Franchising: How to Improve Franchisor-Franchisee Relationships

Franchising is a distribution model that allows business owners a low-cost means of expanding their brand. It is an appealing option for most people who are looking to get started in business. As a legal structure, franchising has a lot of advantages, including lower risks and higher efficiency associated with operating under the banner of an already established brand. A reference published by the U.S. Department of Commerce shows that the revenue of franchise establishments accounts for over 33% of all retail sales.

When starting a business franchise, whether it be for a food franchise or a computer franchise, one of the most common questions asked is: “How can we improve our business franchise?” The usual answers? Improve your business skills, create a good support system, and be up to date with marketing trends. Ultimately, these answers fall under the criteria of management.

Good management is crucial to the success of a business franchise. Good management will ensure that the financials are reasonably strong and consistent to maintain the business efficiently. This means that there is a good amount of capital to cover salaries, utilities, rent, and even thefts. Good management will also look at the business concept, aim to continually improve it, and ensure that the concept continues to provide adequate returns. So how do we make sure that we maintain good franchisor-franchisee management?

Establish the Brand Culture

When prospective franchisees look at the potentials of a franchise business, they do not only look for the sales model or the ROI potential, but they also check on the franchise’s system culture and the people that make up the company. Culture is the inherent DNA of every business out there. Its values govern every brand experience and interaction with customers, stakeholders, and employees.

Franchises that succeed in creating a brand culture display common characteristics. They are more likely to drive advocacy, attract the right talent and alliances. Ultimately, these companies will outperform their competition. In fact, research on one of the biggest franchise businesses in the world shows that the organization’s strongest asset is its culture.

Maintain an Effective Communication Channel

As with any type of business model, maintaining an effective communication channel across franchisees is important to maintain a good business relationship. Keep your franchisees on the loop for any good, and even not-so-good, news. Create a weekly or twice weekly bulletin or web page to disseminate any important information. Remember, though, that simply putting any news out there for transparency does not mean that you are creating an effective communication channel. For any not-so-good news, it is a good practice to drip-feed information to your franchisees to allow them to process information better.

Additionally, entrepreneurs, by their very nature, are almost churning away on ways to improve their business. Unfortunately, this can translate into idea overload and usually to the detriment of your communication channel. Blocking out some time to work on the ground each month to see, experience, and talk to people will help you understand any challenges they might be facing. Also, it will give you an opportunity to hear out ideas and feedback that your franchisees might have to make improvements to the whole business system. You and your franchisees must be committed to tweaking whenever needed.

Recognize Accomplishments

franchising concept

A rule of thumb in branding and marketing is to never forget your employees or, in this case, franchisees. They are your crucial brand ambassadors. Satisfied franchisees translate to a thriving franchise business with higher sales returns. To achieve this, put procedures in place to monitor your network, create a fair rewards system, and recognize accomplishments regularly and consistently.

Franchising is a partnership. Communication is integral. Creating a consistent rewards program is crucial. Like any relationship, nurturing and maintaining a good franchisor-franchisee relationship lead to a faster ROI rate.

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