Greg Nathan

Preparing Your
Franchisees
for the Journey Ahead

Around 20 years ago I developed a model that

maps a franchisees emotional journey, called The
Franchise E-Factor, which predicts a franchisees
relationship with their franchisor will move
through several stages.
Firstly the franchisee is in a state of Glee but
becomes increasingly disillusioned with their
franchisor as they gain more confidence in their
ability to run the business. After Glee the
relationship moves to the Fee stage where the
franchisee questions the value they are getting
for their ongoing franchise fees.
Satisfaction continues to decline as they reach
the self-centred Me stage, where they attribute
any positive results to themselves, but negative
results to the franchisor.
The model predicts satisfaction will continue to
fall and bottom at what is known as the Free
stage. This is where the franchisee is most likely
to try and shake free of the restrictions they feel
from the franchisor or the franchise system. The
relationship is also most likely to be characterised
by overt conflict at this stage.
If a franchisor sets up a conversation of genuine

40 BUSINESSFRANCHISOR

two-way listening and respect, there will be a

breakthrough in the relationship, which is called
the See stage, where both parties are able
to listen to each other and see each others
perspectives.
Finally, if the franchisor demonstrates empathy
and assertiveness to properly address the
franchisees legitimate needs, (while not giving
into unrealistic demands), satisfaction returns
to a realistic level of equilibrium, somewhere inbetween the Glee and Free stages.

Putting The Franchise

E-Factor to the test
Last year we conducted a large scientific study
into the predictors of franchisee success and
satisfaction called the Franchisee Success
Study. It involved over 2,000 franchisees from
four countries who completed a 210 item
questionnaire on their backgrounds, work
patterns, attitudes to life and business, as well as
their satisfaction with being a franchisee.
One finding from the study is that the average
tenure of a franchisee in Australia and New
Zealand today is quite long at 7.1 years,
with many franchisees still in their franchise
relationship after 15 years.

As part of this study we decided to put The

Franchise E-Factor model to the test by tracking
how satisfaction changes with tenure. In theory,
franchisees in the early stages of the relationship
should be more satisfied, but satisfaction levels
should drop as tenure increases. If the model is
correct, at some point, satisfaction will bottom
out and then again increase.
Using a statistical technique called a locally
weighted polynomial regression we were able
to create a best fit curve for how satisfaction
changes over time. The chart below shows the
curve that emerged from the data.
Franchisee satisfaction mapped against
tenure based on data from Franchisee
Success Study.

OverallSatisfaction

The six stages of the

emotional journey

10
YearsTenure

15

20

While it was exciting to see The Franchise

against this checklist. In the Franchisee Success

E-Factor validated, the tenure issue raised fresh

Study we were able to identify a number of

questions around the experience of a franchisee

attributes that make a huge difference to a

over time as they move from being a naive rookie

franchisees later success, such as positive

into a seasoned operator.

outlook, business acumen and pro-activity.

The six stages of the

business journey

Stage 2: Initiation

I am now going to share a new model that has

agreement and is about to start their training,

emerged from this latest research, which we

they are likely to be enthusiastic and listen

call The Franchisee Journey. Rather than map

politely to what you have to say. The bad news

a franchisees satisfaction with their franchisor,

is they are going to forget 80 per cent or more of

Stage 4: Consolidation

as The Franchise E-Factor does, this new model

what they hear. What they will retain is the way

maps the six stages franchisees move through in

they were treated and the experiences they have

their business journey, as shown below.

during their training and induction.

As the franchisee moves from a state of

conscious incompetence to conscious
competence they enter the Consolidation Stage.
There will probably be a base of customers who
are returning regularly or recommending the
business to others. This means the business has
a steady cash flow and, providing the customer
experience is being delivered as it should, sales
will continue to grow.

Once the franchisee has signed the franchise

The six stages of the Franchisee Journey

Stage 1: Investigation
Irrespective of the type of franchise they join, all
franchisees start their business journey trawling
the internet, reading the various franchising
publications and seeking out people able to point
them in the right direction. At this Investigation
Stage of the journey the prospective franchisee
is asking Could this be the right type of business
for me? while the franchisor is asking Is this a

This stage is called Initiation because it is mainly

about initiating the franchisee into your culture
and your brand, rather than just training them
in your business systems. In the Franchisee
Success Study the attribute of brand passion
was the single biggest predictor of franchisee
performance and satisfaction. So if nothing else,
make sure they absorb lots of brand passion at
this stage!

person we should continue to talk to?

Stage 3: Perspiration

What many franchisors fail to recognise is the

While getting the franchisee into their business

may be mission accomplished for the training
department, the journey now takes on a whole
new level of significance for the franchisee.
They are going to be facing the challenges of
difficult customers, unreliable staff, long hours
and unpredictable cash flow. This is where the
proverbial rubber hits the road.

franchisee induction process has already started.

Should this person become a franchisee, the
expectations that are being set up in their mind at
this stage will stay with them for the rest of their
journey which, as I mentioned above, is likely to
be well past seven years.
It is critical that the franchisor has a checklist
of attributes they are selecting against and a
method for assessing prospective franchisees

The franchisee is also now moving from a state

of unconscious incompetence (they dont know

what they dont know) to a state of conscious

incompetence (they begin to realise there is much
they do not know). This can be a particularly
stressful period with franchisees sweating it out,
which is why we call it the Perspiration Stage!
The main role of the franchisor at this stage is to
provide practical support, encouragement and to
revisit the basics of running the business as now
the theory they learned earlier will make more
sense.

The franchisee is now able to take their hands

off the controls and step back to review their
progress and reset their goals. At this point the
franchisors focus should be around reviewing
their plans with them and helping them to
improve productivity and systems. Getting them
into good business habits, such as measuring
their key performance indicators, will also help
them to maximise their success at this stage.

Stage 5: Maturation
The word maturation implies that something is
fully developed to its capacity and is ready for the
next step. The Maturation Stage describes both
the maturity of the business and the franchisee.
We are now likely to be five to seven years down
the track.
The mature franchisee will probably have been
toughened by the ups and downs of running the
business, worked with several field consultants
(some more competent than others), heard
numerous franchisor executives proudly roll out a
raft of new initiatives (some more effective than
others) and seen a number of fellow franchisees
come and go. While they may not be cynical,
they are likely to be sceptical of new ideas,
preferring to hear the evidence of their worth
before making any commitment to invest time or
money on these.

BUSINESSFRANCHISOR 41

Greg Nathan

so the Franchisee Journey repeats itself, but at

a higher level. In this sense it is like a spiral of
continuous improvement.
The point for franchisors to consider when
reviewing this Franchisee Journey is that
franchisees at different stages will have different
learning needs. The type of support they need
and the nature of the leadership they will respond
to will also be different at different stages.
Perhaps in future articles we will explore this
further.
While franchising is a journey with inevitable ups
and downs for franchisees, it is also an exciting
and challenging journey for franchisors where
your capabilities will be tested. Good data is
invaluable along the way and with this in mind
we have made the full findings of the Franchisee
Success Study available as a report that can be
purchased from www.franchiserelationships.
com .
We wish you well on your journey.
Greg Nathan is a psychologist and Founder
of the Franchise Relationships Institute (FRI),
leading global providers of learning programs
for franchisors and franchisees.
While this can be a time for the franchisee to

a decision to make a striking change for the

enjoy their hard work golf, fishing, holidays and

better. This may be to reorganise or restructure

purchasing the things that represent success for

their business or take on additional units. The

them - they can also become complacent. This

energy needed to initiate change should not

is a dangerous time, especially if the business is

be underestimated. There are also likely to be

successful, because nothing in life is forever, and

many unknowns, and with the unknown comes a

maturity is always followed by a levelling out of

certain level of risk.

performance and then decline.

Franchisees who take the decision to go through

The franchisee now needs to start planning for

a reformation should be supported appropriately.

some type of reinvention, before the decline sets

This does not necessarily mean financial support.

in. The role of the franchisor at this stage is to

Assistance with planning and mentoring can be

inspire, and if necessary provoke and challenge

more valuable. For instance providing access to

the franchisee to work out a reinvention or

people who have been through a similar process

succession plan.

would be useful. A thorough diagnostic can also

Stage 6: Reformation
One definition of reformation is An intended
improvement in the existing form or condition
of an institution or practices, to make a striking
change for the better.
A franchisee in the Reformation Stage has taken

42 BUSINESSFRANCHISOR

be invaluable, especially if they are moving into

multi-unit operations.
In many ways the reformation stage will take
the franchisee back through the process of
investigating what the future business will look
like and perspiration as they come to terms with
how the restructured business will function. And

Phone:

07 3510 9000

Email:

info@franchiserelationships.com

Web:

www.franchiserelationships.com