Franchisor vs. Franchisee – Should it really be a this way?

All fresh franchisors start with optimism and faith. They believe the relationships they are going to establish with their franchisees will be perfect. They are confident that whatever troubles will arise, will be quickly addressed and resolved in the best possible manner. I doubt there is a franchise business owner who pictures poor communication between franchisees and franchise management and units closed after court fights.

On daylight things start to look different. Many franchisors soon realize they are unable to serve their franchisees the way they have originally planned. When the franchisee number starts to grow, things just take a turn into the worst. Now franchisors need to work with much more people, solve much more problems and be more flexible. And let’s face it – not everyone is up to this challenge. Many find themselves stuck into a vicious cycle of problems; they cannot stop their growing business and they cannot solve the issues that are piling.
Luckily there are several easy steps that every franchisor can take to reduce the chance of finding themselves into the above scenario.

How to solve problems before they have occurred?

• Be firm but fair. Once you set the basic foundations of your franchise business, stick to them. You will be exited when the first potential franchisee knocks on your doom and you may be tempted to do some tweaks on the operational manual or to adjust your fees just to make sure you will land the sale. Ask yourself – could you do so if you had 100 franchisees? Could you reduce your fees or royalty payments every time you want to land a sale? The answer is no, you cannot, because your business will fail. You must take into consideration the specifics of each sale but your decisions must be economically and not emotionally driven.
• Communicate. Every successful relationship between a franchisor and their franchisee is based on good communication. You may find it difficult to keep up with this once your franchisee number increase, and this is why you can set some standard procedures that anyone working for you can follow. Other times you may not want to communicate as the relationship with one of your franchisees has started on the wrong foot. Whatever the case you must try to make things work and you are the one who should initiate the communication process.
• Be patient. Sometimes it may seem that a franchise unit you have just sold is not performing according to your expectations. Instead of reaching out to call your attorney, stop and check if your impressions are really true. Review the franchisee balance sheets and meet the owner. May be you will really find a reason to worry or maybe you are just being impatient and unrealistic. Set a system (if you do not have it in place already) that will automatically alarm your financial department if the things are not going according to plan with any of your franchisees.