For the best experience please rotate your device to portrait.

Call us today!  1300 722 718

The Franchisor & Franchisee Relationship

Read More

The Franchisor & Franchisee Relationship

February 26th, 2021

The franchisor and franchisee relationship is rather unique in the world of business. The ideal franchisor and franchisee relationship requires effort from both sides, with both parties required to work together to establish a successful partnership. One cannot exist without the other.

As a franchisee, you are investing your own money into a business with an established company, or brand and reputation. In return for your investment, the franchisor provides training, support, marketing plans, and an array of other benefits to the franchisee. As compensation for this support, franchisees operate the business according to the franchisor’s guidelines, which are outlined in a document known as the Franchise Disclosure Document, or FDD.

Opening a franchise is a popular path to take for individuals who wish to own a business but not worry about the stresses of starting entirely from scratch. However, it takes a particular kind of person to work hand-in-hand with a franchise – too much tension, and the franchisor and franchisee relationship could break down. So, what can affect this relationship, and how do you maintain a healthy balance between franchisor and franchisee?

 

Responsibilities of the Franchisor

As we have already mentioned, both the franchisor and franchisee have very important roles to play within a business partnership. The franchisor does have final control over the business operations however, there are certain things a franchisor should always do.

Correctly Assess New Franchisee Applicants

Becoming a franchisee isn’t for everybody, which is why it’s important for the franchisor to correctly assess applicants. This will help keep the franchisor and franchisee relationship strong. But it’s not all a one-way assessment street – Sleepy’s encourages its franchisee applicants to talk to as many current franchisees and ask as many questions as they can during the mutual due diligence process. The Sleepy’s interview process leaves nothing off the table and the prospective franchisee should also approach it the same way. The relationship is about an open and honest culture and correct business ‘fit’ as the relationship must be productive for as long as the franchisee elects to remain in the business.

Welcome and Encourage Feedback from the Network.

A key of a great relationship is the ability to receive and give feedback. As with most relationships there needs to be a balance in doing this as neither the franchisor or franchisee has all the answers all of the time. One of the main attractions of an established franchise (Sleepy’s franchising was established in 2001) is that the systems are in place and have been tried and tested over many years. An added advantage is for the franchisor to have a Franchise Owners and Advisory Council (FOAC). This provides ongoing opportunities for franchisees to provide retail input in all things operational.

Understand and Support Franchisee Needs

For new franchisees the support provided by the franchisor is paramount to their success and, this is not just for the early days following franchise entry. In many instances a new franchisee has no previous experience in business let alone the product they are going to sell or deliver to customers. Training in the systems and product forming part of the overall franchise itself is imperative. Sleepy’s offers at least a two week period of training which is then followed up by the appointment of an Area Leader to continuously monitor the ongoing needs of the new franchisee,

Embrace the New, and Look to the Future

Sleepy’s is very proud of its product innovation and this is borne out with regular new product and improved product launches throughout the year – even in this trying time of Covid impacts. Sleepy’s last two product launches were ‘virtual’ with the only limit being the inability to ‘test’ the feel of the mattresses. Here again, the definitions of mattress feels are well known in the business, FOAC was involved in the testing of the feels (soft, medium or firm) for the whole development journey, mattresses were sent to stores for testing and the network was able to trust the outcome of this detailed process.

 

Responsibilities of the Franchisee

To maintain a positive relationship, the franchisee should strive to keep a good work ethic as well as understand the many faces of franchise ownership, from fees to business structure and beyond.

Have the Right Attitude

Entering into a franchisee position and assuming that money will be made quickly because of brand draw and the support of the franchisor is a big no-no. To ensure a good franchisor and franchisee relationship, franchisees should be driven and ready to hit the ground running. They should also be willing to work with their franchisor by following their marketing tactics and tried and proven methods of business.

Stick to the Business Model

Franchisors make a name for themselves for a reason – so following their lead as closely as possible and remaining within the boundaries of the business model is a proven way to ensure a positive franchisor and franchisee relationship. Straying from a franchisor’s business model can negatively impact a business’ integrity.

Act Honestly and Appropriately

It goes without saying that franchisees should always act with modesty and honesty. For example, underreporting earnings or partaking in dodgy behaviour at the workplace can impact the franchise’s other locations and the franchise as a whole.

 

Qualities of a Good Franchisor-Franchisee Relationship

Certain qualities can go a long way towards positively impacting the business relationship. These include:

  • A growth mindset. Both the franchisor and franchisee shouldn’t rest on their laurels – instead, both should actively pursue growth. A franchisee should be invested in the business, while the business should provide support wherever necessary to keep the franchise moving forward.
  • A sense of collaboration. Franchisees should learn from one another and pass on feedback from fellow franchisees to the franchisor, who should take on board these opinions and suggestions to create a better environment. This produces a stronger system and culture of collaboration.
  • Passion and positivity. Remaining positive in the hard times is important for the franchisor and the franchisee relationship. Franchisors should guide their franchisees through fear and doubt, while franchisees should take every situation as a lesson in learning.

 

In the end, the amount of effort you put into the franchisor-franchisee relationship affects the success and strength of the business as a whole. If you think you’re prepared to take on the world of franchises and become your own boss, why not read more on how to get started in franchising?