The franchisor/franchisee relationship

Transparency is critical if the special relationship between franchisor and franchisee is to work, according to Louise Harris, franchise network manager for NIC

Being in business for yourself is, for some, the most rewarding experience they have ever had. This may not necessarily be financial - it may be emotionally rewarding or the best decision for your family/work/life balance.

But it’s always going to be hard work and there will be difficult decisions and choices to be made.

Path to success

Franchising, done well, should be an arena where the main pitfalls are known in advance, challenges are faced with help from the franchisor and the path to success should be easier and more direct, but not necessarily easy.

Having been in franchising for 12 years, I think one of the most common things that still amazes franchisors is when they discover something about a franchisee that they ought to have known - and vice versa.

There are some simple reasons - the right questions may not have been asked - but often prospective franchisees tell a franchisor what they think the franchisor wants to hear.

There is a special relationship between franchisee and franchisor - if a franchisee is successful, so is the franchisor. It’s actually a simple relationship based on honesty and trust, but fulfi lled through hard work and determination. Often it’s likened to a marriage.

Guilty of white lies

So where does it go wrong? We’re all guilty of white lies - the fish is bigger each time you retell the story or you perhaps talk up an event to make it better than it was. But telling a franchisor that you’re self motivated when you need pushing, that you love sales when you hate cold calling, that you will work six days a week when in fact you really only want to do four - well, this can only lead to problems.

And telling lies about your health - physical and mental - are simply putting the franchise at significant risk of failure.

I believe that sometimes we tell these lies because we slip into an ‘interviewer-interviewee’ relationship. But if a franchisor says it’s critical to be available at a certain time to maximise the business, then it’s best to listen and, if it’s not an option, don’t sign up.

Exploring this a little further, frequently people come to franchising having already had a career. This career may be unrelated to the nature of the business the prospective franchisee is buying, which is all the more reason to accept that the franchisor understands who can make a success of the business model, what character traits are key, what the pitfalls are and how it is possible to fail as well as succeed.

We slip into wanting a franchisor to ‘approve’ of us - to say we can have the franchise - instead of approaching the opportunity as a mutual discussion about a business purchase where both parties need to be right for each other.

Open and honest

Both franchisor and prospective franchisee have an absolute responsibility to be open and honest and these are the areas it seems to be most critical for transparency:

• Money available to buy the business.
• Availability for work.
• Drive and enthusiasm for working the sort of hours required.
• Ability to do the task. If the business requires a physical activity and you’ve got physical problems, declare them.
• How do you work best? Do you need to turn up to an office and be given things to do? Can you really self motivate?

Sadly, individuals often start to go wrong when they’re sat alone at their desk after training and find themselves unable to pick up the phone and start making contacts, deliver leaflets or answer calls. It seems unbelievable, but it happens more often than you imagine.

Have you got the support of your family and friends? If you’re working against those you have around you, no amount of support from the franchisor will help, as day to day they cannot be with you continuously.

When things aren’t going well - and when they are - the franchisor is keen to know, as there may be things they can do to help.

Duty of care

Franchisors have a duty of care to ensure they tell a prospective franchisee the good and bad side of the franchise - and the prospect should listen. If there are known challenges, the franchisor should be making them clear.

This is not just the financial model, which should clearly indicate how long a franchisee may have to wait before recouping their investment and/or see sufficient cash flow to pay themselves. The open discussions should also include:

• How many franchisees have failed or terminated their agreements and, broadly, why this has happened. Often, franchisors will say that a failure lies with the franchisee ‘not following the model’. This is a ‘catch all’ and prospects should receive an explanation about what it is that prospects failed to do - and why - if it’s known.
Sometimes there are legal/personal reasons for not being able to be specific, but a general explanation is important.
• What success looks like.
• What is expected of the franchisee in terms of time commitments, feedback and investment.
• What the franchisee can expect in terms of support. Is it simply someone being available if you have a question or are there more face to face meetings? And is this what is really needed or the prospect wants?
• Weaknesses in the model and plans to overcome them, as change and innovation are important in any business.

The franchisor should be open about this. Equally, the franchisee should consider whether what they hear is a good thing or makes them feel uncomfortable.

Imagine getting married to the man or woman of your dreams - perhaps you already are - and then you discover they’re not who you thought they were.

Often the problems have come about because someone has become besotted with the idea of what might be, rather than asking the questions and checking that they want the same thing. It is irrational to go into a relationship where both parties want different things. If you never asked the question, both parties may simply be assuming they already know the answers.

So, honesty is undoubtedly the best policy. Share openly any concerns and ask all the questions you want to. To coin a much used phrase: the only stupid question is the one you didn’t ask.