Building Strong Franchise Relations

Ed Teixeira

Date

Apr 28, 2017

Franchise relations is used to refer to the state of the relationship between a franchisor and its franchisees, which can range from positive to negative. The level of franchise relations is one of the most important issues that franchisors deal with, in addition to growing the franchise network and increasing sales and profits. To be considered one of the best franchises to own, emerging and startup franchise systems, need to have positive franchise relations, otherwise it will be challenging to grow a successful franchise network. The top franchises have a strong relationship with their franchisees. For example, successful restaurant franchises like McDonald’s and KFC continually strive to maintain good relations with their franchisees. This often means including certain franchisees in major decisions that impact both parties.

To have a top franchise it’s important to build an infrastructure to establish and maintain a positive relationship between the franchisor and franchisees. Since prospective franchises will want to obtain feedback from existing franchisees, a poor relationship between the franchisees and its franchisor can poison the well. In many cases, it will turn the candidate away from that franchise.

Positive franchise relations require a strong foundation that must be built by the franchisor. Following are the important components of that foundation:

  1. The fundamental franchise program must afford each franchisee the opportunity to reach their financial expectations. Nothing promotes positive relations more than having a network of successful franchisees. If franchisees "follow the program" yet are not successful, the franchisor will be faced with franchisee turnover, litigation and numerous other problems.
  2. 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 top levels of franchisor management and receive a reasonable and well thought out response, problems can ensue.
  3. There needs to be an ongoing process to monitor franchisees through field reps, surveys, meetings and conference calls. One of the biggest mistakes a franchisor can make is to be "out of touch" with the pulse of its franchisees. For startup and emerging franchise systems establish a representative franchise advisory council or marketing committee to provide a forum for franchisee feedback.
  4. The President or CEO should maintain a routine of staying in touch with select franchisees. Even in a large system, there is a way for the leader of the franchisor to maintain contact with certain franchisees to know what is taking place within the network

Positive franchise relations are an important ingredient of a successful franchise company. Following the steps that I’ve outlined, represents the building blocks of a positive franchise relations program.

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