What really motivates franchisees

By Sarah Stowe | 29 Oct 2015 View comments

Do franchisees just care about money or are there other factors at play? Here Greg Nathan shares the tale of the franchisor who missed the point.

The new head of franchise operations walked confidently onto the stage. He had spent weeks locked away in his office working on a new financial managment tool that could help franchisees improve their performance and he was convinced they would lap it up. But he was about to miss something important.

"Obviously," he declared with a smirk, "No one runs a business because they enjoy it!" While he expected a laugh he instead received stony-faced stares.

He continued, a little less sure of himself. "The only reason we are all here is to make money, right?" Again no response. I sensed mild bewilderment from the audience. I was watching the franchisees from the sidelines and was pretty sure I knew the reason for the disconnect.

His statement was not entirely true, and saying it with such certainty had damaged his credibility. It was as if the franchisees were thinking "Hang on a minute, I actually enjoy running my business. Does he think we're all just a bunch of money grubbers?"

The session continued with him pushing on with his presentation.

FRANCHISEE MOTIVATION

There is good research to suggest that self-employed people are significantly more satisfied with their work than corporate employees. In our recent Franchise Success Study of more than 2,500 franchisees from 75 franchise systems, 87 percent agreed that running their busines was enjoyable and satisfying.

Don't be fooled into thinking this is because they are all making a lot of money or having it easy. The majority of small business people face higher levels of financial stress and work longer hours for less money than employed executives.

Of course franchisees want to make money and, indeed, building greater personal wealth is the most popular response when they are asked to rank their reasons for buying their franchise. But most are also strongly motivated by other psychological factors, such as the following:

MOTIVATION: FLEXIBILITY

Nearly as many franchisees who rank building wealth as their number one priority say they bought their business primarily to have greater flexibility in how they run their lives.

MOTIVATION: INDEPENDENCE

A significant number of franchisees say they bought their business to escape the politics, rigidity and frustration of working for a boss.

MOTIVATION: ACHIEVEMENT

For many people, their business is a vehicle for them to express their creativity and prove to themselves they can achieve success through their own hard work

MOTIVATION: CONTRIBUTION

Franchisees often see their staff and even their customers as an extension of their own families. Many talk passionately about the satisfaction they gain from developing young people, improving the lives of their customers and making a contribution to their local community.

MOTIVATION: RESPECT

We all have a need to feel respected and many franchisees use their business to build a sense of status and respect in the eyes of their family, friends and colleagues. The importance of respect often only emerges when it is not shown.

Back to our story. How did the franchisees respond to the franchisor's new financial tool? It bombed. Barely anyone accepted it. While there had been past issues that undermined franchisee trust, I am sure a major reason was the franchisees didn't trust his judgement because he had misjudged them.

Left: Greg Nathan, founder of the Franchise Relationships Institute

Read more by Greg: What I have learned about franchising; how to avoid the curse of success; how to beat daily stress; and this video interview  What should you look for in a franchise?