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Getting along to go along – managing franchisee relationships


This sponsored content was provided by Deloitte.

Most franchisors have a large and varied collection of franchisees. No two relationships are the same, or at the same points in the lifecycle. Different segments or geographies can change the temperature of a partnership. That means keeping things productive and harmonious can take more than the specifics of a franchise agreement.

In the spaces between the lines—and between the franchise locations—lies an opportunity to do more. When the “letter of the law” is all that matters, you may open the door one day to find a pack of franchisees gathered with torches and pitchforks (Metaphorically.) In contrast, systems that can define and maintain good relationships will find more health and happiness in their operations.

If you’ve just taken a fresh look at the way you craft franchise agreements, it’s also a good time to identify the factors within them that may become issues later on. What happens if one party is responsible for a slight reporting error? What about late or mistaken deliveries? It’s easy to invoke clauses, demand satisfaction, and go to arbitration. Or worse. It’s also easy to alienate someone you’ve contracted to work with for the next ten years.

What are the formal and informal practices that can grease the wheels instead?  Many franchise organizations have experimented with a number of ideas:

  • Open-door policies. A franchisor with an issue to discuss will value a chance to address it at the highest level. Just be careful about how wide to open the door, because people will definitely use it.
  • De-escalation and non-escalation mechanisms. When a relationship includes a way for people to engage peer-to-peer and head off little problems, you have fewer big ones to deal with.
  • Advisory councils. Especially among organizations with a large number of franchisees, a select group of trusted operators—perhaps the dozen highest performers, or longest-tenured ones—can serve as the collective voice of the franchisees as a whole.
  • Democratization. Note: not “democracy”; but non-binding votes can help establish how the franchisee community stands on issues, give people a sense of being heard, and help focus attention on the problems that affect the most people.
  • Digital tools. You survey your customers. Why not “snap-poll” your franchisees? If open lines of communication are your objective, technology provides lots of ways to make it happen.

Don’t forget that your efforts at relationship-building extend beyond your franchisees. Each franchisor has two levels of “customers” – the business operators and the consumers who patronize them. Good relationships at one level encourage good relationships at the other. If things are strained, the effects can roll downhill.

Ultimately, as in any relationship, one of your most powerful tools is transparency. It’s better for people to know you disagree with them than to wonder where you stand.

Be sure to read Deloitte's other posts in this series - Franchise agreements in black and white and Choosing the right franchisee


Kevin Lane - Principal, Franchise Advisory Services Leader
Deloitte & Touche LLP
With over 20 years of professional experience in advisory services, Kevin has served in a variety of leadership and technical roles over the course of his career.  In recent years, he completed an overseas assignment in South America, repatriating to the United States in 2013 to the Dallas/Fort Worth area.  Kevin now serves a variety of Consumer & Industrial Products (C&IP) clients throughout the U.S. in meeting their risk and compliance objectives.  His areas of focus include compliance, third-party risk, and operations. In addition to leading advisory teams for select C&IP accounts, Kevin serves as Deloitte Advisory’s leader for its Franchisor Advisory Services initiative.  Learn more about Kevin and connect with him here
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