A question of support

When a franchisor and franchisee are at loggerheads, in my experience, a franchisee will usually accuse his franchisor of one or more of the following:

1. That the franchisor misrepresented the franchise to him before or at the time of the sale and thus the franchisee's expectations have not been met.
2. That the franchisor has failed to give the level of support expected and deserved by the franchisee.
3. That the franchisor has dealt with, or is dealing with, the advertising contributions received from its franchisees in a way or for a purpose that the franchisee disapproves of.
4. That, despite claims to the contrary by the franchisor, the concept is not market proven.

Of the above the most common appears to be lack of support from the franchisor. There are a number of issues here and both the franchisor and franchisee should be aware of them.

Most franchisors, particularly at the early stage of the development of their network, are under some pressure to sell franchises. In doing so they may be a little enthusiastic about earnings claims, the value of customers the franchisor will deliver to the franchisee in the early stages (some franchisors do provide such a service), the cost of operating the business, capital requirements etc.

Franchisors should as a matter of policy when making promises, both in the early stages and ongoing, be careful to ensure that they do not promise more than they can deliver, bearing in mind that what may seem to them as being a reasonable demand on their resources at the time of their making such a promise may subsequently prove to be a strain on their resources as the number of franchisees grows. It's better for franchisors to under-promise and over-deliver.

In some cases franchisors have been found to have failed in giving sufficient support to their franchisees, not because they have consciously decided not to do so, but simply because they have forgotten exactly what their contractual obligations to their franchisees are. Franchise agreements contain a list of obligations that franchisors are required to honour, and while these may be fresh in a franchisor's mind in the early days, franchisors could do worse than review their franchise agreements on a regular basis. This would serve not only to refresh their memory as to what they have promised but also to satisfy themselves that such a list of obligations is accurate and if not, to make changes to contracts to be used in the future.

Apart from strict contractual obligations, there are a number of other matters that a franchisor should be aware of and actions that a franchisor should take because they form part and parcel of what is increasingly regarded in ethical franchising as supporting franchisees:

(a) because it is deemed to be best practice;
(b) because most franchisees (irrespective of the nature of the franchise) would have come to expect them; and (c) finally, and most importantly, because they are concerned with ensuring the future prosperity and well-being of the franchised businesses.

Keeping in touch with franchisees, either by means of regular visits or otherwise, is important and a good deal easier now with electronic communication than before. In this process franchisors will (if they are receptive to this) get a steady feedback of what the franchisees' expectations are, and their strengths and weaknesses in running their businesses. Unless and until a franchisor is aware of a franchisee's expectations, it is not going to be able to manage those expectations and managing franchisee expectations is an important part of supporting franchisees.

Franchisees are not always right, but they are not always wrong either. Where a franchisor sees that a franchisee needs support in a particular area, which the franchisor is unable for whatever reason to provide, the franchisor should not be shy to sub-contract to an external organisation to lend specialist support, for example in producing copyright, buying advertising space etc.

In terms of performance, both franchisor and franchisee should meet regularly to assess the franchisee's business performance by reference to criteria previously agreed between them as something to aim for and which is reasonably capable of being achieved, whether it be turnover-related or improving the quality of customers or improving productivity etc. It gives the franchisee something to aim for and provides a useful yardstick by which to measure improvement and growth in a franchisee's business.

It goes without saying that training is crucial and franchisors should not expect their obligations in this respect to have been performed by their having imparted initial training to the franchisee at the outset. Whatever the contract may say, it is recognised good practice within any organisation and franchisees increasingly expect some form of ongoing training from franchisors on a regular basis, after they have received their initial training courses and manuals to get them up and running. Training should most certainly form a part of any franchisee support package devised by a franchisor.

Apart from one-to-one communication between franchisor and franchisee, another important part of supporting franchisees is facilitating dialogue among franchisees, whether it be by means of regional meetings, franchisee associations, intranet facility or something else. Although this may seem curious on the face of it, if properly managed it can produce results. Franchisees can be very supportive of each other given the opportunity and franchisors (who can be part of the dialogue) will be surprised at how much they can learn from this forum.

Finally, keeping franchisees abreast of what the franchisor's expectations are, what it is planning for the future of the network and the business concept that is being franchised, as well as what its expectations of the network are, are equally important when determining the quality and extent of support given to franchisees.

Much is said about franchising being 'a partnership' between franchisor and franchisee and that can only be true if, in return for the fees paid by the franchisee to the franchisor on a regular basis, the franchisor is there not only to react to its franchisees but to be proactive and thereby be better able to sustain its franchisees in their respective businesses to the extent each of them legitimately requires.