FW Focus: Franchise Relations
Building Franchise Relations Upon A Solid Foundation
By Ed Teixeira
By virtue of having spent most of my business career in the franchising sector, from field level to executive positions, I was most often placed in the situation of resolving disputes or being directly involved in litigation brought by either the franchisee or franchisor. On the other hand, I have also worked within a climate of positive franchise relations.
I recognize how open communication, newsletters, meetings between the franchisor and its franchisees and other related activities contribute towards building and enhancing positive franchise relations. The aforementioned attributes should be part of every franchise organization. In fact, these act ivities are the “enabling factors” since they help to enable positive franchise relations. Regardless of how large the franchisor may be, it makes sense for all franchisors to have positive communications, accessibility to franchisor management, and other methods for recognizing and communicating with its franchisees even if these activities are somewhat on a smaller scale in newer franchise companies.
Positive franchise relations must be built upon a solid foundation. I have observed many situations whereby a franchisor possessed the enabling factors for building and maintaining positive franchise relations, yet continued to face numerous challenges. These franchisors had newsletters, meetings and franchise advisory councils, yet because there were certain fundamental flaws pertaining to their franchise program, they failed to maintain positive franchise relations on an ongoing basis.
Regardless of whether you are a mature or emerging franchisor, you need to have a solid foundation that franchise relations can rest upon. The following are practices which will serve as the building blocks of the foundation, which when coupled with the enabling factors, should result in positive franchise relations:
Be Aware
Begin with credible and accurate representations throughout the franchise sales process. If a new franchisee feels that they were misled in any way during the franchise sales process, you can expect future problems. Moreover, chances are that this situation wouldn’t be limited to one isolated incident. Be involved and aware of any problems in this area. Once you are aware, take appropriate action to prevent a reoccurrence. Members of senior management should find the time to contact new franchisees after the franchisee has spent a few months in the system. This can confirm that the new franchisee has and continues to receive what they were told and expected to receive. This contact should take place after the initial congratulatory calls and grand opening kudos. Don’t take the position that “no news is good news.” There are certain instances when a new franchisee may be reluctant to speak up. It’s better

to uncover a problem in its early stages before it grows to an unmanageable size.
Be Cautious and Consistent
If you are a franchisor who ne gotiates the terms of your franchise agreement, it’s important that this process be carefully controlled. Have procedures which will prevent individuals within your organization from being able to amend or change terms of the franchise agreement without the approval or previous consent of your franchise attorney. In my companies I had the so called “sacred cows” which my subordinates knew were non-negotiable. If these came up as issues, they would defer to me. T his procedure prevented franchisees from having agreements with varying terms.
Be Concise
Monitor the ongoing services that your franchisees are entitled to receive. From site visits to training support, be sure your staff is delivering what you as a franchisor are obligated to provide. Refer to the franchise agreement and be sure that your responsibilities as a franchisor are being fulfilled. It’s not unusual to forget or neglect particular services which the franchisee is entitled to receive. Perhaps you’ll uncover some services that can be deleted from subsequent franchise agreements without significant impact. Conduct a survey once a year or semi-annually in order to evaluate the level of franchisor satisfaction on the part of your franchisees.
Maintain Compliance
As a franchisor, it’s important to uphold the standards that your franchise agreement establishes. Franchisees expect to be held accountable to these standards, and when they are not, it can lead to potential problems. Moreover, by not enforcing system standards, a franchisor is being unfair to those franchisees who follow the system.
Monitor
Measure the financial results of your franchisees on a regular basis. Common sense dictates that there is a direct relationship between franchisee financial results and franchisor-franchisee relations. Profitable franchisees will typically lead to positive franchise relations. That’s a truism that can’t be denied.
Adapt
Make changes to your program when needed. Don’t wait for your franchisees to demand change. If you carefully consider the situation and the penalty of not reacting, don’t be reluctant to make a change. Far better as a franchisor to initiate change rather than being forced into it. I can recall a situation whereby a majority of franchisees requested what was not an unreasonable change to the franchise program. The franchisor adamantly resisted the change only to later relent. This approach cost the franchisor important credibility and hurt its relationship with franchisees.

Be Tuned In
Have a network of franchisees who can be counted on to provide feedback when needed. A true benefit of a franchise advisory council is that some of its members will feel obliged to provide unsolicited feedback to the franchisor. This is a benefit which can work both ways. Use this relationship in a positive way by getting the message to franchisees, utilizing FAC members as a conduit to assist in this endeavor.
Vince Lombardi, the legendary football coach, had a requirement that his players practice the fundamentals of blocking and tackling until the execution was mistake free.
A loose comparison can be made to the previously mentioned building blocks, namely that as a franchisor you need to strive for excellence in terms of these factors. You may not reach perfection; however, you’ll have a structure within your organization which will be able to withstand those challenges to franchisor-franchisee relations that can arise from time-to-time.
Ed Teixeira, is president of FranchiseKnowHow, LLC a consulting company. He can be reached at 631-246-5782 or ed@franchiseknowhow.com.