How the Franchisor/Franchisee dynamic has changed

franchisee agreement

Elana Koral, founder of Franchise Coaches and a co-sponsor of FASA’s Franchising in Africa conference held in August shared interesting insights into the franchisor/franchisee dynamic. “The franchisor/franchisee relationship is like a tug of war,” says Elana “with a power struggle between the franchisor and the franchisee in achieving their respective goals. It’s because one party has naturally more power and more control than the other – with the franchisor holding the intellectual property and the goodwill so naturally they are in a stronger position within the relationship.”

Whilst the final goals, aspirations and outcomes should be the same for both, there are subtle differences in the main objectives of each side, as shown below.

 

Franchisor

  • A healthy brand
  • Profitability
  • Goodwill
  • Protection of intellectual property
  • Compliant & happy franchisees
  • Brand Citizenship/Sustained growth
  • Happy customers

Franchisee

  • Good turnovers and profits
  • Strong product and service
  • Ongoing innovation
  • Support from franchisor (emotional & intellectual)
  • Win-win
  • Value for royalty
  • Recognition

 

Whilst both sides want profitability, a good brand and goodwill, the franchisees’ expectations extend to wanting ongoing support and value for money and the assurance that the franchise brand continues to grow with franchisors continually innovating to grow their franchise concept. The trying economic conditions of the past few years, coupled with the fall-out from Covid-19 has brought on new challenges where the old ‘command and control’ principle that governed franchising is no longer the primary focus.

The key going forward is a new kind of communication and collaboration with the onus on the franchisor to continue improving and supporting franchisees. The basic tenants of collaboration, as set out by franchise guru Greg Nathan in his E-curve include the fundamental elements of command and control that underpins all good, ethical franchises but these are overridden by the fact that if you have happy franchisees, everything else falls into place. Greg Nathan has long promoted the idea that franchisee happiness stimulates their passion and pro-activity which in turn creates happy customers and high turnovers.

The inter-dependency between franchisors and franchisees was highlighted in a very positive way during the pandemic where both sides were motivated to support each other on totally different levels to what they were used to. Not only were there the usual business challenges but the underlying tensions brought on by Covid-19, the shut-downs and the riots added new layers of frustration and fear that needed to be addressed if the franchise dynamic was to survive. Those franchisors that collaborated with and supported their franchisees through the pandemic are the ones that will survive to become stronger entities and more successful franchises.

 

Franchise coaching to become more holistic

According to Elana Koral, franchise training has evolved in recent years to become more transformational in nature – going beyond conventional training to more holistic coaching. “The basic premise is to grow the person through a shared reality which results in both personal growth as well as growth that affects the entire franchise system. In order to get to that shared reality, the focus needs to shift to include the following:

  • Listening skills become key to the coaching
  • Show genuine care and concern
  • Reflective enquiry
  • Coach the problem, not the person
  • Create a shared reality
  • Release judgment, ask questions, be curious, show empathy
  • Create an environment of psychological safety

Franchise Coaches is about providing coaching to entrepreneurs who understand that cultivating a culture of ownership in and a passion for what you do is the first step in getting back to business. Franchise Coaches is the only coaching service in South Africa that is geared exclusively to those in the franchise industry.

With over 30 years experience in franchising, they understand the game and know the peaks and troughs that franchisors and franchisees go through and the constant need to reinvent to stay ahead of the curve.

“Things have changed in how support and advice is given to clients in this rapidly changing world,” says Elana. “Interventions have evolved from ‘instructing’ or ‘telling’ people what to do (consulting) to rather collaborating with clients to find the best solutions (coaching). This approach is far more sustainable and far reaching and gets the buy-in of everyone in an organisation.”

Franchise Coaches believes that, in order to be effective, coaching needs to thread itself throughout an organisation to see real systemic shifts. Transformational coaching cultivates change in individuals, teams and organisations in their totality

 

Elana Koral
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