Leadership, with Steve Whiteside

Why Franchisors Should Visit their Franchisees’ Operations

As I have mentioned in many of my posts and articles in the past, communication is one of the key elements to building great Franchisor/Franchisee relationships. I have also written about the importance of building trust in the Franchisor/Franchisee relationship. When Franchisors visit Franchisees’ operations, they have an opportunity to build trust and strengthen communication, and this should happen often.

When the Franchisor makes visits to their Franchisees, there should be a very deliberate agenda set out so that the most can be made of their time together. As most Franchisors do not get the opportunity to visit their Franchisees as much as they would like, Franchisors should make sure to get the most out of the time they do get with their Franchisees. Also, Franchisees will want to make the most of the time they get to spend with the representative from the Franchisor.

One of the first questions I am often asked by Franchisors is: “Who should do the onsite visits?” Well this depends; I always suggest it be a person who has some decision-making power at the Head Office of the Franchisor. If the Franchisee is going to take 4 or 8 hours of their time to meet with someone from the Franchisor, they want to make sure that their time will be a good investment. No, this does not mean it has to be the President. What I am saying here is: It must be a person who can make change or effectively help to steer change at the Franchisor level. So if the person who will be making the onsite visits does this as part of their job, then the Franchisor will need to build this person and the position in a way that creates confidence with the Franchisees that the visit will be worth their time.

The second question is: “What should we accomplish during our onsite visits?” Now there is no fast way to answer this, but there are many items I would like to share to start the process. There are five functions I suggest you try to accomplish during your onsite visits.

         1. Align Yourselves – Spend some time aligning the Franchisor’s goals and vision, while trying to understand what the Franchisee’s goals and vision are also. Then work to make sure the goals and visions can align with each other. Without doing this, the Franchisor and the Franchisee can never work together as a team. I don’t think I have to explain the importance of team work in the Franchisor/Franchisee relationship.

The important thing is that the Franchisee feels like they are a part of the system and that what they are working towards is important to the Franchisor. It is true that the Franchisee must follow the systems of the Franchisor, but if the Franchisee does not have goals or their own personal vision, they will be lost on a day-to-day basis. However, if the Franchisor can support the Franchisee’s goals and vision while still working within the Franchisor’s systems, the Franchisees will be much stronger.

 

         2. Measure Standards and Performance – It is important for Franchisees to know how they are doing. It is often helpful to let them know how they are doing within a perspective they will understand, like compared to other Franchisees. This can be a helpful tool if you are measuring apples to apples and keep all information confidential.

One example is that you would not necessarily measure the gross sales of a location in Chicago, Illinois, with a location in Boulder Flats, Utah. You may be able to measure the conversation rates of leads for the two locations and come up with a percentage that represents a fair comparison with these two locations. As the markets are so different in these two locations, it still may not be a measurement that is fair or helpful. It is important to make comparisons that will relate well to each other.

Another way to measure is to have targets on which the majority of your Franchisees can agree; we will call this Franchisee Base Lines or FBL™. Then make a matrix of how well the Franchisee ranks against the FBL™ to see if a Franchisee needs improvement or to see if the Franchisor can find out why the Franchisee is excelling in a certain FBL™.

It is also very important to be able to measure a Franchisee’s past performance to show the trending of growth or shrinkage. A key goal for a Franchisor is to always promote growth, and having the Franchisees’ historical data available is an important part of your matrix.

Another important measurement is the success and measurement of the Franchisor. This should be shared with the Franchisee during your onsite visit. The Franchisor can share the strengths and weaknesses of the goals that have been measured. The Franchisor can also ask for input in ways to improve on these items. In my research with Franchisees, I found that most franchisees felt their Franchisors really did not care about their input on the shortcomings of the Franchisor. When information is collected about the Franchisor, it should be put together in a way that the outcome can be shared with the Franchisees. For example, using a survey tool will allow the Franchisor to share the accumulated outcomes of how the Franchisees rate the Franchisor.

 

          3. Know the Market – It is important to know the market of each of your Franchisees. Of course, you will know the basic demographics of the market that is served, but there can be large differences from location to location. For instance, if you are a Private Business College franchise, the difference from a location in Santa Monica, California, and East Los Angeles California, will be great. The demographic of the customer, the demographic of the employee, and the products purchased will in all likelihood be much different. Take a close look at the differences, look to see where a Franchisee may be missing an opportunity or where a Franchisee may be exploiting an opportunity that the Franchisor can learn from.

When the Franchisor representative visits, they should take some time to visit with customers of the Franchisee. Take special note of the customer’s perspective of the Franchisee. Take notes and share this with the Franchisee; usually such feedback will be a very positive part of the day. Also, find out what Franchisees’ perspectives are of the Franchisor. If you ask questions such as, Do you feel the TV advertising is consistent with our product or Do you feel the look such as colors and feel of the location is professional, then you will get a good idea of how the customer views the systems that the Franchisor puts in place. See what can be done to strengthen the relationship between the Franchisee and its customers. Whatever the Franchisor can do to help this relationship will be a huge benefit to the Franchisee.

The real benefit of knowing the market is not only being able to make changes that matter, but also being better able to understand the Franchisee and see what makes them tick. You cannot understand your Franchisee’s needs without first understanding the Franchisee’s customers!

 

           4. Open Mike – This is a great time to let Franchisees air their concerns and ideas. I always recommend this be in the later part of the day, so the Franchisor representative can set a positive feeling throughout the day. If the Franchisor is positive, helpful, and understanding, I have almost always found the Franchisee will be also. However, Franchisors should note that Franchisees have many issues, problems, and concerns: many of which they feel ill-equipped or powerless to fix because the Franchisor holds so much of the power through rules, standards, systems, and perceived and real control.

When the Franchisor truly listens and deals with the Franchisee’s issues, good things will happen. This process can be very liberating for the Franchisees and also for the Franchisor. Not only is it important for the Franchisor to listen, but also to show that you understand and that you will take the information back with you to the Head Office and share it with the appropriate people.

 

           5. Agree on Moving Forward – Often, I find that Franchisors see problems in the Franchisees’ organization, but the Franchisor will not say anything until down the road by letter or email. The Franchisor feels it is safer this way. Well, it might be safer, but not nearly as effective. I suggest you start tackling issues when you see them. Talk about the problem and work on solutions together. Of course, you will have to follow up officially and document serious issues, but don’t leave without some agreement on the issue and even the beginning of an action plan to fix the issue.

At the end of the visit, if both the Franchisor representative and the Franchisee can agree on some of the issues, they will be much simpler to take care of in the future. You will also earn the trust of your Franchisees.

There is another important step to do now: Share with the Franchisee what they are doing right and how you can share that information with other Franchisees. My experience has been that the best form of flattery is asking if you can share the Franchisee’s successes with the entire organization.

If a Franchisor can work on these five key areas when doing site visits, they can maximize their efforts and work towards building the organization at the same time. In future articles, I will talk about attitude of the Franchisor vs. the Franchisee and some pit falls of strong arming Franchisees, even when you do not realize it is happening.

For now, remember the Franchisor/Franchisee relationship is the heart beat of all Franchise organizations, and we should keep those relationships as healthy as possible—just like we would our own hearts.

Steve Whiteside is a consultant specializing in organizational development within franchise organizations and educational organizations. You can contact him at The Franchise Leadership Center, 604-786-5677.

What Affects the Quality of a Franchise Relationship?

I have spent hundreds of hours working on what affects a quality franchise relationship. Over and over the same answers were revealed. Although all franchisors and franchisees feel they have problems that are unique to them, I found that their problems are not so unique. Yes, they may look different from the surface, but they are all grounded in some major themes.

From my research, four major themes emerged that directly affect the quality of relationship between the franchisor and the franchisees:

• expectations versus perceptions of the franchisor and franchisee,
• collaborative communication and how communication can be effective,
• communication barriers reduce the ability of the franchisor and franchisee to work together effectively, and
• trust and its effect on franchisor/franchisee relationships.

Expectations versus perceptions of the franchisor and franchisee:
When franchisor and franchisee expectations are not aligned, they will be working towards different goals. In many cases, you can see this when a franchise organization does not appear consistent or unified. If the franchisor's goal is to sell the highest quality food, but the franchisee's goal is to sell the largest quantity of food regardless of quality, many issues will arise from accusations of poor product quality to differences in advertising methods.

I found that the forming of expectations and perceptions starts during the first contacts between the franchisor and the potential franchisee. In most cases, perceptions are already set from the experiences the potential franchisee has had as a customer with the franchise organization, but the real expectations start to be made at the first meeting between the potential franchisee and the franchisor.

The more qualifications a franchisee must go through, the more in-line expectations seem to be. An example would be Tim Horton's, which is a popular franchise in Canada and it is moving across the United States. They interview and look into any potential franchisee in depth. They look for very specific qualifications. When they find the right franchisee, the relationship has already been set in many ways through the exhaustive interview process.

Ultimately, finding the right franchisee for the right franchisor is the key. This will only be done by complete honesty, openness from both franchisor and franchisee, and making sure that both parties understand their full commitment to each other.

The best franchisors know this, live by it, and grow like crazy. Other franchisors look for the fast sell and seem to be more busy putting out fires than actually growing the organization. Some organizations will never learn, but the good news is: Most will.

Collaborative communication and how communication can be effective:
I have found that there are many communication problems between franchisors and franchisees. Some of the issues are a lack of effective communication and the need for collaborative communication, in the form of open and honest flow between the franchisor and franchisee and their respective staff.

My research showed that franchisors and franchisees wanted better communication and were willing to create better communication. So why is effective communication so elusive? Mostly because we do things that hinder our communication. We assume others know what we are saying, we expect others to read what we write, we even expect that others understand how we feel. All of this leads to poor communication, then eventually to a break down in communication.

I have also found that, when communication is done in collaboration with all stakeholders, it is much more effective. When all parties feel they are a part of the change or policy that is being developed the buy in is much more complete.

Communication barriers reduce the ability of the franchisor and franchisee to work together effectively:
One of the largest communication barriers I have come across in my consulting occurs when the parties communicating feel they are not on an equal footing. In many cases, franchisees feel they can talk until they are blue in the face, but they feel their franchisor will do whatever it wants in the long run.

On the other hand, I have come across franchisors who will not make choices if there is no backing from a majority of franchisees. In these cases, the franchisees know this and want to give input as they feel their input makes a difference.

Things are always unequal if one party feels that its input has no sway or power to influence. This is why I have always tried to have franchise organizations develop ground rules that make it plain what is up for discussion and what is not. For instance, in a franchise organization where public safety is paramount there are things that just can not be changed and must be followed, but on the other hand, items like marketing should always be up for frank, open, and honest discussion.

Breaking down barriers will allow collaborative communication to take place, and from there, many good things will follow. Many times it helps to bring in a third party, like a consultant, to find out if and where the barriers exist, as it is often hard to see the barriers that we have helped to create.

Trust and its effect on franchisor/franchisee relationships:
Much has been written about trust, so I will not go into the definition of trust in an already long blog posting. What I will say is: I have found that trust is one of the most important elements of a franchisor/franchisee relationship. Without trust, you have no way to ground your relationship. You can not have effective communication, and you most certainly can not effectively collaborate on anything.

Interestingly enough, my research showed that most franchisors did not even realize that there was a problem with their franchisee's trust. In some cases, when the franchisor found out there was a lack of trust, they were offended at first, but trust is usually a combination of expectations not being met and poor communication. When we fix our communication breakdowns, we can usually improve our trust factor.

Trust is not something that comes naturally for most; it must be earned. Just because a franchisor has a franchisee sign a contract will not mean they are building trust. Trust comes from events and conversations, where trust is built from outcomes. So, whether you are a franchisee or a franchisor, ask, "What have I done lately to build trust in those around me? What events or conversations have I been a part of that have built trust?"

If you keep some of these ideas at the forefront of your mind when working with your franchisees or franchisor, I believe you will build a better relationship as well as help your company be much more successful.

Steve Whiteside is a consultant specializing in organizational development within franchise organizations and educational organizations. You can contact him at The Franchise Leadership Center, 604-568-9686.

Copyright © 2009 Steve Whiteside

Great Franchising it's about Alignment

I was working with a franchisor last week and I had the opportunity to work on one of the most important subjects I deal with when consulting with franchise organizations - alignment. In my experience one of the most common problems in franchise organizations that are experiencing slow to no growth or just experiencing a complete lack of positive movement is the fact that they are not in alignment.

What I mean by this is that there are three major components to a franchise organization, the Franchisor, Franchisee and the customer. If all three are not in alignment then the franchise organization will not be able to take advantage of their total resources. Misalignment of these three components create negative repercussions such as: disgruntled clients who don’t receive  what they expected, angry franchisees who think they are being taken advantage of, and franchisors who believe that no one is listening to their message. .

The foundation steps in alignment are  aligning expectations, communication, perception and trust.  Once an organization has these four items aligned, they build capacity to align in other areas and continue to work together effectively and successfully.  

 

This diagram shows the items that should be in alignment and how they work together. The Franchisor takes a leadership role in helping to align all of the important elements, hence the franchisor is at the top of the pyramid. The largest and most important of all three levels is of course the customer and hence they are the largest part of the pyramid at the foundation level. Without customers the franchisor and the franchisee have no reason for existence. With that relationship as primary, change works best when directed from the leadership level.

If you are a franchisor or franchisee thinking about alignment, here are some simple questions to start with,

1. Are the expectations from your stakeholders in alignment when it comes to product, deliver responsibility and outcome?
2. Do you have open and honest and effective methods of communication between all customer, franchisee and franchisor levels and can all three groups speak to each other independently?
3. Are the perception of the Customer, Franchisee and Franchisor the same when it comes to what is your reason for being? Does your brand communicate the perception that the stakeholders have?
4. Is there 100% and complete trust between the stakeholders? If you ask them if they trust the company, product and system 100% what would be the answer. If it is less than 100%, you must work on this area. Trust indicates how well  your organization will survive and profit!

"Alignment creates momentum and momentum translates into success and profit."

Steve Whiteside is a consultant specializing in organizational development within franchise organizations and educational organizations. You can contact him at The Franchise Leadership Center, 604-568-9686.

Copyright © 2009 Steve Whiteside

What is your "Franchisor Value Proposition"?

In my experience with franchised organizations, there are many things a Franchisor can do to maintain and improve on their relationships with the Franchisees. Maybe the most important one is "Making sure you (the Franchisor) continue to give good value to your franchisees."

Many franchisors sell many franchises and become big and forget to constantly guarantee value. Let's face it: the reason franchisees bought from a franchisor is to get better value than they would on their own. This is a great reason to be a franchisee. Franchisors can ask themselves three questions to make sure they are giving good value to the franchisees.

1. Can I continue to sell or support my franchisees at a better price and quality then my franchisees can obtain on their own?

2. What have I done lately that brings extra value to my franchisees?

3. What can I do in the future to grantee my franchisees continued value?

If a franchisor can work through these three questions and get positive answers or come up with new positive answers, they will solve the majority of franchisee complaints.

The "Value Proposition" is a very important part of the Franchisor / Franchisee relationship. After all why would a person pay extra money to receive less value for something? They would not; so if a person buys a franchise, they have seen the value in doing so. If that franchisee perceives diminished value from the franchisor, as often happens, then this is where the Franchisor and Franchisee relationship starts to break down. I have seen this happen from small franchised organizations to very large organizations. When the value disappears, so too will the positive relationship.

Whether you are the Franchisor or Franchisee, take responsibility to find the value, and you will continue to receive value that exceeds expectations, and you will always have a positive Franchisor / Franchisee relationship.

Steve Whiteside is a consultant specializing in organizational development within franchise organizations and educational organizations. You can contact him at 604-568-9686.

Copyright © 2009 Steve Whiteside

Comunication is at the core of any Franchisor/Franchisee relationship

It has always amazed me that so many organizational problems exist between franchisors and franchisees, when you consider that they cannot exist without one another, and franchisees rely on franchisors for so much. Franchisees make a substantial investment in their franchisor and need each other and must work together to be effective and profitable.

In isolated cases there may be franchisors looking to take advantage of franchisees, but in both my personal experience and in my research, I only found franchisors that really wanted their franchisees to be successful. Unfortunately in many cases the perception of the franchisees was that their franchisor did not care about their success at all.

This is where my interest lies. The goal in my research has been to investigate why these relationships break down. In cases were the relationships are strong I explore how they can be made even stronger. For example, if the revenue of a large franchise organization can be increased by even 2 or 3 percent it can have dramatic benefits to both franchisor and franchisee. Franchising represents over two trillion dollars in global revenue and accounts for approximately 50% of all retail business in the United States and Canada. If we could grow this business by improving the relationships within franchise organizations with little or no monetary investment, wouldn't that reap large rewards?

When I was doing research for my Masters thesis I found that there are some issues that seem to resonate within many franchise organizations. I broke them down into four areas:

1. Expectations versus perceptions of the franchisor and franchisee
2. Lack of collaborative communication
3. Communication barriers
4. Trust issues that prevent effective communication

One of the interesting outcomes of this research was that ‘communication’ kept cropping up. If you ask franchisors if they communicate with their franchisees most will say “of course, we send out information all the time, have webinars, newsletters, help desks, conventions and send out daily emails”. Their franchisees would say that they get all kinds of communication, but none of it all that useful, and that the information they specifically ask for never arrives.

So what is the problem? If the franchisors work so hard to communicate, and the franchisees have a hard time even keeping up with all the communication, why does communication keep showing up as a problem? I found two major reasons. First, the wrong information is being communicated, and in many cases to the wrong people. Secondly, too much of the communication is very impersonal.

In future postings I will cover off the four areas above in more detail. For now I want to focus on these two primary reasons communication keeps showing up as a problem despite so much energy being put into it. I call this the basics of relationship problems.

On the issue of the wrong information being communicated, and in many cases to the wrong people, this is because most organizations are set up to prioritize the information going out. There are no checks and balances to ensure that the information was useful to the recipient. At one franchise I spoke with, information on government issues was being sent to front line workers who had no responsibility whatsoever for the company’s relationship with the government. The information was going to the wrong source, plain and simple.

In another case a franchisee asked the franchisor for some help with safety issues on the premises. The franchisor sent out some information that dealt with the wrong State, not even addressing the industry the franchisee was in. It would have been better if the franchisor just admitted it did not have the proper information, but that in most States it could be found on the web under State safety legislation. At least that would have been information that was accurate.

On the issue of too much of the communication being very impersonal, franchisors as well as franchisees seem to be rushed and busy, resulting in much communication being very impersonal. While this may be okay for the short term, I found that over longer periods of time franchisees want to have a more personal relationship with their franchisor, if for no other reason than they feel the franchisor really cares about their success.

There is no need to spend a lot of ‘touchy feely’ time to accomplish this. All a franchisor has to do is keep in regular contact and ask questions. Franchisors are always telling franchisees things. Sometime the franchisor should stop and ask some questions and let the franchisee give some information. It really is amazing how effective this can be. I have seen franchisors repair very negative relationships just using this method of communication. Ask "How are you?" "What’s new in your business?" "How can we support you?" and then listen carefully to the answers. Appreciative communication will go a long way!

There is a very small cost to maximizing communication between franchisor and franchisee, but there are many rewards for doing it. Try these simple steps.

• Focus on the information you send out and make sure it is relevant.
• Make sure the information is going to the right recipients.
• Try to have more personal communications with your franchisor/franchisee.
• Ask questions and show genuine interest in what is being said.
• Follow up on past conversations.
• If it feels good to you it will probably feel good to the person you are communicating with.

Give it a try. Effective communication is at the center of all relationships and can make or break them!

Steve Whiteside is a consultant developing effective tools for franchise organizations to become more effective, his focus is on leadership and organizational development. You can contact Steve at aolsteve@shawlink.ca