The Challenge of Supporting Mature Franchisees
Franchisors should pay close attention to their franchisees’ maturation. Data shows more than half currently have average tenures of about seven years and may be facing mid-life crises.
By Greg Nathan, CFE
Look at yourself in a mirror each day and you won’t notice yourself aging. It’s not until you see an old photo, or something goes wrong with your health, that you are hit by the impact of the aging process. So too, franchisees are getting older, but because of their ongoing dealings with their franchisors, neither party may notice the implications of this until an issue, or a performance problem, draws it to their attention.
The facts suggest franchisors need to pay more attention to the maturation of their franchisees. Extensive survey data on over 30,000 franchisees, shows 53 percent have now owned their businesses for six or more years with an average tenure of around seven years.
In lifecycle terms, business years are like animal years, where one year is equivalent to several human years. So after six years, a franchisee and its business may well be heading for a mid-life crisis. Not surprisingly, it is around this time that businesses start to plateau, unless a reinvention occurs.
The franchisee business journey
A previous Franchising World article mentions this tipping point, with most franchisees now in the maturation or reformation stages of their lifecycle. These stages are based on a model developed by the Franchise Relationships Institute called the Franchisee Business Journey. The six stages are:
- Investigation (the prospective franchisee assesses the business opportunity),
- Initiation (they sign the agreement and are inducted into the franchisor’s culture and systems),
- Perspiration (they face the challenges of building a team and growing sales),
- Consolidation (everything comes together and the business starts to make money),
- Maturation (routine sets in and business performance starts to wane) and,
- Reformation (the franchisee makes a decision to reinvent themselves and their business).
The Franchisee Business Journey should not be confused with the emotional stages of the franchise relationship, known as The Franchise E-Factor, also developed by FRI, which also has six stages: Glee, Fee, Me, Free, See and We.
The irony of these two models is, as franchisees’ performance improve, satisfaction inevitably drops. This gap between performance and satisfaction, called the Zone of Creative Tension, is shown in the chart below.
8 considerations when working with mature franchisees
Here are eight considerations to help franchisors work more effectively with their mature franchisees as they move through the Zone of Creative Tension.
- Mature franchisees can experience relationship fatigue. While the average tenure of a franchisee is seven years, the average tenure of a franchisor executive is three to four years. So it is likely most franchisees will have seen off at least two generations of franchisor executives. Some of these past relationships will have been valued, especially where a franchisee has received significant business or personal mentoring.The trust and commitment needed to build a successful franchise relationship takes time and energy, and mature franchisees will have been through this process several times. Franchisor executives joining a franchise network should consider that their mature franchisees may be thinking, “Here we go again.”
- Mature franchisees hold much of a brand’s cultural history. The longer tenure of mature franchisees means the bulk of the intellectual capital and cultural history of a brand typically lives more with them than the franchisor team. New franchisor teams are often unaware, to their detriment, of how past events have shaped franchisees’ current attitudes and beliefs. Especially initiatives that did not deliver the promised outcomes. This explains the emotional resistance or scepticism often seen toward proposed initiatives, even when these are backed by evidence.
- Mature franchisees can be resentful of younger franchisor executives. Having worked hard in the business over many years, mature franchisees may feel they have “paid their dues” and deserve a level of respect, especially from newer and younger franchisor staff. For instance, generational stereotypes do exist, with Gen X and Baby Boomers believing younger executives don’t respect them or share their work ethic. While Millennials currently only account for around 20 percent of franchisor executives, this group will increasingly be leading a majority of Gen X and Baby Boomer franchisees. Respect and understanding between older franchisees and younger franchisor executives should be encouraged.
- Mature franchisees intuitively “read the play” Given their years of experience, mature franchisees will quickly understand the real-world implications of proposals and decisions. So they tend to become impatient with long-winded or poorly articulated strategies. When listening to proposed initiatives they are more interested in
practical considerations, such as timelines and costs. And they will quickly sense if a franchisor executive is exaggerating or trying to cover up mistakes.
- Mature franchisees need help to stay focused After doing the same type of work in the same business with the same team for six or more years, franchisees can become bored or distracted, looking for new business opportunities or more stimulating ways to spend their time. A business where the franchisee has mentally checked out will experience a drop in performance and standards. This is likely to raise the ire of the franchisor team and other franchisees, and will inevitably lead to some tense discussions.
- Mature franchisees are more likely to suffer a personal crisis. The statistical facts are, the longer a franchisee is part of a network, the more likely he will suffer from a personal or family crisis. Consider that 20 percent of people each year experience a significant emotional disorder, related to depression, anxiety or addiction, while around 30 percent of marriages end in divorce. While a franchisor team may not want to get involved, it sometimes will have no choice because of the negative impact these personal challenges often have on a business and the brand.
- Mature franchisees can be grieving for the good old days. As the business world increasingly operates in a volatile, uncertain, complex and ambiguous environment, franchise networks are adapting by changing their products, services and operating systems. Add to this the rising costs of doing business, and many mature franchisees are now working longer hours than they used to, in order to maintain their financial performance. This can create resentment, resistance to new initiatives and a form of grieving for “the good old days” because the business model is now different than when they were first involved.
- Mature franchisees need support to reinvent themselves. All franchisees will at some stage need to reinvest in their businesses and reinvent themselves to prevent a plateauing of performance. The prospect of having to make fundamental changes can be stressful because these will usually involve inconvenience, cost and risk. Working with mature franchisees as they prepare to move into the reformation stage, requires the same level of care as when the franchisee first started with the business. In a sense the journey is about to repeat itself.
The good news: this reinvention process is a powerful secret for those wanting sustained success.
Greg Nathan, CFE, is Founder of the Franchise Relationships Institute. Find him at fransocial.franchise.org.