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Listen Up

Want a more successful brand? Talk ‘with’ each other, not ‘at’


When parties stop actively listening, they resort to litigation—often at ‘incredible cost’ to the brand, believes our guest columnist, a franchise attorney. How to keep your brand out of court and on to high performance.

Successful franchisors focus on unit-level economics, find franchisees who are the right fit for the system and constantly look to innovate and change the products or services offered to consumers. Highly successful franchisors take it to the next level and lead their brand and franchise system through a spirit of collaboration rather than command and control.

These franchisors view franchisees as key stakeholders in the brand, as the franchisor leads its system in an often competitive and always changing marketplace.

The difference between struggling franchisors and highly successful franchisors often is not the products or services, but rather the attitude, devotion and alignment among the franchisor and its franchisees. Stated another way, it’s the culture the franchisor designs and relationship with its franchisees that often make a meaningful difference to the unit-level results and the customer brand loyalty.

Nuggets for change

Every year our law firm’s franchise practice hosts a Franchise Summit. Our most recent focus was leadership, innovation and results—the keys to a powerhouse brand and franchise system. Here are a few of the nuggets our franchise executives in attendance identified:

Leadership occurs at every level of a franchise system. Think about the differences between a system where the CEO/founder has an undying devotion to the brand (it’s often their baby) with a franchise system where the “undying devotion to the brand” attitude and commitment exists also at all levels of the franchisor’s management, the franchisees and the franchisees’ employees who are the touch point with the brand’s customers. That’s a difference maker. That’s leadership.

Change must be inspired rather than mandated. Too often, tradition keeps franchisors from making change (saying no to change because that’s not the way we’ve done it in the past). Breaking through this paralysis requires the franchisor to inspire rather than mandate change and then to hold people accountable for their commitments at all levels.

Collaboration and listening matter. The power of franchising lies in collaboration between the franchisor and franchisees to protect, enhance and evolve the brand as opposed to command and control where the franchisor tells the franchisees what, when and where without franchisee input. 

Franchise relationships fail if franchisors and franchisees do not adequately address breakdowns and collaborate to find solutions. When parties stop actively listening and communicating, they resort to litigation. At times litigation is inevitable, but more often than not litigation does not produce the desired outcome. Or if it does, it comes at an incredible cost to the brand.

Not so soft

Attitude is everything. Leaders can’t dictate attitude or blame others for system failures, as they are responsible for building and instilling passion and attitude throughout the entire system.  Again, these leadership dynamics exist at both the franchisor and franchisee levels.

Some will assert these “softer” relationship features are not critical to overall system performance. What those critics often fail to realize is they are getting the exact results they are designed to get. And, in order to get different results or improve performance, you often need to change the way you are doing something, rather than spending more on “x” or less on “y.”  

An effective way to measure a key aspect of leadership is the nature of the dialogue within the system.  Is there true open dialogue among the franchisor and franchisees or do the franchisor and franchisees talk at each other, trying to convince the other they are right and the other wrong, rather than suspending their opinions and assumptions for the possibility of creating something bigger?  

Related to true and effective dialogue is whether the franchisor and franchisees really tackle the issues that exist (the recurring complaints that have been around awhile but never fully resolved). Here is how you know if your communication could be improved.  Continued use of “they,” “always,” “never,” “we all know,” or “the problem is” strongly suggest that gaps exist in communication and system performance likely is suffering.

Franchisees also have the opportunity to change the way things are done. Too often franchisees refuse to collaborate by declining to participate in programs or initiatives or they engage in the same ineffective dialogue noted above where they are more focused on being right than finding solutions.

Best practices

Here are a few best practices I learned from a recent panel discussion with Tony Gioia, chairman and CEO of Togo’s, Steve White, president and COO of PuroSystems, and Saunda Kitchen, a Mr. Rooter franchise owner in Sonoma County (all three are respected franchise leaders). 

1. Get very clear on defining the franchisor’s purpose (for example, making franchisees successful or whatever else it might be) and then focus on it every single day. That focus must exist with every person who is part of the franchise system, not just the CEO or COO.  

2. Identify a few key unit level measurements/key performance indicators (two to four rather than six to eight) that are difference makers for your business and then “Be The Best” at them.  In order to be the best at these measurements, you must know your business, your competition and the industry norms.  

3. The prevailing attitude should be an obsession with unit level economics and the customer experience, especially with the franchisor’s field support team and the franchisees.  Franchisees must not shirk their responsibility to be fully engaged not only in their business but in the franchise system. They also must hire right, train right, motivate right and reward right.

 Moving the needle 

If franchisors and franchisees would focus on shared ownership of the opportunities and challenges in the franchise system and brand, the results would be startling and sustainable.  The quest for each franchisor and franchisee is to determine how they can move the “franchise leadership/relationship” needle.  

Moving the needles two spots to the right (say from a “5” to a “7”—you don’t need perfection) will have a profound difference on the overall results that franchisors and franchisees experience. Good luck. 

Brian Schnell is a partner specializing in franchise law with Faegre Baker Daniels in Minneapolis. Reach him at 612.766.7699; brian.schnell@faegrebd.com.

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