The relationships between franchisors and franchisees over time are a lot like raising children. The franchisor, as a parent, spends time, energy and resources nurturing inexperienced franchisees and teaching them all the rules and systems that make the business and brand successful.
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Initially, a franchisee will diligently and obediently adhere to these rules and systems. Then come the teen years – where they question and reject the way things should be done.
They may think they know better, and boundaries are there to be tested. Given time, however, as a franchisee and their business matures, there comes a stage where both franchisee and franchisor are there to help each other.
The Franchise E-Factor, by corporate psychologist and author Greg Nathan, examines how relationships between franchisees and franchisors evolve as the franchisee gains greater competence and confidence in running the franchise. These are the three phases and six stages in the relationship.
The three phases of the relationship
In the beginning of the relationship, the franchisee is dependent on the franchisor for guidance and support, and the relationship is usually good.
The franchisee gains experience, a desire for independence, and begins to assert themself. This is usually the stage when things start going wrong with the relationship (and the business’s functioning). Royalty payments become an issue and franchisor support is questioned.
Note: The level of satisfaction is lowest when the desire for independence is at its highest.
During this phase, the relationship reaches maturity. This is the relationship that both the franchisor and franchisee must strive for.
The 6 stages of the relationship
The franchisee is nervous and likely to feel vulnerable about the new business venture. But there is also excitement and optimism about the future success of the business. This period usually lasts for three to 12 months and covers the period from the start of negotiations right up to the finalisation of the agreement to buy the franchise.
The franchisee becomes sensitive and concerned about the value of the fees being paid to the franchisor. They will also start questioning the value of the services they are receiving.
The franchisee becomes more commercially astute and they start thinking about how the fees they pay the franchisor can best benefit their business. They also become more sceptical about the importance of the franchisor.
Franchisees frequently come into contact with friends, relatives, and business associates who each have their own perspective on franchising.
There can be different motives for their comments ranging from negative to positive. These comments may influence the franchisee and have an impact on their attitude to the franchisor.
The franchisee concludes that their success is due mainly to their own effort and plays down the contribution of the franchisor. They become self-centred and proud of themselves.
If they’re struggling, they play down their deficiencies. As a franchisee’s competence in running their business increases, they will move into this stage. This is when the drive for independence starts to assert itself. If things go well, they take the credit. If not, they blame the franchisor.
This stage is characterised by the franchisee’s need to demonstrate their competence and assert their independence, thus testing the boundaries of the franchise system.
The franchisee becomes cynical and begins to question the motives of the franchisor, and challenges the reasons behind new innovations or changes in strategy. This stage is characterised by a need to break free of the limitations of the franchise system.
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Conflict cannot be ignored. Through frank and open discussion the franchisee and franchisor better understand and respect each other’s point of view. Both parties show a renewed willingness to work together. Mediation may also be used to resolve issues if discussions don’t succeed.
The franchisee recognises that success and satisfaction come more easily from working with rather than against their franchisor. Ideas and opinions will be openly shared in a spirit of mutual trust and co-operation.
There is a natural progression from the ‘See’ stage to ‘We’ stage – it’s a move from independent to interdependent, which is where the rubber meets the road in a franchise business model.