The franchisor and franchisee relationship is unique in the way that the success of the franchise is largely affected by knowing how to manage franchisees. That’s not to say that your business, marketing strategy, and overall growth plan don’t play a huge role in your success. But managing this unique relationship and working together is essential to a flourishing franchise.
Franchisors across all industries need positive franchisee relationships with open communication to fix issues quickly and improve the customer experience. The careful balancing act of managing your franchisee without overstepping on a day-to-day level is tricky. Managing your franchisees starts at the recruitment process and goes all the way to running franchise daily operations when you take a step back.
In this article, we try to understand the unique stages of the franchisor-franchisee relationship and some tips on how to manage franchisees.
Skip ahead to:
- What is a franchise?
- The stages of the franchisor-franchisee relationship
- 3 must-have skills for franchise management
- 8 tips on how to manage franchisees
What is a franchise?
A franchise is a business where the owner or franchisor allows a franchisee to access the business knowledge, trademarks, and processes. The franchisee can then sell a service or product under the franchisor’s business name. When starting a franchise, usually the franchisee will pay a start-up fee and annual fees, depending on the set-up. The ongoing royalties paid to the franchisor can vary massively from one industry to another.
To give you a better idea of the differences between industries, here’s a quick overview of some popular franchise businesses, the initial start-up cost, and the ongoing fees:
- Mcdonalds – $45,000 franchise fee, 4% monthly fee, and $500,000 in liquid assets.
- 9Round – up to $196,775 total initial investment and a $600 flat monthly fee.
- The Maids – $12,500 franchise fee, $250,000 net worth and $50,000 liquid capital.
The most successful franchises are the ones that prioritize the development of their people and invest in thorough support. Managing your franchisees starts with finding that people fit into your business. They bring as much passion to their work as you do. Prospective franchisees are already looking out for reassurance from you that you can be that pillar of support they need to grow together.
The stages of the franchisor-franchisee relationship
Your franchisor-franchisee relationship is a long one. Similar to a marriage, it should be built on trust and commitment from both sides of the party. By exploring the different stages of this unique relationship, we can look to determine where along the franchisee journey has the greatest impact on the overall success of the franchise.
The recruitment process starts when you write your franchise offer post. Arguably, this is one of the most important stages of managing franchisees. This is the point where you set the foundation for open and honest communication. At this stage, the franchisor can set expectations and build a shared desire for success and growth.
During the onboarding process, it’s your job to give your franchisee everything they need to get
off the ground. Your initial training and support will play a big role in determining the success of your franchise. As your franchisee gets off the ground, you still need to be around to offer support as well as making regular franchise visits.
Your franchise is growing and maturing. After several years, your relationship should feel comfortable and natural. You probably know what to expect from each other. As a franchisor, your support should continue so that your franchisee doesn’t feel abandoned. At this stage, you’re taking a step back and allowing your franchisee to work to their full potential.
3 must-have skills for franchise management
As a franchise owner, your days are spent managing your business and taking a deep overview of your business. At the same time, you utilize your personal skills to maintain good working relationships with your franchisees. While franchising is about growing your business; at its core, franchising is about relationships.
Communication and interpersonal skills
Establishing yourself as a leader is one thing but training your franchisees to take your business and move forward is another. Creating the right tools for teaching your methods and a suitable delivery method that works is challenging. In a franchise, your communication and interpersonal skills are really tested. But if you can bring emotional intelligence to the table, you can nurture franchisees in the best way possible.
Being a business owner requires a certain set of personality traits and mentality. Interestingly, you also want your franchisees to possess the same qualities that you do as they are turning your franchise model and concept into a business. When you have a growth mindset, you believe that you are in control of your own ability and you understand that continuous learning is a key part of growing. A franchise owner with a growth mindset will start with a solid franchise manual, business model, and plan. But, more importantly, they understand that growth requires continuous monitoring and learning.
Industry and business expertise
The franchise owner has the industry and business expertise to create and grow a successful franchise from the ground up. When searching for franchise opportunities, new franchisees are looking for someone who will be a beacon of knowledge and authority. Good industry knowledge attracts franchisees who are hungry to learn and keen to build long-lasting franchise relationships.
8 tips on how to manage franchisees
Running a franchise with a large network is stressful; that’s no surprise. Although you may demand a lot from your franchisees, with plenty of support and training, most franchisees can find success running their own business. Good franchisors set the tone for communication and management. Let’s talk about some tips you can use when managing franchisees.
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1. Practice open communication
Practicing open communication may sound like the number one thing to do in the world’s most obvious to-do list. But it’s easy for it to slip through the net. The first thing that’s important is regular contact. This both encourages your franchisee and gives you the opportunity to monitor performance. Meeting in person will also help to solidify the relationship and offer more support. It’s your responsibility to communicate your goals, mission, and vision of the business. Like any relationship, personal or professional, it requires open and honest communication.
2. Treat franchisees with respect
You can apply the same tip for managing franchisees to most relationships. If you treat your franchisee with respect, you are more likely to get it back in return. It’s not quite the same as an employer-employee relationship. Your role is to offer support, guidance, and high-quality onboarding, rather than run the daily operations of the business. Establishing this type of relationship from the beginning is key to success.
3. Be a pillar of support
Although your franchisees are not your employees, you are a pillar of support for them. They might message you with a question or have a concern in an area of the business. Respond to support requests promptly and check in with franchisees regularly. It’s normal for franchisees to need more support in the beginning.
After several years of running the business, franchisees don’t need as much support but it’s important that they know you are there in times of crisis. Ongoing support and education that is readily available is a part of creating a franchise that attracts high-caliber and driven franchisees. Providing support starts with helping out with the initial setup of the franchise to innovating your services so that you can stay ahead of the competition.
4. Create a genuine connection
One element of managing the franchisee relationship is building a genuine connection based on trust and honest communication. There can be some discontent within the franchisor-franchisee relationship. This is especially true if you’re coming from an employee-employer dynamic. False expectations, miscommunication, and too much or too little involvement can all throw a spanner in the works.
Building strong relationships with people is about connecting on a meaningful level. Franchisees with stronger franchisor relationships tend to perform better on a local level, which helps the brand as a whole. Franchisee success is in the interest of both parties. It will be easier to manage franchisees when you have a great connection.
5. Deal with conflict smoothly
When working with people as a franchisor or as a boss, conflicts can arise. It’s normal to have disagreements and changing ideas about how a certain situation should be handled. But if conflicts are left unresolved, it can create resentment and negative emotions can begin to fester.
Good conflict resolution is based on communication, respect, and active listening. If all else fails, you seek expert help through mediation, but this really is the final straw. When you can talk through a problem and find a solution, you can put an issue to bed and move forward without lingering negative feelings. If conflict arises, deal with it smoothly and quickly, so the problem doesn’t get blown out of proportion.
6. Start with a thorough onboarding process
Your onboarding process sets the tone for your business. When managing your franchisees, it’s important to give them the best start possible. Training, support, and ongoing education are all key to getting franchisees up and running. If they have all the materials, knowledge, and training to get off the ground, management will likely be easier down the line.
The value of training, and learning core values, and culture can’t be underestimated. An effective onboarding process sets up your franchisees for success. It can help with morale, communication, reduces conflicts, and has a positive effect on the overall brand. When you combine onboarding with continued learning, support, and experiences, the possibilities are limitless. The best franchises reevaluate their onboarding processes on a regular basis to ensure that everything is up-to-date and effective.
7. Perfect your hiring system
A key part of managing franchisees is choosing the right person. Inappropriate franchisees are more likely to create issues and could pose a considerable risk to the brand. The most successful franchisees possess a combination of qualities. Because a franchisee is running a business, it’s a good idea to look out for resilience, energy, and self-sufficiency so that they can handle the pressure of running a franchise.
The recruitment process starts by advertising in the right place. Bear in mind the type of personality that you’re looking for in your franchisees. As you sift through candidates, be fair but rigorous. Does your potential franchisee possess the right qualifications as well as being a good communicator? Franchising success is largely based on recruiting the right people, supporting them, and investing in their success.
8. Provide the right tools
The right tools for your franchisees will largely depend on your industry and business. One of the factors that will attract great franchisees is a franchise that invests in the right tools to facilitate different elements of running the business. Franchisors provide the tools that allow franchisees to operate the business to the same standards.
Think about your franchise marketing campaigns, lead generation, social media strategy, messaging, and sales. If you need to manage multiple franchise locations, the franchise systems and tools need to be the same so that you can see the bigger picture across locations in real-time. Your franchise manual will set the tone for consistency and guide franchisees to greater success.
The unique relationship between franchisee and franchisor is crucial to the success of your business. Supporting your franchisees is a delicate balance of being present while also not interfering with the day-to-day operations. While both parties need each other to move forward, there is a great deal of stepping back and letting go, which in itself can be one of the hardest things to do after growing your business. By focusing on onboarding the right people and building a foundation of respect, honesty, and open communication, you can set yourself up for a smoother journey.
Here’s a quick overview of what we covered in this article:
- Franchisors across all industries need positive franchisee relationships to succeed.
- The most successful franchises are the ones that prioritize the development of their people and invest in support.
- Recruitment is one of the most important stages of managing franchisees.
- A growth mindset, industry expertise, and communication skills are essential qualities of a franchise owner.
- An effective onboarding process sets up your franchisees for success.
- Managing your franchisees is a delicate balance of independence and support.