Franchise Management For Dummies
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Franchising has an interesting dynamic missing from most other types of expansion strategies. The owner of the brand and the operating systems has little to no control over how the business is managed and operated on a day-to-day basis. That is the responsibility of the franchisees.

Most franchisors trust that the franchisees will operate the businesses with pride in the system and rely on the franchisees to independently manage the business in a way that consistently delivers to every consumer the brand promise of the system. Franchisors drill and drill their franchisees on system standards to ensure that they understand what the system’s brand means to consumers.

Franchisors do so when first meeting franchisees during discovery day, at training sessions, during franchisee meetings, in the operations manual, in franchise newsletters, in webinars, through the system’s field consultants, and every other chance they get. Franchisors celebrate publicly those who execute the standards well and may expel from the system those who don’t. And in all cases, franchisors constantly emphasize the importance of brand standards in an effort to maintain the value of the brand, support the pride everyone has in it, and ensure that the consumer can rely on the franchise system’s brand promise.

Maintaining a system everyone can be proud of requires that everyone meet the system’s brand standards — at every franchisee operation and at every company-owned operation.

“Selecting franchisees that can independently deliver to the high brand promise of a home care brand like BrightStar Care is what has allowed us to grow and today lead in our industry segment,” says Shelly Sun, founder of BrightStar Care and chair of the International Franchise Association. “During our discovery days we are not selling the prospective franchisee on the BrightStar Care system. Instead they are selling us on why we should trust them to operate in their local markets using our brand. After all, while we license our system to franchisees, and they share a brand with all of the other franchisees in our system, it is our franchisees that are going to be the ones solely responsible for delivering to BrightStar Care’s high brand standards. I have grown BrightStar Care with a personal commitment that while I am not with every patient every day, our selection, training, accreditation requirements and support of our franchisees is to give our patients and their families the confidence required in selecting BrightStar Care to care for their needs.”

As powerful as the brand promise can be in achieving success, not achieving the goal of brand standards consistently can be a franchise system’s greatest risk and threat. It only takes one franchisee who doesn’t “get it” to cause significant damage to how the public perceives the entire system. In the age of the Internet and social media, nothing is local anymore. Every violation of brand standards that negatively impacts any customer experience can potentially become a system-wide problem. Because of that, franchisors and franchisees take brand standard violations very seriously.

Franchising isn’t perfect. Great franchise systems are simply careful and corrective. It is expected in a franchise system that when problems occur at a location, a good franchisee will take immediate and independent action to fix the problem before anyone becomes aware that anything bad even took place. When there is a dirty bathroom or a lack of proper fizz in the soda, good franchisees correct the problem instantly, because such things are important to how the public views the entire system.

When problems aren’t fixed, or they repeat and continue, that’s when franchisors generally step in to address how to bring the franchisee’s business back into compliance. Franchisors do so because meeting brand standards is important — not just to the franchisee’s business, but to everyone that shares the brand with them.

How does this work? Most of the time (unless the violation is creating a public hazard or is considered extreme), the franchisor’s field consultant contacts the franchisee and works with them to understand the brand standard and fix the situation. In mature franchise systems, the role of the franchisor’s field consultant is primarily to provide the franchisee with coaching to help improve the business and bottom-line performance.

Although good field consultants don’t see their job as primarily a policeman for the brand, in a sense they are. An important part of their job is brand integrity, and therefore enforcing standards and assisting franchisees to return to operating standards generally is their responsibility, because they’re the ones visiting the franchisee’s business location.

If problems are severe or repetitive, franchisors usually beef up their oversight of the franchisee’s location to ensure that the franchisee makes the necessary corrections and monitor the situation going forward to make sure the violations don’t reoccur. If violations do continue, franchisors can invoke the remedies available in the franchise agreement, which can include notices of default with a period of time to cure, and ultimately termination of the relationship. However, nobody benefits when it becomes necessary for a franchise contract to be terminated, and although the franchise agreement will contain this right, termination is not that common for many reasons.

About This Article

This article is from the book:

About the book authors:

Michael H. Seid is the founder and Managing Director of MSA Worldwide, the leading strategic and tactical advisory firm in franchising. Joyce Mazero is a partner and Co-Chair of Gardere's Global Supply Network Industry Practice, internationally recognized and trusted legal advisors dedicated to excellence in franchising.

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