Franchising: a Love Affair – but is it Dependent or Interdependent?
Franchising involves a special kind of relationship distinct from any other you’ll likely ever enter. It goes beyond a business format system and beyond a mere legal agreement binding two parties. Franchising is a way of life – a decision by two parties to bond with the intention of co-creating something where the whole is greater than the sum of the parts.
The success of one party depends on the success of the other… a true win-win at both a business and a personal level. But like any friendship it only thrives to the extent that both parties work on it regularly in an interdependence of give-and-take.
In the eyes of the franchisee, there are four key prerequisites that must exist and remain ongoing for the bromance to even start.
Is the franchise concept viable?
Franchisees have to satisfy themselves that enough consumers desire and are able to afford the product or service over time. It cannot be a fleeting popularity without the possibility of longevity. A fad – any more than an infatuation – is not a good candidate for franchising. Part of the concept is that franchises have to love what they do. Being a franchisee is hard work often involving risk taking and lots of rejection. The only way to get up every morning is to really enjoy what one does. Be happy = half of success.
Are the franchisee and the franchisor profitable?
Unless both the franchisee and franchisor make a good profit, one or both will eventually either go out of business or find better investment opportunities. As long as a franchise is profitable, both sides can stay in business forever – and if both love what they do, they will. Make money = the other half of success. Franchisors who understand this communicate often, bring people together as a tight team and work hard to make sure these four points are always top of mind. It’s worth the hard work, too. Franchisees outperform small businesses by a large margin.
The franchisor provides ongoing value to its franchisees
Franchisees pay royalty fees, and will not feel this is value for money unless they see something in return. They will eventually leave the relationship. To prevent ultimate disappointment, franchisees should check (with other franchisees) that the franchisor provides enough value for the royalties they collect. So both sides should measure franchisee satisfaction often.
Franchisees need to behave
While the franchisor has the responsibility to provide value and support to franchisees, they also expect franchisees to follow their proven system. Success comes to those franchisees willing to work hard and implement the system. After all, they have to understand can’t expect to achieve the results of the franchisor’s proven model if they don’t follow it.
In conclusion: the nature of the relationship
The franchising relationship between franchisor and franchisee is therefore one of the best illustrations of interdependence, one that involves sharing a common set of principles and values.
Franchising is a love affair.