Building a constructive franchise relationship

For many franchisees, the prospect of owning your business whilst enjoying the support of a franchisor, and the stability of a proven franchise system, is an attractive one.

However, sometimes balancing your own personal interests and business ideas, whilst still operating under a franchise system, can prove difficult.

It may help franchisees to first remember that the franchise relationship is not balanced. Ultimately - as the ‘creator’ of the franchise business system - it is the franchisor that has more control in the franchise business method.

However, that said, being a franchisor is no easy task. Franchisors have to first set-up their own business (without the support of the franchise business system) and build it up, before designing a franchise system and recruiting franchisees.

Moreover, they are not the only ones attempting to perform the balancing act; they too have to find a happy medium between making sure franchisees follow their business model, ensuring continuity within the business, whilst affording franchisees some autonomy as small business managers.

The relationship between the franchisor and franchise may not be equal, in terms of control. However, they are equally valuable.

Below are 2 steps to ensuring the franchise relationship is a constructive one!

1. Establish Boundaries

Franchisee and franchisor should clearly understand their different roles. Boundaries need to be established from the beginning in the form of a franchising licence agreement, to minimise the chance of dispute in the future.

This is not to say however, that the relationship will not change slightly over time. But as initially dependent franchisees gain confidence in running their business franchisors need to allow for this change.

If boundaries are clear, these changes can have a positive effect on the franchise business. If dealt with correctly, franchisees can help develop the franchise business through communicating their suggestions for improvement and giving continual feedback.

2. Communication

Every relationship, whether it is personal or professional, thrives on communication. When two people can freely and honestly express their feelings, opinions and suggestion, disagreements can be prevented and the relationship is a productive one.

Franchisors then, need to establish communication channels through which dialogue can frequently occur. Face-to-face communication is ideal, although not always practical, the more personal the interaction the better.

Communication too, should remain as professional and respectful as possible. Franchisees need to be provided with explanations when given instructions and informed of company changes in a detailed, explanatory manner. Franchisees too, need to express their thoughts and feelings, give potential reasons for problems and how they can be addressed.

Essentially, both the franchisee and franchisor are working toward the same goal – the success of the franchise – and should therefore both work together to benefit the business.

The Franchise Association of New Zealand is an official regulatory board for franchises in New Zealand. They facilitate the process of learning and sharing information, and encourage high standards of conduct through the Association’s Code of Practice Ethics, by which all its members must abide.