Franchisor and Franchisee: The Guide to a Successful Relationship

The franchisor (franchise seller) has no power at all until the franchisee agrees to buy. At that point there is a monumental shift in power. The Franchisee spends money on the franchise, the business, and makes a massive investment. The risk has been taken and the franchisee needs all they help they can get, especially from the franchisor who has convinced them that their franchise is a good money maker.

The Risk Has Been Taken

One of the things that really angered people was when President Obama said that the government made the USA great because it builds the roads. It was a dumb thing to say, but they killed Bin Laden under Obama, so he gets a pass. Still, it undermines the risks and hard work that people put into their small businesses, especially when somebody invests in a franchise. It comes with the promise of success at the cost of a lot of money and the promise to follow a lot of rules. The franchisee doesn’t have much power when it comes to the franchisee/franchisor relationship. However, a savvy business owner also understands the risk a franchisor takes.

If the franchise is damaged too much, then royalties stop coming in and people stop buying the franchise. A single business owner does have some power when it comes to convincing other people “Not” to buy the franchise. Plus, it is well known that a franchise suffers when franchisees do bad things in public. If a small business were pushed to breaking point because of an unreasonable, unhelpful, or just plain bad franchisor, then the small business could start doing things that damages the brand publicly. 

The Balance of Power

Now you understand the balance of power, let’s examine points of contact. They are in-person, written, and through phone calls or video chats. You have to remember that every encounter is a negotiation. The franchisee wants more in order to succeed more easily, and the franchisor wants more money and less hassle. When it comes to balance of power, remember that the people you are talking to are not the primary decision makers. For example, taking a “Machiavellian” approach to your rep is probably not going to get you very far. Keep in mind that the people you are talking to are often just people, doing a job at a fixed rate, so keep your “Power moves” in reserve for when you communicate with the higher ups.

Communication In Person

You may get visits from field support staff, support consultants or other representatives. They may share your ideas with their bosses and will probably have comments and information from the headquarters.

Annual conferences and events are often a place where you can meet some of the more important members of franchise. Regional meetings and seminars are sometimes staffed with higher ups but are often staffed with representatives and third-party consultants.

Written Communication

There may be webinars, email newsletters, Internet communication and things of that nature. It is very difficult to know who you are communicating with when you use written communication. However, if you are trying to create a paper trail, or need proof of what you have claimed and/or noted, then written communication (especially electronic) is good because you can prove what you have done, written, filed, received, sent, etc. 

Verbal Communication

There may be phone calls, live chats and video calls. There are even some businesses that communicate using digital signs, Kitcast, and online-video chats so that they may communicate with people through their digital signs. Once the call is over, the digital sign goes back to its regular job. 

Verbal communication, over the phone or through video chats, poses a similar problem to the written communication issue. You have no idea if you are talking to the intern receptionist, to an office manager, or to somebody who is important in the association. Try to record any of your conversations because it is information you can use later if there is legal trouble, or if you wish to complain that you have asked repeatedly for something and it has not been given. If you can prove you have been asking, then you have a stronger position to move forwards. The same works on the other side, if you are the franchisor and telling your clients and associates certain things, and they are ignoring you, it will help you later in court if you can prove all the times you told people the relevant information.