A good franchisor-franchisee relationship is essential for the success of any franchise system. It is an interdependent relationship where both parties rely on each other to make the franchise system as a whole stronger, more efficient, and more profitable.
Commitment is at the heart of all good franchisor-franchisee relationships. Both parties must commit to building and maintaining a good relationship with each other. The best way to do this is by fulfilling their responsibilities.
The franchisor has a responsibility to help the franchisee open shop. This support includes guidance on how to set up a location, purchase the right equipment, build relationships with preferred suppliers, and implement operational rules and procedures that align with the franchise brand. The support also extends to training the franchisee and their employees on running operations.
When the franchisor gives proper training to the franchisee, they set the standard for engagement going forward. The franchisee gets to experience the franchisor’s professionalism, work ethic, and passion for the business. They also feel supported as they start their business, building trust in the franchisor.
Franchisee support should not end at the beginning stage, though. The franchisor should support the franchisee in running the business. For example, they may avail informational resources to franchisees to help them with functions like marketing, accounting, procurement, inventory management, and customer service.
Franchisors can further give franchisees access to their networks of business management professionals. These professionals can share business best practices or tips from successful franchisees on how to operate profitably. Where possible, franchisors can even extend financing to franchisees.
Maintaining communication is crucial for support systems to flourish. Franchisors must have a culture of open communication with their franchisees. This can range from simple acts such as returning calls from franchisees to scheduling weekly or monthly calls to set goals, develop plans, measure progress, and collect feedback from franchisees. This also applies to times of crisis. Whenever there is a major problem in the franchise system such as litigation or financial challenges, franchisors should acknowledge the issues to franchisees, address their concerns, and keep them informed about how they are addressing the problem.
The franchisor must also fiercely protect their brand. Their brand is what the franchisees bought into and what attracts customers to their locations. Franchisors must protect their brand reputation and promote it through strategic advertising and public relations. They must also innovate around their products and services to keep ahead of the competition. This gives franchisees confidence that the franchisor is not complacent and is as hard working at the national level as they are locally.
The franchisee is the other half of the franchisor-franchisee relationship. They too have responsibilities to fulfill so as to build a solid franchisor-franchisee relationship, starting with paying fees on time. Franchisees should pay the initial franchise fee at the beginning and after setting up shop, make ongoing royalty payments diligently. If the franchise network requires franchisees to contribute to advertising, they should do it.
Beyond money, franchisees should abide by the operational guidelines set by the franchise. If they are to present the brand’s trademarks in a certain way, source inventory from specific suppliers, or prepare food in a predetermined way, they should comply. Franchisees too have a role to play in protecting and strengthening the brand. Doing so develops mutual respect and trust between them and the franchisor.
Finally, franchisees should share with franchisors feedback to enhance the business. If a new procedure complicates service delivery or if customers request certain enhancements on a new product, they should pass this information on to franchisors. Franchisors appreciate having franchisees who are as determined to grow as they are. This makes it feel like a true business partnership.
