01530 513300

The Franchise Relationship

The Franchise Relationship

Categorised in: Ask Nigel    Posted: March 7, 2016

Ideal marriage, bitter divorce or happy co-habiting?

Franchise guru, Nigel Toplis, examines the relationship between franchisor and franchisee

 In my view there is no single definition that totally explains the nature of the franchisee/franchisor relationship.

What I can say is that the relationship between the franchisor and franchisee is absolutely fundamental to the success of the business.

This article looks at the nature of the relationship, what a franchisee should expect from it and what steps to take to ensure the chemistry is right – before signing up.

Where the relationship is strong and founded on mutual respect, openness of thought, common objectives and a comparable level of energy, dedication and drive then the individual business of the franchisee will thrive.

On the other hand if the relationship is bordering on the verge of bitterness, where objectives are opposite, where energy is absent and where trust has evaporated, then for the benefit of both parties, and the network as a whole, it is best to instigate divorce proceedings.

Naturally, because we are dealing with humans, both situations exist.

Fortunately though in my experience it’s more about the happy marriage and less of divorce and recriminations!

Good franchising is built on the foundations of a strong and successful union between franchisor and franchisee.

That doesn’t mean that a good franchisor and a good franchisee will agree on everything – they won’t and they shouldn’t.

BUT, what neither party should do is try to run the other’s business.

I am a strong believer that it is not the job of the franchisor to run the franchisee’s business.

Similarly, it is not the role of the franchisee to tell the franchisor how to manage and develop the network.

Ideally, both the franchisor and the franchisee should see the role of the franchisor as a ‘non-executive’ director for the franchisee and the facilitator of an intellectual and support hub that the franchisee can tap into at will.

Before you take the plunge

Taking on a franchise is a big decision – right up there with marriage and moving house – so it requires careful and due examination.

As with any new relationship it’s best to take your time and not rush in. That first heady flush of infatuation can wear off very quickly so it’s best to take your time, find out as much as you can to check out compatibility and then make your decision based on fact not emotion.

When you think you have found the right business, the right opportunity – stand back and ask yourself these ten questions.

  • Do they have a solid trading history?
  • Are they financially sound?
  • Do they have a history of success?
  • Is there a genuine Head Office support structure?
  • What do they actually provide by way of support?
  • If the franchisor supplies product, what are the T’s and C’s?
  • What is their position in the market?
  • Are projected cash flows realistic? Can they prove so?
  • Does the company have a finance facility with the banks?
  • How tough is their interview process?

Then, like checking out a prenuptial contract take the franchise agreement to a bfa accredited lawyer and get feedback on its contents and meaning.

If you are happy with the agreement then it’s time to look at the figures. Draft a business plan and if you need help to do this ask around for a reliable accountant who understands the franchise model and has experience working with business start-ups.

Always find out how much these professional advisors will charge to avoid any nasty shocks further down the line.

Settling down

Franchisees can often choose where their franchise is based and many can be run from home, meaning more time to spend with the family and no daily commute.

This is a huge benefit for many franchisees, especially parents.  For young people too, franchising is an excellent way to launch their careers.

Franchisee Alex Newman was in his twenties when he took on his franchise.

“Buying a Recognition Express franchise has given me a unique opportunity to become a business owner at such a young age.  The market potential is massive, our product range extensive and the range of companies we access is huge.”                              

Alex Newman Recognition Express, Coventry

So, courtship done, make your decision and only if it feels absolutely right should you sign up. Like a marriage it’s far easier to break off an engagement than file for divorce!

Happily ever after?

The phrase ‘in business for yourself, not by yourself’ truly captures the essence of franchising.

If you set up a business from scratch you are responsible for all aspects. But with franchising you get all the benefits of ‘corporate’ head office support and you’re part of a network of people who can share best practice, advice and insights.

Franchisees come from a wide range of backgrounds and previous experience, and running a franchise is conducive to a variety of transferable skills, including project management, marketing, operations and sales. As with any good partnership the franchisor is there to supplement and boost the skill sets of those in the network.

The franchisor offers experience, know-how, proven operation methods, marketing tools, sales training, technical guidance as well as a corporate identity, trademarks and the all-important brand.

Like any family there’s bound to be ups and downs but the main thing is you are part of a group of people with a shared vision – to build a successful business.

Clear, open communication between the franchisor and franchisee is vital at all stages of the franchising relationship from courtship through to marriage. If you make the right choice and then work hard to put as much as you can into your business at the same time maximise the mentoring and support available to you from the franchisor you’ll be celebrating many milestone anniversaries!

About the author Nigel Toplis

Nigel Toplis is the Managing Director of The Bardon Group. Nigel sees his key role as providing the vision and direction for each of the businesses, developing new income streams - across the board, recruiting customer focused and passionate Franchise Owners and providing business and management support to my Franchise Owners.

Follow Nigel on LinkedIn for regular updates

Share with others