Four key principles of effective community include listening skills, the two-way process, trust in the relationship and the mutual alignment of goals.
Franchising World September 2011
By: Jack Pearce, CFE
Many people have heard the word “effective” used many times and in many ways. For example: He is an effective communicator, aspirin is an effective remedy for headaches and that was an effective use of imagery. But how often do people stop to think about what it really means. What is the definition of “effective?” According to the dictionary, one definition is “causing a result, especially the desired or intended result” and another is “successful, especially in producing a strong or favorable impression on people.”
In the context of franchise relations, the definition of “effective two-way communications” would then become achieving desired results and producing a favorable impression between franchisees and the franchisor. The next logical question would then be how does an organization ensure this outcome? How do companies know what the desired results should be? How do they know the communications have produced a positive outcome?
In previous franchise relations articles, effective two-way communication is often discussed and many times credited with the success of a franchise concept or function. Whether the discussion is about advisory councils or field support, the ability to communicate effectively seems to be the key element for success. DLA Piper Rudnick Gray Cary US Partner Erik B. Wulff, author of the International Franchise Association publication, Advisory Councils: Effective Two-Way Communications for Franchise Systems, wrote: “Indeed, the overwhelming majority of franchisors and franchisees in systems that have Advisory Councils rate them as an effective means of two-way communications…Aside from doing all the right things as a franchisor (i.e. new product development, effective marketing, field support, etc.), a franchisor needs to continue to communicate with franchisees on an individual level.”
The point is made clear: while effective communications are the key to achieving the desired outcome, most businesses still have not answered the basic questions about how to ensure those results. For this, companies must turn to some basic principles of effective communications, and in the franchising industry there are four key principles which would apply: listening skills, the two-way process, trust in the relationship and the mutual alignment of goals.
The most common way to discover if someone is not listening is when he cuts someone off in mid-sentence or before that person can complete his thought. How can someone be listening to what is being said when he doesn’t even hear the end of the sentence? A good listener will carefully focus on the other person’s complete thought before responding or forming an opinion of his own. This principle is sometimes referred to as active listening skills and it truly takes energy and patience to do it well. Here are a few tips for improving listening skills:
- Focus eyes and mind on the person speaking.
- Indicate listening through eye contact, note-taking and body language.
- Respond appropriately with comments, questions or paraphrasing.
- Use questioning to clarify specific points of discussion.
- Repeat words or phrases in your own words to verify understanding.
- Summarize a discussion to confirm main points and a complete, accurate understanding.
The previous reference to advisory councils is a clear example of how the two-way process of communication is being deployed in the franchising industry. Here, franchisees are being invited to the proverbial table by the franchisor for the expressed purpose of speaking their minds and exchanging opinions. Although most advisory councils do not have a final vote on policy decisions, a wise franchisor will consider advisory input in the setting of priorities and in the allocation of resources. Both parties must feel free to communicate openly and honestly, and in doing so, they are clearly on a two-way path toward stronger relations.
Field support is another franchising function which relies heavily on the two-way process, and the communication is not always simply verbal. Franchise Relationships Institute Managing Director/ Psychologist Greg Nathan writes in his book, The Franchisor’s Guider to Improving Field Visits, “…research into franchisee satisfaction by the Franchise Relations Institute has shown that franchisees who believe their franchisor genuinely cares about them are significantly more likely to trust the franchisor.” And, “Face to face contact demonstrates that you do care and helps to build positive communications and trust.”
With that being said, a field support representative is charged with guiding and supporting the franchisee through the various stages of her business development from grand opening to final sale. As part of this relationship, the representative will play a variety of roles, including consultant, mentor, facilitator and trainer, all of which require a two-way exchange of thoughts and ideas. Each of these roles may require a different type of relationship, such as one commanding leadership, another communicating as a peer or possibly educating as an instructor. But, all of these roles rely heavily on the effective use of communication skills, and more importantly, are dependent on a strong level of trust.
Trust in the Relationship
Clearly, trust is what allows two parties to openly communicate their ideas and feedback, good or bad, and eventually leads down a path of collaboration and mutual understanding. If there is an absence of trust and the relationship is perceived to be one-sided or deceptive, it will most certainly fail. Whether it’s the individual franchisee expressing his or her desire to achieve a certain level of sales, or it’s the advisory council suggesting new ways to streamline a process, both are grounded in a relationship of trust and can openly be communicated in a two-way exchange of ideas.
To ensure there is a solid foundation of trust on which franchise relations and effective communications can be built, one of the most common attributes in successful organizations seems to be a strong alignment between the franchisor’s goals and those of the franchisee. This principle is most evident when the franchisor operates from a philosophy of “if the franchisee wins, we win,” and it typically leads to a strong alignment of goals. If the franchisor chooses to build a singular-minded culture around “profitability at all costs,” there is likely to be a disconnect between profit motives and a genuine concern for each franchisee’s success.
It is in this environment of cooperation and collaboration in which franchise business people rely on their active listening skills, on the two-way process and on relationships grounded in trust to guide participants down a path toward ensuring effective communications. But what is being used to actually measure success? How do companies define whether or not their two-way communications have been effective? If all parties can agree on a mutual alignment of goals and some measure of how close they are from obtaining them, there should be a strong measure of success for how effective communications have been.
Mutual Alignment of Goals
Inherent in the “you win/we win” philosophy is the fact that everyone is going to participate in some level of mutual benefits. In the case of franchising, if the franchisee is financially successful at the local store level, then the franchisor by definition is going to benefit from increasing royalty revenues. It is this key alignment of goals which allows both franchisee and franchisor to actively engage in communications aimed at achieving a common objective.
If the franchisor has developed its business model (aka: revenue model) around royalty fees as its primary source of financial success, this should motivate both parties to use two-way communications as the principle method for ensuring effective results. With the alignment of goals in place, the entire support, marketing, development and administration infrastructure of the franchise organization becomes focused around a singular purpose. This alignment also becomes clearly visible to the franchisees, and it plays a vital role in building those trusting relationships between franchisees and the franchisor, also known as “transparency.”
However, if the franchisor chooses alternative revenue streams as a primary focus, such as initial franchise fees, start-up orders, equipment packages or proprietary supply contracts, then it is possible there will not be a solid alignment of goals with franchisees over the long term. Any time price competition (material cost) is arbitrarily controlled or manipulated, such as the franchisor striking kick-back or rebate deals with vendors who provide inventory, equipment or fixtures, it may risk establishing profit motives which do not favor the franchisee. In a similar way, if the franchisor chooses to offer proprietary supplies as a primary and or essential component of its sales and profitability model, then the alignment of goals is also going to suffer or not exist at all. To maintain quality franchise relations based on mutual benefits, the franchisor must carefully design its business model around an organizational structure which either directly or indirectly drives revenue growth and or profitability down to the individual franchisee unit level.
It is still the responsibility of franchisees to execute the franchisor’s business model, and it’s truly their hard work and motivation which achieves business success at the end of the day. However, the alignment of both parties’ goals is what allows and stimulates the ongoing dialog and the two-way exchange of ideas and opinions. In today’s environment of instant communications, everyone has access to the means of communication. The measure of success will primarily stem from the degree to which both parties believe they have achieved their individual or mutually aligned set of goals.
The answer to the earlier questions about ensuring effective communications requires turning to a set of basic principles on which to measure success. Franchises must initially create the opportunities and the environment for the two-way exchange of open and honest ideas. Next, they must engage in the skillful process of active listening for all parties to truly comprehend each other. And finally, organizations must depend on the trust in the relationship to agree upon, or come to an understanding about, mutual goals and objectives. If organizations agree progress has been made or they have achieved those goals, they can honestly proclaim the communications were effective.
In the world of franchising where the relationship between franchisor and franchisee is critical for achieving success, effective two-way communication is truly the foundation on which strong relationships can be built. Whether it’s an advisory council meeting or a field support visit, a key element for success is a strong two-way process of communication.
Jack Pearce, CFE, is executive director of franchise relations of Annex Brands, Inc., a 400-plus unit franchise organization comprised of four unique brands within the mail and parcel, custom packaging and shipping industries. He serves on two national IFA committees, Franchise Relations and Information Technology. He can be reached at email@example.com. For more perspectives on franchise relations, visit IFA’s Web site, www.franchise.org, and select “Resources” for franchise relations documents.