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Rollercoaster ride for franchisees

Friday, 29 October 2010 | By Michelle Hammond

Franchisees often experience a “rollercoaster” relationship with their franchisor, according to a leading industry commentator.

 

 

Greg Nathan, managing director of the Franchise Relationships Institute, says franchisees should enter the business with their eyes wide open and be prepared for a rollercoaster relationship with their franchisee.

 

He says the relationship can be broken down into a six-stage model:

 

Glee. Occurs in the first three months. Franchisee is getting a lot of support from franchisor. Franchisee feels very special and looks positively upon the franchise system. Somewhat unrealistic outlook.

 

Fee. Franchisee starts to deal with financial pressures of running a business. Franchisee starts to understand how much money they must relay to franchisor and how much they can keep for themselves.

 

Me. Franchisee starts to build their confidence and capability. As they gain more experience, franchisee starts to question validity of franchise system.

 

Free. Franchisee wants to establish their own systems within the business. Franchisee may challenge franchisor as a way of exerting their independence.

 

Conflict is most likely to occur during this stage, which is typically within 2-3 years of starting the business. A good franchisor will resolve this through open discussion and negotiations.

 

See. A better understanding of the responsibilities of both franchisee and franchisor. Both start to see things from the other’s perspective.

 

We. Realisation that relationship is dependent on both parties, which leads to acceptance.

 

Nathan says franchisees can prepare for the relationship with the following tips:

  • Seek out an advisor or mentor who will question you about your new business and challenge your answers.
  • Have a business plan, which has realistic goals that you can revisit and assess. Use that as a measure of satisfaction rather than your emotions.

 

Franchise Council of Australia executive director Steve Wright says franchisees need to understand that franchising is a type of partnership, which means emotions will come into play regardless of how much you prepare.

 

"But, in terms of the franchising arrangement, there is no need for this to happen, so long as all parties understand the nature of the relationship and work constructively to get the best out of you," Wright says.