The industry is just beginning to truly understand their significance.

By Jack Pearce, CFE

What is Trending?

During the International Franchise Association’s recent annual convention in New Orleans, there were four key “takeaways” identified by the attendees: franchisee engagement, franchise support, social media and international development.  The latter two topics seem obvious since international markets have been leading franchise growth for years and social media seems inescapable in touching many aspects of both our personal and business lives.  Without much analysis it’s easy to see why these two topics are on the short list of what is trending in the franchise industry today. When did the subjects of franchisee engagement and franchise support rise to the status of top-of-mind awareness?  Franchise support is acknowledged by most in the industry as a “best practice” and a fundamental operating principle.  But now support seems to be joined at the hip with the relatively new topic of franchisee engagement.  Exactly what does this new term mean and why is it so important to both franchisees and franchisors?

What is Franchisee Engagement?

If you rely on a dictionary to define engagement relative to the franchise industry, it is difficult on the surface to find a meaningful interpretation.  But if you read between the lines, you might find the following interpretations:

  1. Agreement to marry.  Isn’t a franchise agreement similar to a marriage, dedicating each to the other, taking vows to honor and respect in a variety of ways?
  2. Commitment to involvement.  Both franchisee and franchisor make a commitment to interact with each other, to take part in the activity of franchising, to be present.
  3. Short-term job.  Whether in the context of the franchise agreement term or relative to the view of a franchise as an investment, engagement lasts for the term of the agreement and then it’s over.
  4. Military operation. Mostly viewed in the negative context of a battle, but the franchise engagement can also be viewed as simply an encounter between two parties.
  5. Active or operational state.  Engaging the inner workings of a machine is easy to imagine and it is not a stretch to see the same engagement between franchisee and franchisor coming together in an active and operational state.

Take the definitions above, put them all together and what you end up with is a functional relationship between two parties.

The Franchise Relationship

Very simply, the franchise relationship between franchisee and franchisor typically begins and ends with an agreement.  Many different versions of a franchise agreement are used in the industry today and in many cases a very successful franchise organization may employ an almost identical agreement to one used by a struggling or failing franchisor.  Why is one organization very successful and another failing when the key relationship document they each use is nearly the same? The answer is that the success of the franchise relationship is not simply based on the quality, balance or fairness of its franchise agreement, but possibly on other more important elements.  As was suggested by attendees to last year’s IFA convention, two of those critical elements may very well be franchisee engagement and franchise support.  How, exactly, do these two elements come into play and why do they have such a dramatic impact on the overall success of a franchise organization?

Engaging Franchisees

To truly engage and support franchisees there needs to be an atmosphere or culture conducive to the development of strong franchise relations.  This culture typically begins at the top of the organization with the founder or chief executive and must then filter down through every facet of franchise operations.  The foundation for this type of culture and relationship typically includes the following companies: Franchise Relations

  • Two-way communication is essential.
  • Constructive, honest and open feedback leads to ongoing development.
  • Trust is essential; all parties must feel free to speak their minds.
  • Alignment of goals equals mutual benefits.
  • Transparency is important for the difficult process of allocating limited resources.
  • Company Culture
  • To set the tone, the “you win, we win” culture begins with individual unit profitability.
  • Re-investing in the business model is a sign of franchisor commitment.
  • Open communication creates transparency and promotes trust.
  • A franchisee-centric attitude which asks “Does it drive sales at the franchisee level?”
  • Support, support, support.

The Tools of Engagement

Once the winning culture has been deeply rooted into the organization and a foundation of strong franchise relations has been built, then it is time to effectively execute the tools of engagement.  Most franchise organizations use a common set of tactical support methods, yet their success will depend greatly upon the quality and depth of the relations and culture described above.  Here is a short list of the common tools of engagement deployed by many franchise companies: CRM systems.  The franchisor tracks all franchisee communications to promote consistency, accuracy and fulfillment. Two-way communications:  Monthly individual phone contact, frequent operations and marketing bulletins, robust email discussions, webinars and an “always available” phone policy for all staff and management personnel. Training, coaching and counseling.  “Grand Opening” training, ongoing educational programs for franchisee and staff, business management coaching and confidential counseling for franchisees with special circumstances. Mentor programs:  Very popular among successful franchise organizations, peer-to-peer mentoring is highly effective at increasing maturity and success levels in new franchisees, plus it supports motivational and problem-solving goals. Convention:  This is the most fundamental, long-standing and sound investment made by any franchise company.  Primary convention benefits include learning new concepts, building relations with fellow franchisees, increased motivation to succeed and improved camaraderie among all participants. Franchise support.  The most essential of all engagement tools and according to attendees at the 2014 IFA Convention, one of their most important “takeaways.”

Why Franchise Support is so important

Every franchise organization does it and depending on the business concept, just exactly how support is done can vary in hundreds of different ways.  In general, franchise support is the mechanism by which the intellectual property of the franchisor is transferred to the franchisee for the purpose of replicating the success of the business model.  It is not difficult then to understand why strong franchise relations and a positive culture are synonymous with support success. A good source of reference for a strong support model can be found in the IFA Handbook, “Effective Development of a Franchise Support Organization.”  It breaks down the model for support into two basic levels, organizational and operational.  On an organizational level, the discussion is about support principles like the relations and culture discussed above.  On an operational level the discussion turns toward tactics and methods. Simply, the tactics and methods used for franchise support usually fall into just three major categories.  Some of those typical methods found in each category are: Field Support

  • Site selection
  • Grand opening support
  • On-site operations training
  • Key performance indicator coaching and consulting
  • Business management/financial review
  • Compliance visits

Home Office Support

  • Collateral marketing materials
  • Training classes
  • Preferred vendor negotiations, contracts and support
  • Online or “help desk” support services
  • Intranet systems, electronic bulletin boards, discussion forums, etc.

Other Support 

  • Franchise advisory council
  • Mentor programs
  • Convention
  • Regional meetings

A company’s winning culture sets the tone for driving the mutual success of all parties and franchise relations are made easy by frequent and constructive communications, by a strong foundation of trust and by the effective operation of a well-trained support organization. Taken together, it is easy to see why franchisee engagement and support are truly two of the most important keys to franchise success.

Jack Pearce, CFE, is executive director of franchise relations for Annex Brands Inc., a 450-plus-unit franchise organization. He serves on IFA’s Franchise Relations and Marketing and Technology committees. Find him at fransocial.franchise.org.  

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