Franchise Relationship Model

A franchise with a seemingly successful business model and proven economic system in place can fall apart with a poor franchise relationship model.

The foundation of any healthy franchise system is based on trust between the franchisee and franchisor. A franchise with a seemingly successful business model and proven economic system in place can fall apart with a poor franchise relationship. To have a successful relationship it is critical that both sides understand their roles and responsibilities. This article will outline those individual roles. We’ll discuss best practices that will help establish and maintain an effective franchise relationship model.

Role Of The Franchisor

The primary responsibility of the franchisor (i.e. the CEO and management team) is to establish and maintain a corporate culture that allows the franchise business model to be successful. This corporate culture starts at the top with the leadership team that will communicate clearly and openly with the franchisee. By keeping commitments, dealing with the franchisee fairly, and showing they care about the franchisee’s input in business decisions, the franchisor can establish a trusting relationship.

Most successful franchises have a franchisor who empowers the franchisee with adequate tools, training, and resources to help them be more effective at growing the business. Franchisors should also act as a troubleshooter, providing ongoing technical support and being available any time of day to answer questions. Primarily, franchisors main focus should be on franchise operations: business expansion, innovation, and maintaining brand reputation and development. This includes monitoring industry trends, updating products and staying ahead of the competition. Having standardized operation procedures to provide unity across all franchise locations can greatly enhance communication throughout the franchise system.

Role Of The Franchisee

The primary responsibilities of the franchisee are to provide capital and follow the system put in place by the franchisor. Their role is to manage the business location(s) and ensure growth. Another important function of the franchisee is to protect the brand’s image. This can be done simply by complying with company policies and seeking approval before making important marketing decisions. In addition to investing in the franchise financially, the franchisee will be investing their time, learning how the business operates. The franchisee should be able to assume their own leadership role, taking the initiative to learn new skills, build a loyal customer base and resolve every-day issues that may arise. Finally, the franchisee needs to be organized in managing daily operations. They must be able to communicate effectively with the franchisor, the customers, the employees, and other franchisees.

Best Practices

Most of the best practices involved in having an effective franchise relationship revolve around excellent communication between the franchisor and the franchisee. Internet communication is not a good substitute for human contact. It’s far too easy to be misinterpreted. Communication should be honest and frequent. The franchisor should be taking calls daily and responding to emails the same business day. If possible, setting up a support line, using an online platform to track all communications, or even designating one person in the organization to be in charge of managing communication would go a long way in promoting useful dialogue.

Franchisee Advisory Councils (FAC) or advisory council programs are great ways for management to receive feedback from franchisees about various programs and initiatives. Advisory council programs provide the franchise with an agenda, policies to address confidentiality, term limits, and purpose. They can promote franchisee involvement and leadership. Councils provide a way for the franchisor to hear about potential problems before they become real issues.

Regularly surveying franchisees is good for finding out how valuable the franchise programs are, how effective marketing is, and the quality of training and support the franchisee is receiving. In the end, the franchisee and franchisor are partners, and transparency is the key to a successful franchise relationship model.

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