A couple of weeks ago, I was asked about the importance of business relations. In both start-ups and mature establishments, relations are vital. In fact, companies heavily invest on having proper customer relations management.
Franchising is no exception. The relations begin between the franchisor and franchisee. The handshake is a sign of acceptance and start of the relationship.
As in any relationship, there are stages which both parties undergo.
Honeymoon Stage: From the time the parties sign the franchise agreement, they will be in a getting-to-know-each-other mode. The agreement must be thoroughly understood, especially by the franchisee. It is a contract, which contains details and obligations by both parties. This stage is when the franchisee and the franchisor work on building their relations. This includes having initial training, hiring of employees, construction, and initial operation of the business.
Adolescence Stage: Having operated for several months, the franchisee learns the business. There are now questions on various areas, such as the delivery of goods, type of training, and frequency of visits of the franchisor or his representatives. However, the franchisee still adheres to the standards of the company.
Independence Stage: Reaching this stage, the franchisee may start to question if the franchisor is the right company to deal with. After operating the business for some time, the franchisee feels he or she can independently manage the enterprise. The franchisee gets to feel that the current state of the business is all because of the efforts he or she exerted.
Resolution Stage: This is where the franchisee may begin to think of doing the business alone. There is no need to have a franchisor- franchise relationship. Business may be good and everything appears to be operating. In franchising, what is being carried by the franchisee is the brand and systems established. Consumers patronize a business with major chains. The franchisor has to draw the line.
There are franchisors and franchisees that are able to discuss and plan for a much better relationship. The franchisor who fails to align everybody within the system may have difficulty in ensuring the sustainability of the brand. If, on the other hand, the franchisee thinks and feels he or she can independently manage the business, then the franchisor has to let go. There are things which the franchisee must be aware of. This is the non-compete clause in the agreement. It refers to avoiding being in direct competition for a certain number of years.
How then can relations be strengthened?
1. On the side of the franchisee, understand, clarify and document issues which may arise. Keeping quiet and taking things for granted may lead to bigger consequences.
2. Establish good working relations with representatives of the franchisor. In a franchise, these are people engaged in field support.
They perform tasks such as operations of the branch, training and development of branch employees, advertising and promotions, and research and development. A meeting with any of the representatives is important and issues should be addressed to them.
3. Reread and understand the franchise agreement. Often, due to the nature of the business, the role and obligations of both parties may have been forgotten. If and when there is a need for assistance, always alert the franchisor. There are franchisors who provide a direct line.
4. From the side of the franchisor, select, train and constantly brief the staff assigned to service the franchisees. They must be made to understand that franchisees are partners and independent business people. They are never to be seen as employees of the company. It must be remembered too that there are different needs of each franchisee. These may be due to the location of the business as well as cultural practices.
5. There will always be things that need to be solved or planned. What is vital is to keep an open line of communication. There are people who believe that merely sending an SMS to each other is sufficient. I beg to disagree. The franchisor and franchisee must have a face-to-face meeting. The frequency can be twice a year. The talking points should be sent ahead of time. There are companies who set a yearly general conference for all the franchisees. This briefing should include business directions as well as strategic moves.
Remember that the definition of franchising is to be in business for yourself but not by yourself. The relationship is meant to strengthen each other in order to bring out the best in all. Oftentimes, I refer to this as having a synergistic relationship.