One of the most important byproducts of the franchisor-franchisee relationship is the state of franchise relations, which can range from positive to negative. The most common and immediate measure of franchise relations is derived from a combination of franchisee surveys, franchisor-franchisee litigation and feedback from a franchisee advisory committee or franchisee association.
A lack of positive franchise relations can be attributed to a number of factors, however, the process begins with the fundamental structure and administration of the franchise system. These factors represent the foundation of a successful franchise program. If the structure of the franchise program or how it’s administered is flawed or out of sync it will upend the delicate balance between the relationship of a franchisor and its franchisees.
In order to establish and maintain a positive relationship between a franchisor and its franchisees, there are certain principles that must be followed:
- The fundamental franchise program must afford each franchisee the opportunity to reach their financial expectations. If franchisees "follow the program" yet are not successful, the franchisor will be faced with franchisee turnover, litigation and numerous other problems. Franchise programs can be flawed or operate, where the franchisee has no margin for error. The franchisor must have a way to gauge the success of its franchisees by surveys, collecting income statements and utilizing other ways to evaluate franchisee results.
- The franchisor must "listen" to their franchisees and put ego aside when necessary. If a franchisee with a legitimate complaint can’t communicate to the higher levels of franchisor management and receive a reasonable and well thought out response it can be problematic. It may not be necessary to have a F.A.C., especially for smaller franchise companies, but there had better be a process in place for franchisees to provide feedback.
- There should a proactive process to monitor franchisees through field reps, surveys, meetings or conference calls. The greatest mistake a franchisor can make is to be "out of touch" with the pulse of its franchisees.
- The President or CEO should have a routine of staying in touch with select franchisees. Even in a large system, there is always a way for the leader of the franchisor to maintain contact with certain franchisees and know what is taking place within the network
Positive franchise relations are an important element of a successful franchise company. Following these steps represents the building blocks of a solid franchise relations program.
