The Franchisor and Franchisee: Parent, Child, Spouse?

Posted on September 17, 2014

franchisor and franchisee

If you’ve been in the franchise business, you know the franchisor-franchisee relationship is more complicated than commonly thought.

Spouses, children, friends, enemies. For some reason, we just can’t pinpoint how this relationship works.

Well, that ends today. Because today, we are going to break down the franchisor and franchisee relationship. Are they spouses? Parent and child? Something else?

I’m not much for suspense, so I’ll go ahead and give away the ending: while the spouse and parent analogies certain help, they are not satisfactory. I agree with Don Fox, Chief Executive Officer at Firehouse Subs: “The franchise relationship should be treated as its own.” 

And when it’s not, when the franchisor becomes spouse, or the franchisee becomes the child, undesirable and harmful consequences can follow. 

So let’s examine the marriage and parenting analogies.

1. The Marriage Analogy

franchisor/franchisee relationship

What the Analogy Implies.

1. Franchisor and franchisee have a common purpose. 

Franchises need solidarity to grow, develop, and progress. As a married couple works together to pay bills, raise children, solve problems, and overcome conflict, so, too, the franchisor and franchisee work together to share and expand the brand. 

2. Franchisor and franchisee are equal. 

Under the marriage analogy, franchisors and franchisees are equal. Of course, many see the franchisor as the head of the household. But still. Equality matters.

3. Franchisor and franchisee are legally bound. 

Like a marriage, franchisor and franchisee stay together by contract.

4. Franchisor and franchisee will fight. 

As a bride and groom go through their first euphoric honeymoon, so, too, the franchisor and franchisee experience excitement and possibility at the beginning of the franchise experience.

Then, the conflicts, the disagreements, the plate throwing, nerve wrecking fights. If the conflict isn’t resolved, you can expect a divorce.

Where the Analogy is Weak.

1. Franchisors never have one franchisee; they have several. 

In reality, a franchisor focuses not on one franchisee—on one spouse—but several. As Don Fox says in a LinkedIn forum.

“I always find danger in using the marriage analogy. If I continue with the marriage analogy, as a franchisor, I have hundreds of ‘spouses.’ The franchisee has ONE spouse. All of that said, the analogy of marriage starts to crumble quickly.”

Thus, franchisees must show self-sufficiency in their management. They must be able to act, lead, and make decisions without the franchisor’s constant aid.

2. Franchisors and franchisees do not have common goals. 

Franchisors manage multiple locations, regions, states. In general, they care about national advertising, brand consistency among franchisees, and national promotions. Their outlook is big picture. 

On the other hand, franchisees care about local marketing. They want marketing and promotional material for their city and location. Their outlook is localization.

While the franchisor and franchisee care about the brand name, their audiences are different. How they spread the brand depends on their context. 

3. Franchisors and franchisees are not entirely equal. 

By position, franchisees expect the franchisor to know the brand better. Franchisors have experience, wisdom, and expertise. They are, by experience, not equal with the franchisee.

Franchisees, however, are not without valuable knowledge. Franchisees know their location better than the franchisor: the locals, environment, atmosphere. His knowledge can (and should) influence the franchisor’s marketing tactics for that location.

Because of this, franchisees and franchisors need to develop a healthy relationship involving dialogue and communication. 

What to take away: Dialogue & Communication

What can we learn from the marriage analogy?

One take away: communication and dialogue matter.

And not just technological communication. Words on a screen can be read any number of ways, but a person’ face is always plainly understood.Seek face-to-face, personal contact. True, we live in a world of overwhelming technology, where instant back-to-back interaction is common. In such a world the convenience of online and smart phone communication is tantalizing, but actually making the effort to talk with your franchisees (or with your franchisor) is vital.

On the other hand, franchisees should not feel hurt or rejected if the franchisor doesn’t give immediate attention to the franchisee’s problems. Franchisors are busy. Give them some time to answer.

2. The Parent/Child Analogy

parent-child-relationship

Some compare the franchisor and franchisee to a parent and child. As before, let’s deconstruct this analogy.

What the Analogy Implies.

1. Franchisors teach, support, and raise franchisees.

As parents teach their children what they’ve learned—”if you ain’t bleeding, you ain’t napping,” “don’t spend your money in one place,” “scared money don’t make money”—franchisors teach franchisees what they’ve learned about the franchise.

Furthermore, franchisors support and rear franchisees, answering questions, promoting growth, ensuring safety.

2. Franchisors discipline franchisees.

Sometimes, franchisee act as a rambunctious child. When that happens, franchisors have the right to discipline them. I mean, franchisees are under the franchisor’s jurisdiction. Ultimately, he must follow what the franchisor says.

Where the Analogy is Weak.

1. Franchisees are not completely dependent. 

Yes, franchisors offer much needed wisdom. On the other hand, as discussed above, franchisors cannot assist every franchisee.

When a franchisee opens a business, he takes a risk. It can cost from $50,000 to several hundred thousand dollars to buy a franchise. Thus, franchisees must have managerial skills if they are to operate their business.

Franchisees are not children They should not be completely dependent.  

2. Franchise Dictatorship

Though they clearly run the operations, franchisors should no be dictators.

Encourage honest conversations, acknowledge franchisees’ ideas and opinions, and franchisors will notice an improved relationship.

 What to take away: Trust & Honesty

In order for the parent/child relationship to be productive, both must be honest. Trust is the foundation of leadership. Without trust, neither parties can succeed in the franchise relationship.

3. The Franchise Relationship

hand-shake-franchisee-franchisor

A few months back, we created a LinkedIn forum with the question, “Is the franchisor/franchisee relationship analogous to (1) a marriage, (2) parent/child relationship, or (3) something else?”

While we received a lot of great responses, Don Fox’s succinct response was the most intriguing.

It is not analogous to anything else. Franchising is franchising…it is it’s own unique business model, where the Franchisor and Franchisee have contractual responsibilities. Many of their interests are common. But their responsibilities (and what both parties should ultimately be held accountable for) are driven by the franchise agreement they have entered into.

In other words, the franchise relationship is unique.

We cannot compare it to a marriage. It’s not one

We cannot compare it to a parent/child relationship. It’s not that, either. 

Though, as we showed, the franchise relationship shares responsibilities with these two, ultimately, it is a relational category of its own. Each franchisee will be different, and each difference implies a different relationship. 

Where do we go now?

franchisee-franchisor

The next big question: how can we improve this unique relationship?

That, my friend, is the subject of our next article.

Stay tuned.

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