Franchisee/Franchisor relationships are important to your business success


When you decide to invest in a franchise business, you are entering into an agreement much like any business partnership. While you have a significant amount of business ownership independence, you will still be working with a certain group of people “through thick and thin”.

Mainly, these people will be the team at the franchisor corporate office. These are people who come to work every morning and work day in and day out to help make you and your business successful. At times, it can be difficult to see the forest for the trees in a franchisee/franchisor relationship dynamic. It can seem like the franchisor isn’t listening to you, or that they’re not taking your best interests to heart.

The franchisor needs to work very hard to maintain a consistent, relevant, and valuable brand across the entire franchise network. And this is no small task. 

It is important for both franchisees and franchisors to understand each other’s needs and perspectives, to communicate effectively, and to maintain an emotionally intelligent mindset in their interactions with each other and others around them. Through this, a strong franchisee/franchisor relationship is built on a foundation of trust and accountability.

 

4 Tips for Building Great Franchisee/Franchisor Relationships

 

1. Research

Doing your research is the first and most important tip to building a great franchisee/franchisor relationship. Why?

Because research will help you determine if you’re mutually a good fit to enter into a business partnership with. Doing your research will also help you understand what the franchisor’s relationship with current and past franchisees is like. Questions such as whether or not the franchisors has ever been involved in a lawsuit with franchisees, and what it was about, help tell a tale. 

Your research must include interviews with current and past franchisees, information which is usually easily found on the franchise website and in the Franchise Disclosure Document (FDD). 

The franchisor will also do research on you with the same intent of determining what kind of relationship they might be entering into with you. They will usually do a background check, and study your personal and financial background to make sure you’re a good fit for the company brand.

 

2. Open Communication & Trust

In a franchisee/franchisor relationship, open and clear communication is key. All organizations work hard to improve communication, and this can be difficult for franchisors that need to communicate information to independent business owners across a broad network.

The responsibility of communication doesn’t fall solely on the franchisors. Should you become a franchisee, it is also your responsibility to make your best-faith effort to keep updated on what is being communicated from the corporate office. Most franchise organizations will have an online communication portal that is used to store and disseminate internal information and resources. Most will also produce a monthly newsletter to highlight the important information and updates in the portal.

Some take communication a few steps further with periodic webinars, peer meetings, and in-person conferences. All these channels are developed to provide franchisees with the information they need to run and grow their businesses successfully. They take a lot of time and care to put together, and it will be in your best interest to keep updated with this information.

On the franchisor side, opening a two-way line of communication is in the best interest of everyone. When franchisors are able to gain insights and new best practices from the field, they can use the resources of the entire franchise organization to test it and then roll it out to other franchisees—therefore improving the likelihood of success for all. This is just one of the particular advantages of investing in a franchise organization that offers exclusive territories. This way, franchisees are not in competition with each other. Instead, they are sharing best practices and coaching to help everyone. 

 

3. Emotional Intelligence

The ability to respond to any situation with emotional intelligence is important on both ends of the franchisee/franchisor relationship. There may be times throughout your tenure as a franchise business owner when emotions run high. You may get caught up in a “bandwagon” movement amongst a group of franchisees. Or the franchisor might roll out a new initiative that you are not in favor of. 

On the other hand, you may find yourself in scenarios where your business is performing particularly well, while others may be struggling with a variety of business and/or financial issues. 

Being able to navigate any type of scenario with a high level of emotional intelligence will ultimately help you in your business, as well as in your relationships with other franchisees and the franchisor. Make sure you’re responding thoughtfully, rather than reacting emotionally, to successes and challenges that you find yourself in. 

 

4. Responsibility & Accountability

The importance of understanding and owning responsibility and accountability on each side of the franchisee/franchisor equation is an important aspect of building a strong relationship.

Sometimes, franchisees go into a franchise agreement with unrealistic expectations of what the franchise corporate office will provide. On the other hand, there are times when the franchisor doesn’t set those expectations properly and realistically. Oftentimes, it is in the areas of franchisee/franchisor responsibility and accountability that the need for open communication and emotional intelligence is highest!

From your research, you should have a good idea of which areas of the business your are responsible and accountable for versus the franchise office. Ultimately, when it comes to purchasing a franchise, you are an independent business owner—with some guardrails installed to protect the brand and product/service quality. Make sure you are ready to own and commit to these responsibilities before making a decision to purchase. 

The franchisee/franchisor relationship is a critical success factor for your individual business, as well as for the franchise organization as a whole. Building and maintaining this relationship is a two-way street and requires respect and effort. As in any relationship, things won’t always go smoothly. Being able to manage your relationship with research, open communication, emotional intelligence, and a clear sense of responsibility and accountability will produce great results for you personally and your business.

Are you interested in learning more about how Crestcom fosters great franchisee/franchisor relationships? Contact us today to schedule a chat!

 

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