How to turn the tide when franchising becomes a struggle?


Franchising is a great mechanism to expand with third-party capital and to benefit from having dedicated owner-operators who care about customer service in all your outlets. However, franchising can become a struggle when all parties – the franchisor and franchisees – do not have their needs met and become frustrated with the relationship.

Back to basics

The first thing to consider is the design of the franchise. Did the franchisor pilot the concept in its franchise format? Good distributors don’t necessarily make good franchisors. A company with existing infrastructure may be tempted to skip the design and piloting process and start franchising on the back of its current capabilities. For example, let’s say a company is a manufacturer of goods for the building market, but it has never run a retail store; franchising without piloting a retail store can cause problems down the road. The only way to understand the intricacies of the concept and the support that franchisees may need is to run a pilot store, preferably for a year.

Decide on the franchise type and design the franchise value proposition

Business format franchising has many benefits, but it’s not feasible for all franchises. If your franchise can’t deliver on business format support, adjust the value proposition and avoid overstating what the franchisor will do to support franchisees

When your infrastructure is insufficient

A good franchise has several core elements as part of its offering and infrastructure, including training, marketing, operations support, financial monitoring and a well-designed franchise package, which includes a user-friendly operations manual. It’s a good idea to evaluate your support infrastructure to identify gaps. It’s never too late to adjust and close the gaps needed to provide adequate franchisee support. If it’s impossible to hire the necessary resources, some of these functions can be outsourced to specialised franchise consultants, trainers and marketing consultants.

The franchisor/franchisee relationship

A poorly designed and supported franchise often leads to strained franchisor/franchisee relationships. When the franchisor starts trying to remedy the situation, it often happens that the relationship has deteriorated so severely that franchisees distrust the franchisor, no matter what they do. It is possible to turn this around by opening the channels of communication. Franchisees want to be heard and will appreciate an effort to facilitate this.

Re-think franchise recruitment

Another pothole on the path to good franchise relationships is the selection of franchisees who don’t fit the mould. When starting franchising, the temptation is to appoint any franchisee with money to invest, especially if the franchisor has ambitions to expand rapidly. This is a grave mistake, as not everyone has the intrinsic qualities to be compliant franchisees. It’s a good idea to revisit the recruitment process and become more discerning.

Franchising doesn’t have to be a struggle, and it’s always possible to pause and evaluate where your network is and where it is going before you recruit more franchisees and repeat the same mistakes. Join us on 11 August to discuss these issues in more detail and to change your franchising efforts from struggle to success.