franchisees emerge as experienced members of the system. In many networks these franchisees are finding it more difficult to justify writing monthly royalty checks. They now know the business and begin to see shrinking value in this expense. Franchisor must prove the value of royalties or pay the cost of bad relationships. The royalty/benefit ratio always plays a heavy hand in franchising.

Player 3 is the Franchisor. Visions of exponential growth and directing a sea of franchisees captures the imagination of every franchisor. They might truly enjoy teaching and supporting their franchisees, but there are only so many hours in a day. Many franchisors find themselves promising the world each time they meet an inviting prospect, and they may mean it. But the reality is that there is only so much time in a day. A sincere promise if not delivered sets the stage for bad feelings. Franchisees by nature expect the warm welcome to go on longer than is practical. It’s common for a franchisee to feel abandoned following training and the grand opening. The dynamics of promises and expectations are tricky factors.

For more about franchisor considerations read this franchise article.

Here’s a note on tolerating bad relationships be they in franchising or otherwise.

Healthy people will not tolerate an unbalanced relationship forever. Good franchise relationships stem from balance while bad franchise relationships stem from imbalance. Great franchisees are neither employees nor independent entrepreneurs and great franchisors understand this. There’s no doubt misunderstanding and not using this principle will insure poor franchise relationships down the road. Want to avoid future problems? Then understand these dynamics as either a franchisor or franchisee before you sign a franchise agreement both legally and personally.

If you’re experiencing the financial and emotional cost of bad franchise relationships contact us. Our services are a worthwhile alternative to expensive franchise mediation or litigation. We reach solutions based on common sense, identifying causes and creating stress free communications and solutions.

PART TWO