Managing franchisee expectations

I thought I was getting an ‘operator’ – a guy who knows about marketing, with energy to work seven days-a-week, who’s smart and understands GPs and has a handle on the current labour legislation. I thought I was getting a fast learner, pleasant at all times to his patrons, shirts always nicely pressed, shoes properly brushed and who’s punctual as well. I also expected he’d treat my staff and I courteously and with respect.

What did I get? Someone who still wants a ‘lifestyle’, is a little introverted and uncomfortable cold-canvassing strangers, who finds it difficult to understand the legalese of the labour legislation and doesn’t have the energy to be on his feet 24 hours-a-day for seven days-a-week. Someone who has an okay but under-performing store, who suddenly seems to know everything about my business and isn’t even grateful for the opportunity to be one of our franchisees.

On the other hand, he thought he was getting ‘real’ support, hands-on expert assistance, a pleasant voice at the end of the line 24 hours-a-day, a sympathetic ear and someone reassuring to hold his hand when things got tough. He thought that delivery problems would be taken care of, and a simple phone call would resolve his staff and labour issues. He thought that management would give him the free time, freedom and lifestyle business owners enjoy.

What happened?

In the eyes of the franchisee, the franchisor seemed so reasonable at the meetings, so genuine. The franchisee was sure he heard the franchisor say that he was always contactable, 24/7 and that he could call anytime. “No problem,” he heard the franchisor say, “would be too small to handle” and all those little labour issues would easily be dealt with. After all, he’s part of a franchise – a system – isn’t he?

During negotiations, a franchisee and franchisor can tend to simply miss each other in the dark – we hear selectively or we just don’t listen. Was it all just laziness, tactics, a ploy to close a deal, to sell another franchise or to be accepted as a franchisee, more driven by emotion than by real old-fashioned honesty, reflection and common sense?

At this time truths become untruths. Simple white lies, exaggeration and embellishments, however innocuous or harmless, are taken literally.

“Just give me six months. You need to be in the store for six months – that’s how long it takes to establish your systems and clientele,” I said.

Well, I could have said seven or eight months. Or maybe I should have said: “Expect that the first few months in any business are critical and the best results are achieved if you devote as much of your time as possible in the store, working diligently and honestly to establish yourself.” It’s what I meant.

But six months is six months. And seven months into the program, and with the store not yet ‘pumping’, “misrepresentation” is mentioned.

“You said six and I’ve been on-board seven already and I’m still not making enough money!”

In response to a very simple no-nonsense question by the franchisor – “Will you be running the store?” – the franchisee invariably replies: “Of course!”

Of course is, of course, clear and unambiguous. But to one party it means being in the store 24 hours-a-day, to the other it means checking up from time to time and “popping in” in the evenings. Running the store doesn’t necessarily mean physically running the store; it could also mean by management or by proxy.

What happened? We didn’t really understand each other. We didn’t explain and elaborate. Maybe we didn’t want to ask, for fear of being told the truth? The problem is that it’s too late when frustration turns to bitterness and confidence in each other’s integrity is on the line.

It is therefore expedient to choose a time for the parties to lay bare the clichés and innuendo. This is best achieved at parity, when the parties are at their most cooperative and communicative. It is at this time when it is appropriate – no, imperative – to delve, prise and elaborate. The very real dangers of over-anticipating and raising false or ambitious expectations must be emphasised.

Specific issues of what is meant by “working in a store” or “I’m available at all times” need to be discussed. Clarifying, understanding and formulating expectations will stand the parties in good stead if the relationship skews out of par, which it is likely to, because to try, at this time, to explain your understanding might prove difficult.

Parity in relationships influence expectations

The equality of relationships is paramount in the determination of expectations and the level of parity in a relationship fluctuates throughout its lifecycle. There will be times when one party tips the scale and is ‘more equal’ than the other, but this might alter, given different circumstances. It’s much the same in all relationships. When people get to know each other, a position of equality is usually achieved given time, respect, compromise and understanding.

It is at this point that courting parties are most likely to marry, for example, and it is at this time that realistic expectations are formulated. It’s the understanding that this person is human, has failings and is less than perfect. A happy marriage works hard to preserve the equality in the relationship, lowering expectations and raising the level of understanding and acceptance.

Courting

In the early stages of the franchisee/franchisor relationship the respective positions of the parties are determined by tactics, titillation and the art of selling and buying. Essentially, supply and demand will determine their stance – and a little poker as well. An unequal relationship will give rise to skewed, unfair and distorted expectations, so we have to first stabilise the relationship before formulating expectations, which when based on mutual respect will be more capable of successful fulfilment.

Initially the franchisor is anxious to impress with the system and the franchisee with his or her suitability to become a successful candidate. Very quickly the assessment process is underway and a myriad factors comes into play. The balance at this time shifts continuously, giving rise to differing expectations determined by perception of status.

The right fit, marrying the best and most suitable franchisees and franchisors, remains eternally vexed. Volumes have been written and programs developed to assist the matchmaking process.

When a franchise system is in demand, a franchisor may select from a list of potential candidates. This affords status and allows for higher and more ambitious expectations. If the system is not so highly sought after, the franchisor may be less choosy and more inclined towards compromise. In this case expectations will be more in keeping with those in a more equal relationship. If there is a need to compromise even further, expectations will be lowered accordingly.

Lower demand, and hence more parity in the relationship, is not necessarily a bad thing. A flexible system will take into account the ebb and flows of the franchise’s popularity, and will provide an environment to accommodate this reality. The necessary support, training and level of involvement will ensure the best possible outcome and expectations should extend no further than what is practical and achievable.

Franchisees too may have to make compromises in relation to the franchisor they select. Affordability, lifestyle, availability, and the selection process itself, determine expectations. The more robustly he or she is pursued, the higher their expectation and the more vulnerable the relationship. The more equal, the more tempered their needs, and the more positive the relationship prognosis becomes. In a position of subservience he or she will initially have no, or very low, expectations, but creeping frustration and anger will remain a distinct danger in the longer term.

Reality should determine expectations, but in fact perception does. Reality should be the unequivocal acceptance of each other’s contribution to the business overall, the brand and the individual or franchised store. Perception is temporary, unstable and based on emotion and status and ought not to be the driving criteria for formulating expectations.

At this time of negotiation and compromise, there should be no excuse for formulating harmful and unattainable expectations and the parties concerned should be encouraged to achieve parity as quickly as possible in the best interest of their mutual aspirations.

Signing

When the deal is concluded and a contract signed by the parties with concomitant rights and obligations, the relationship is briefly at its most equal. Expectations should extend no further than to what is promised in the documents. However, and despite confirming that “no representations are being relied upon”, it is still advisable to stop, consider and reflect, clarify and as best as possible, understand the parameters as enunciated in the legal document, because no sooner than the ink dries on the paper, the danger is that the balance again starts to shift, giving rise to a new and different set of expectations.

Post-agreement

The period after signing the agreements must be actively managed to maintain parity as the relationship is likely to be immediately challenged by emotional issues of remorse, loss of confidence and uncertainty. This is an important time to prove the relationship and build lasting and strong bonds. In many instances there is a lag between the signing of contracts and getting the franchisee up and running – it’s a dangerous time but with an immense upside for those who embrace the potential and apparent opportunity to secure the long-term. It’s a time for a great deal of contact, consultation and concern by all parties.

Managing expectations

Managing expectations is common sense – there’s absolutely nothing smart about this. Unhappiness and frustration in both franchisee and franchisor is borne out of unfulfilled and unrealistic expectations of each other. You can’t really manage your expectations unless you temper or change them. If you lower your sights, you won’t be disappointed and frustrated, as you will effectively be managing them.

If you know what’s expected of you, and the other person knows what you expect of them, and there exists a meeting of the minds, you at least have a chance of escaping the draining disappointment and exasperation of an unfulfilled relationship.

A franchisor should realise that the person sitting across the desk might be less than perfect, that he or she might not be the best operator in the business. After all, why would a banker of 25 years make a great restaurateur, dog washer or lawn mower? Why would this potential franchisee possess bookkeeping skills, be outgoing, friendly and wish to work seven days a week? Why, indeed, would a five-day a week employee relish the thought of doing financial statements, cleaning extraction systems after midnight and dealing with other fathers’ adolescent kids as his employees?

How perfect do the franchisor and the system need to be to satisfy the franchisee’s expectations? What level of support, short of running the business for them, is acceptable as being adequate? A less than perfect franchisor needs acceptance and credit to ensure realistic expectations. It is his system; he did develop it and is justifiably proud and jealous of it.

Just as long as the parties understand the parameters, and expect no more than what is absolutely reasonable, the relationship will work. The franchisor needs, as his expectation, the notion that he is going to have to work with a pretty decent fellow, possibly with limitations, to make him the best franchisee possible. If this can’t be achieved, then his system fails; it is limited and possibly flawed. The franchisee needs as his expectation that he is joining a system and franchise that is also less than perfect, but with enough potential and goodwill for him to realise his dreams and aspirations.

Changing the culture of superiority

Franchisors (similar to landlords) often have in their culture a feeling of superiority; after all, they founded and developed the system, it’s theirs. By way of example, at a recent franchising conference a senior award-winning franchisor made disparaging remarks to raucous laughter and applause about franchisees needing to perform before they could expect assistance from him, referring to them as “UFOs” (under-performing franchise operators).

Franchisors have an expectation of absolute compliance and ordain that the franchisee does what they’re told. They don’t see him or her as a partner, despite paying lip service to this notion during the courting stage. They aren’t recognised or given credence for their importance to the development and promotion of the franchisor, the business, system and brand. The very essence, heart and soul of the business is undervalued and regarded contemptuously, frequently at the franchisor’s peril. Franchisees tend to receive very little credit for the success of a franchise but would invariably bear the brunt for its demise.

So to manage expectations we have to temper and modify them, but for as long as you are in an unequal relationship it is unlikely that your expectations will be those conducive to a partnership. The point is that this relationship, similar to a landlord/tennant relationship, has a culture and air of inequality. Our challenge in the franchising industry is to address this imbalance and start preaching the mutual needs of the parties and their interdependence.

Truthfulness, respect and an appreciation for each other’s value are required. A healthy understanding and acceptance of the partnership principle will allow a change in attitude, which will ultimately lead to a lowering of unrealistic expectations and hence their successful management.

Excellent franchisees are not born, nor are excellent franchisors. Compromise is necessary and the best prospect of success in a less than perfect system is an honest evaluation of each other, and having as a prime expectation to work with the other party to achieve the best possible result.

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