Strengthening Franchise Relationships-Keeping Trial Lawyers Out of Your Business

What did Shakespeare say about killing all the lawyers? When it comes to strengthening relationships between franchisors and franchisees, many franchisors might argue Shakespeare had the answer. However, there may be an easier answer.

Franchise disputes typically involve important business and legal issues, but they usually have their genesis in a relationship between franchisor and franchisee that deteriorated over time. Strengthening those relationships may be the key to keeping the trial lawyers out of your business.

No doubt the best franchisor-franchisee relationships are those in which both parties are making a lot of money. However, even successful franchisees can turn on their franchisors, and even unsuccessful franchisees frequently maintain good relationships with their franchisors. The glue that keeps franchisors and franchisees working together is not always their profits, but their communications, and their respect for each other. Few franchisees that have good relationships with their franchisors will join a protesting group of franchisees, leave the system, withhold royalties, or seek franchise counsel.

Of course, maintaining good relationships is easier said than done. This article will focus on some of the ways franchisors have found to improve and maintain good relationships with franchisees.

Training

Most franchisees join a franchise system because they want to take advantage of the franchisor’s know-how. This know-how is typically imparted to franchisees during the franchisor’s initial training program. However, even the most observant and educated franchisees will forget part of what they learned by the time they get home. And most of what they learned will be forgotten within the first year. It is therefore important that you, as a franchisor have solid, ongoing training programs for your franchisees.

Have you ever offered to pay a struggling franchisee’s airfare and lodging to bring them to your office for additional training? If it takes a relatively small investment on your part to convince a struggling franchisee to take advantage of some additional training, and that training can help save the franchisee’s business, or your relationship with the franchisee, you will recoup your investment many times over in providing this type of assistance. Bringing the franchisee to the “home office” also gives the franchisee a chance to reacquaint himself with your staff and get re-energized in his business. If you can arrange box seats to that night’s ballgame, or reservations at a well-known local bistro, you may also strengthen the personal relationship that will come in handy when the franchisee receives a call from someone who wants to talk about a royalty strike.

Even franchisees that do not need additional formal training can benefit from periodic additional assistance. Do you use your franchise inspections to define areas where franchisees can be doing a better job, and do you follow up on those areas? Do you regularly send ideas to franchisees that can help them improve their operations? Many years ago, Burger King sent a bulletin to their franchisees about suggestive selling. A Gainesville, Florida franchisee, that was already one of the more successful franchisees in the system, took Burger King’s recommendations to his managers, and more than quadrupled the sale of cheese on sandwiches, a high profit item. At the time, the franchisee was considering various options for his business, including an exit strategy. Within three years, the franchisee had opened a second and third restaurant.

Personal Recognition Programs

When your franchisees do not follow standards, you are probably quick to admonish them. However, do you also compliment them on the positive things they do? Look for opportunities to recognize franchisees for the extra things they do, and in some cases, even for staying on track. Occasional notes, emails or telephone calls from senior staff of the franchisor go a long way to making your franchisees feel they are an important, appreciated part of the system.

People also like to receive public recognition for their efforts. Many franchise systems create numerous awards for their franchisees. Award programs can help create loyalty among franchisees, and encourage franchisees to achieve recognition at increasingly higher levels. Awards do not need to be limited to your top revenue producers, as awards can be designed for community service, most improved, and other areas that every franchisee can achieve.

Some franchisors also create recognition for long-term commitment to the system. In its early years, ERA Real Estate created five-year pins for all franchisees. The pins were awarded at annual conventions, with a diamond chip added every five years. Franchisees (and their sales associates) not only looked forward to receiving their 15- and 20-year pins, but those wearing the pins at the convention were sought out as role models and mentors by newer franchisees.

Do you send cards or acknowledgments to franchisees to commemorate special events in their lives? Store anniversaries, wedding anniversaries, and birthdays, all present wonderful opportunities to send a card or small gift, which shows personal concern and care for franchisees. (And don’t forget the spouse!)

Communications

Technology is wonderful. Faxes and e-mails can be sent to all your franchisees at one time. Voicemail allows you to leave many more messages than you could when you had to wait for a return call. However, these technological advances keep us from communicating on a personal level. When that personal communication is lost, the relationship starts to drift apart, and the chance for friction increases.

Several years ago, United Airlines had a commercial featuring business people talking about how they were losing accounts. The CEO bought airline tickets for all his executives so that they could meet personally with the company’s customers. The CEO took the largest customer. When was the last time your company sent its executives out to meet with your largest franchisees? Even if the only purpose of the trip is to have dinner, and to get to know each other better, it can be a good investment of time and money.

When personal visits are not possible, there are simple personal touches that can help your franchisees stay “bonded” to the system. Newsletters with photos and human interest stories about your franchisees give everyone a sense of belonging to a “family,” rather than merely a business organization. If you have replaced those newsletters with blast faxes and e-mails that focus only on business, consider bringing back those “feel good” stories and pictures, perhaps through a good old-fashioned newsletter you send through the mail that franchisees can pass around their organization or bring home to their family.

Communications are, of course, a two way street. Listening to your franchisees can be as important as speaking to your franchisees. By listening, you may learn something about a trend in the business or a problem in the system. And asking franchisees for their opinions reminds them again that they are important and that you care about them.

Many franchisors not only encourage franchisees to contact them, but they will find opportunities to ask franchisees for their opinions. Advisory councils can serve that purpose, but so can a supervisor who sits down with a franchisee at a monthly, quarterly or annual visit, and talks with the franchisee about her business. Many franchisors survey their consumers to elicit valuable market information, but have you ever surveyed your franchisees to find out what they like and dislike about their relationship with you?

CONCLUSION

As your system grows, it becomes more and more difficult to maintain good franchise relationships. Like a marriage, or a relationship with a child, it takes work. Technological advances have come at the expense of the personal touch that was important in establishing many franchisor-franchisee relationships. However, when franchisees are struggling, or making decisions that will have a significant impact both on their business and on your business, the existence of a good relationship between franchisor and franchisee will be invaluable in helping both businesses achieve their mutual objectives -- and keeping the trial lawyers out of your business.

This article originally appeared in the October 2005 issue of Franchising World Magazine, a publication of the International Franchise Association www.franchise.org . It is reprinted here with permission of the publisher.