Franchising- Lesson 7

Franchise and franchisee Relationship

Topics :

1. Phases of franchise relationship

2. Franchise relationship marketing
3. Franchise advisory counsel
4. C. A. R. E.- Communications, Awareness, Rapport, Expertise

The relationship between the franchise and the franchisee is ongoing, contractual business
relationship governed by the franchise agreement. The franchise provides the franchisee with the
operating systems and support service to help grow the business.

 The franchisor / franchisee relationship is an dependent relationship.

 The franchisor establishes the business system, the operating business and grants franchisees
the right to establish their franchise location.
 As a franchisee, you have the right and obligations, your work is acquiring the right to use the
franchisors trademark, to follow the business system and to rely on them for support.
 Franchisee obligations relate to establishing a franchise locations and taking the necessary day
to day steps to make the business successful.

1. Phases of Franchise Relationship

Franchise relationship are psychological in nature and include emotions;

 Hope frustration
 Joy
 Disappointment renewed confidence

Franchise E- Factor- it is the nature maturing relationship you must have with the franchisee as your
gain greater competence and confidence in running your own franchise.

Stages of franchise relationship

1. Glee stage. Are positive emotions a great sense of achievement from everyone as the numerous
handles in establishing the business have been moved been cleared. It covers the period of
buying the franchise 3 to 12 months depending on the business experience.

2. Fee stage. The franchise gains more of a handle is the business finance. It is the growing
appreciation profit minus expense. At this point they become sensitive to the royalty and
advertising fee. Annoys fees from their profit. Royalty, the level satisfactions of franchise goes
down. Two path of the fee stages. A) back to the glee stage. B) Into the me stage.

3. The me stage. They attribute their success to their best effort and initiative. Taking credit of the
good things in business “ attribution effect” or “ Self serving Bias”- explain the theory the
 thinking process we go through no searching the best explanation of an event and also suggest
that we are not all rational as what we like to believe.

4. Free me stage. Characterized by a need to break free of the restrictions and limitations of the
franchisor and testing of the system. The franchisee get bogged down its resentment and
continue to brake with the franchise or revert to the me stage with intermittent but harmonious
grumbling.

5. See stage. The need to be frank and open discussion when the franchisee and franchisor listens
carefully to each other point of view. The need for the acceptance and letting go of the past of
both parties.

6. We stage. Move from independent to interdependent thinking. At this point the franchisee is
prepared to put him or her ego aside and recognize the success and satisfaction generally come
sure easily from working with rather than against, this franchisee.

B. Franchise Relationship marketing

Relationship in marketing is concern in attracting new customers buying existing customers to be

loyal;. The key strategy in relationship marketing is design and maintaining and in multi service
organization enhancing customers relationship around which customers relationship is established.

Dimensions of relationship in marketing.

1. Service by franchisor as a basis for improving quality of franchise relationship.

2. The relationship marketing has important strategies implications for both the manager of the
franchising companies and franchise satisfaction.
3. Trust and communications- are important dimensions of franchisee and franchisor toward
franchise satisfactions and more important antecedents for a franchise intensions to remain in
the franchised system.

Trust is the belief that another party can rely on with confident to perform role responsibilities in a
fiduciary manner.

4. Communications – formal relationships review in each partners performance discussions of any

changes in market place the production condition.

C. Franchise advisory control

Franchise advisory – a franchise advisory co or council (FAC) its basic definitions a committee of
individual franchisees organized by the franchisee to provide feedback and collaborative to the improve
the systems.
Five indicators to determine of the advising in running successfully (FAC)

1. Competent chairpersons as facilitation- the persons is responsible ensuring the meeting are
effectively and everyone has the opportunity to leave or say. Are effective facilitator keep
things moving agenda focused and remain open to new topics as they come up.

2. Clarity over the purpose, roles and powers of the FAC.- everyone in the group should franchise
network. The FAC advisory is not intended to provide franchise a veto over franchisee decisions.
By listening and taking views into account prior to making decisions, will g along way toward
building trust and value with the FAC and the systems as a whole.

3. Well prepared – the process for gathering data should met be onerous on the members and one
should be given to know the agenda items are prepared for discussions in meetings. Facilitations
and sequence of topic need to be carefully handled.

4. Participation of senior franchisor executives – Successful FAC have a consistent participation

from franchise leaders who attended an open mind, candor and the willingness to listen to the
view presented in meeting. They don’t over react or defend personal attack on criticism.

5. Focus on meaningful business improvement. - the purpose must be about resolving differences
of opinion and heavy gripes- it should be improving franchise profitability, collaborations and
competitiveness of the group. Individual frustrations should be at once resolved as quickly as
possible, so the meeting main focus more in meaningful solutions and dealing with real
challenges for the modern system.

D. COMMUNICATION, AWARENESS, RAPPORT, and EXPERTISE

Probably the main ingredient in the franchisor-franchisee relationship is the feeling that the franchisor
cares about the success and activities of the franchisee. “C.A.R.E.” refers to several ingredients of the
relationships- communications, awareness, rapport and expertise.

Communications. One of the major concerns of the franchisor is the franchisee always be able to
communicate and feel a part of the franchisor’s organizations. Effective communications is a key to any
successful business activities. Most franchising organizations creates newsletters to help enhance
communications throughout the systems.

In additions, many franchisors use franchisees to form advertising committees, new product and
development committees, grievance committees and operations committees. Franchisors will often
provide regional seminars, training programs and field representatives to ensure the communications
are kept strong.

Awareness. It is considered important ingredient of a successful franchise system. The franchisor

should make the franchisees aware that they are appreciated and a vital components in the success of
the organizations.
Most franchisor provide awards to show awareness of the franchisee performance levels. Some
franchisors offer performance incentives, such as cash trips, for successful franchisees. This kind of
things enhances the awareness between the franchisor and franchisee. Franchisor should periodically
survey of their franchisees to learn their feeling and concern. Also franchisor can encourage local or
regional clubs to help franchisees support each other as well as develop common advertising and
marketing systems.

Rapport. The franchisor should try to develop a strong personal rapport with each franchisee. Some
franchisors do this by providing birthday gifts, flowers on special days and remembrances of services
performed or goal reached. Additionally recognition is often given at annual meetings or through the
newsletters for promotional service, publicity service, performance levels and even community service.
Developing rapport will keep the franchise systems strong and unified.

Expertise. The franchisors needs to provide expertise to the franchisee. Most initial meetings are
concerned with the nuts and bolts of the operations, but as the relationships matures, meetings should
concentrate on specific areas such as finance, management, personal growth, marketing and even
special promotions. A toll free hot line is often set up to allow the franchisee immediate access to the
expertise in the central office. The headquarters may provide computer expertise and marketing
promotional expertise as well as products or service research and development.

The franchisor- franchisee relationship will amount to nothing if the franchisor fails to demonstrate
genuine care. The franchisor must deal openly and honestly, with integrity and mutual respect for the
franchisee. The Golden rule is directly applicable to the franchising relationship. When it is fallowed,
success, prosperity and growth will likely occur. When it is not followed, franchisee will become
disenchanted, legal problems will arise, and the franchise will generally fail.