Understanding the Franchise Relationship

A mutually beneficial franchise relationship in which the franchisor’s and franchisees’ roles are clearly defined is the basis for a functional franchise system. Franchisors who do not invest much effort into determining the parameters for this relationship and making it work will be filled with regrets later. The most important thing to remember about your franchise relationship is that it is a business relationship. It is not a friendship between equals. The reason why you and your franchisees have contracts detailing your respective responsibilities within the franchise system is to ensure that you all live up to those responsibilities. This makes for the effective operation of your franchise system.

 

The Hierarchies in the Franchise Relationship

 

Because the franchise system is built on your original business ideas, and because, in the process of franchising your business, your role shifts into an executive one, it is important for your relationship with your franchisees to reflect this hierarchy. It is your role to set the direction for the franchise company’s development. By the time your franchisees sign on for their positions, the terms are set in stone for the most part. They may suggest minor adjustments, but you are not under any obligation to keep on negotiating the details of the contract until they feel pleased with them. Most of the accommodation has to come from their side. If they sign the franchise agreement, they have to be willing to live with the terms of that agreement. This underlines the importance of the franchisor and franchisee hashing out the details of the documents governing the franchise relationship before they sign them. That’s the only way to determine that they are, in fact, a good fit for each other.

A good franchisor will clearly lay out his or her expectations and give the franchisees detailed guidelines to follow as they operate their franchises. At the same time, the franchisor or his or her representative should be accessible to the franchisees. They should be able to express their concerns if they have any. Furthermore, if their concerns turn out to be legitimate, it is important to address them. Ignoring one’s franchisees’ reasonable requests is out of the question. The franchisees could have ideas that improve the efficiency of the system, and any improvements to the system benefit everybody, including the franchisor, at the end of the day. Additionally, it is important for all the parties in a franchise relationship to feel that their contributions matter and that their opinions are valued.