Category: Acceler8Success Cafe

Domino Effect of a Customer Experience

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Here’s a story that was shared with me during our last recession. I recently thought about how such an experience can ultimately affect a franchise brand (or any brand, business or organization) today. So, franchisors, and anyone else that may want to chime in, please keep the following questions in mind:

  • How would you handle this situation if you became aware of it through a customer complaint?
  • If asked by a franchisee about what to do in a situation like this or how to avoid it completely, how would you respond?
  • Are scenarios like this covered in initial and ongoing franchisee training?
  • Ultimately, if similar situations are repeated, how could it affect the franchisee’s bottom line and how could it affect the franchisors’ bottom line?
  • How should a franchise organization go the extra mile in working and communicating with its franchisees about customers, ultimately, the brand’s customers?

When the story was shared with me, I immediately thought about a question that had been posted on a discussion board about what companies were prepared to do in order to retain customers during a recession or time of economic uncertainty.

Domino Effect

Late one morning, a client of mine was told by his boss to purchase gift cards to be given as prizes for that afternoon’s golf tournament. The company had decided to increase the number of prizes as the response to participate by local businesses was overwhelming. The tournament was to start at 12:30PM and my client was playing in the event and also had several of his clients playing with him. Therefore, it was imperative he make it to the golf course by noon at the very latest.

At 10:35AM he went to a national chain restaurant location and found it closed but saw a lot of activity inside by the front desk. He knocked on the door and explained his need to purchase $1000 in gift cards. He was rudely told the restaurant didn’t open until 11:00AM. My client explained his circumstances and the need to get across town to the golf course and not having to wait 25 minutes would really help him. He asked to speak with a manager. He was told the manager was not available and emphatically told once again, we don’t open until 11:00AM. The door was abruptly slammed shut before he could utter another word.

Instead of waiting, my client went across the street to another national restaurant chain location and found it also didn’t open until 11AM. However, as he was looking in, a cook noticed him from the back, hurriedly walked up front and opened the door. Upon listening to my client’s request, the cook cleaned his hands and with the help of two other staff members in the restaurant, they were able to put together enough gift cards to make up the desired amount and complete the transaction. All within a matter of minutes!

Here are a few thoughts to consider:

My client frequently takes clients out for lunch. Do you think he’ll frequent the first restaurant in the future? Do you believe he would go out of his way to dine at the second location?

The gift cards were given to ten participants at the golf tournament. Do you think they may spend above the gift card denomination when they redeem the cards? And is there a possibility their experience at the restaurant may be their first to the restaurant and if they enjoy the experience, they may visit in the future?

How many people will my client inform about his bad experience at the first restaurant and with how many people will he share his great experience?

The list of questions could easily go on with respect to my client’s boss, others in their organization, participants at the tournament, etc.

Yes, there’s a domino effect with a bad customer experience. However, the same is true with a great customer experience. Maybe even more so when the experience is positively memorable.

But the most important questions to ponder are, how much does a negative domino effect hurt a business or brand during a recession or time of economic uncertainty and conversely, how much does a business or brand benefit from a positive domino effect during that same period of economic challenges. And especially in an era of review sites, social media and influencers?

Franchise Candidates: An Evolving Mindset

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This article was originally published in 2009, as Franchise Candidates: A Changing Mindset and then revised in 2014 as, Franchise Candidates: A Changed Mindset.

Now, revised today under its current title, the article may be more relevant as franchising continues to evolve AND rebound from the pandemic and its unprecedented challenges. Compounding these challenges include the necessity of developing and implementing plans to address the looming recession and how the same could potentially hinder recovery plans and squash growth initiatives.

Franchise brands will continue to explore and invest in more viable, effective lead generation strategies in order to stand out in an increase in industrywide efforts to attract franchise candidates. Think of the increasing number of franchise expos & shows and franchise broker (consultant, coach) networks as cases in point along with the proliferation of new franchise portals and lead generation companies. And let’s not forget the influx of ways to distribute content including podcasts, video, blogs and now, the metaverse!

Further, franchise brands are continuing with their commitment to social media and digital marketing having [finally] realized their positions as integral and effective components of these strategies. Sadly, but not surprisingly, a significant number of brands still have not realized the potential of doing so according to an evolving integrated plan thinking these marketing efforts are solely line-item costs as opposed to an investment/expense hybrid.

Today’s Candidates

A look at today’s franchise candidates will reveal they are more sophisticated, better educated (academically & professionally, as well as self-educated), and more technologically advanced than ever before. Demographically as well with more females and minorities (including a growing number of immigrants and refugees) seeking business ownership as a way toward self-independence. Multi-generational partnerships are adding to the mix.

In addition, and possibly even more so due to current economic uncertainty and challenges, including world events, the mindset of today’s candidates, regardless of background tends to be somewhat unsettled or uncertain in thought. Ultimately, this creates a sense of uncertainty and hesitancy in moving forward. Caution is a common thought expressed by today’s candidates.

To that end, today’s candidates are spending more time researching options and opportunities and doing so at a much slower, deliberate pace. In order to be diligent in the process, more time is being spent online reviewing page after page of information, constantly bookmarking, and moving back and forth from new information to saved information. They’re comparing notes for consistency across one platform to another as well as with other franchise candidates on social networking sites. As well, they’re gaining invaluable insight monitoring online discussion groups and forums.

Ultimately, today’s franchise candidates desire and need to be certain the franchise opportunity is as close to perfect for his or her (or their) situation, and as humanly and practically possible.

Especially after previous recessions, franchise candidates have used their capital gains to invest in franchise opportunities, often being able to leave their principal investment untouched. There was a sense of throwing caution to the wind because they were investing profits, often considered as found money from ungodly profits, at least by today’s standards. Does anyone remember when money markets kicked out 17% returns?

Unfortunately for the typical franchise brand but possibly and rightly so for the future of franchising, a multitude of individuals looking at franchise opportunities today are looking at things differently. They have to. They must.

Many are transitioning corporate executives and mid-level managers staring at the back end of what were previously described as great career paths, now trying to squeak out just five or ten more years before they actually retire, or when they could afford to retire. Facing the challenge of younger talent, new technology, a rapidly changing business environment, along with living longer lives many opt to “buy” another job and explore franchising and small business ownership.

What has Changed?

Here’s the difference between today’s recession, and of those in the past. As huge fortunes have been lost, and large gains have not been realized in current financial markets, today’s candidates are forced to invest all or part of their remaining nest eggs in order to enter the world of business ownership. Of course, most everyone knows and somewhat understands the risks (or that there is risk) involved in owning a business. But in yesterday’s business environment, many franchisees and business owners were “gambling” with profits.

Certainly, no one wanted to lose money in a business venture. But many had fallback positions with funds still in retirement accounts and if they had to, continued employment including second and third jobs.

For many of today’s candidates, failure is not an option because fallback opportunities are fast becoming more challenging. Maybe even more so due to recent views and actions against side-gigs & freelancing and monitoring of Venmo & Pay Pal transactions. Actually, I believe many of today’s candidates might not have even considered franchise or small business ownership in the past. For tomorrow’s candidates that may be even more the case.

So, as many individuals explore their options, they will focus more and more of their efforts online. Franchisors must embrace this fact and continue to dedicate more resources to the internet and expand their efforts within social media to complement and enhance their traditional franchise marketing strategies. They must focus more and more on bringing their messages directly to their audience as opposed to just relying on attracting them, and in an interactive way. By doing so, they’ll realize multiple benefits for their entire system including:

– Developing and strengthening brand awareness with franchise candidates and consumers alike – including those who may not know much, or anything about franchising, or quite frankly about the brand itself.

– Generating franchise leads that are genuinely interested in exploring entrepreneurship and to that end what franchising and small business ownership have to offer.

– Introducing particularly new industry segments that may include opportunities that could be the right fit for candidates to achieve their goals and objectives.

– Establishing an interactive environment of information sharing, communications and education that will become the backbone of future franchise relationships throughout emerging and legacy franchise systems alike.

– Creating positively memorable experiences and the right culture for franchisees (as well as for all brand stakeholders) the foundation for future growth fostered by excellent validation and multi-unit development.

Last, many franchise candidates previously viewed franchising and small business ownership as a way of achieving their wishes, hopes and dreams, regardless of what those may have been. Today, it’s more about goals and objectives, AND necessities. All within franchising must fully realize this and understand the evolving mindset of today’s franchise candidates in order to survive and grow today, and tomorrow.

Startup or Franchise? Focus on what is best for you but choose wisely.

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Owning and operating a small business was once the exclusive domain of the risk takers of the business world. The true entrepreneur had a distinct flair for creativity, innovation and vision. He, and I emphasize “he”, knew how to operate outside-the-box. He knew how to make things happen. Many times, this individual had little choice as he knew from an early age, he would be responsible for shaping his future and for making it on his own. Formal education was usually limited and often just a far-fetched dream. Corporate life was not even an option. Besides, he couldn’t be told what to do, how to do it and when to do it. No way. No how.

Well, times certainly have changed in the business world. More so recently as many individuals are again faced with economic uncertainty. An advanced degree is no longer the fast track to success. As such, many individuals especially more women than ever before are deciding enough is enough. Wanting to control their own destiny they’re increasingly choosing small business ownership as opposed to leaving their future in the hands of Corporate America.

Sure, the financial aspects are vitally important. That’s a given. However, today’s new small business owners describe their number one priority as establishing true balance in all areas of their life. They desire the freedom of furthering their own personal growth but will limit that growth by their abilities and resources, finding it more important to help others improve the quality of their lives and build long-term mutually beneficial relationships; both business and personal. They firmly believe people and relationships to be the foundation of success even more than money itself as they have determined money (profits) will be the end result of their actions.

This is where the road gets tricky as a decision must be made between starting their own venture and assuming total risk or reducing the learning curve and limiting the risk by investing in a franchise where they would be in business for themselves but not by themselves. The key questions posed by many emerging small business owners are asked very emphatically, “Can I achieve my goals and objectives as part of a franchise system? And do I have what it takes to be a franchisee?”

In addressing these questions (and concerns), it’s relatively easy to analyze the two and realize, beyond the viability of a particular franchise brand as addressed in due diligence of the franchise concept itself, the answers are really contingent and dependent upon each other. The answers actually lie in understanding the mindset required to be a franchisee. Once understood, a choice must be made regarding the desired path either as an independent small business owner or as one of the hundreds of thousands of franchisees across several thousand franchise concepts worldwide.

The typical franchisee must be willing to follow and adhere to a franchise company’s business system and ultimately, promote the same within their new franchise community at all times. It must be completely understood the system cannot be changed by the franchisee nor can their business be operated differently than the franchise company requires as the system is proven and uniform across the chain. It’s this uniformity throughout the organization that is paramount to brand awareness leading to company and franchisee success and is the foundation of an interdependent relationship between both parties to the franchise agreement.

A franchise is almost definitely not the right choice for the business maverick or renegade. Certainly, there is an important place in business and in our hearts for these unique innovators. If not, we wouldn’t know Apple or Amazon as they’re known today. Even McDonalds, as probably the greatest franchise of all time that stormed through the country under the leadership and direction of a true maverick, Ray Kroc, would not have been successful without franchisees being required to strictly follow and adhere to the McDonalds system without fail. No questions asked and no room for negotiation.

Entrepreneurs will be around for centuries to come blazing trails as never before. Some will actually plan to choose franchising as an expansion strategy and build the foundation of future franchise concepts. They will provide a choice for tomorrow’s small business owners on whether to go it alone or invest in a franchise. And it will be those franchisees of tomorrow that will follow, promote and expand those systems that will prove to be the steel, bricks and glass built upon the foundation of new franchise companies. Thus, continuing the growth of franchising as it increasingly expands throughout the world, giving back by affording people more opportunities and options in determining the path to small business ownership that suits them best.

8 Key Focus Areas of Successful Franchise Leadership

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From professional athletes to high-tech programmers, every career requires different talents. However, what makes a career as a leader of a franchise system different are skills that do not have to be acquired through rigorous training or years of schooling.

Instead, success in franchise leadership can come to anyone who is determined, dedicated and willing to invest in their personal development—and will pay off tremendously by developing a network of franchisees who respect your leadership traits. Below are key focus areas for individuals to become successful brand executives and great well-respected leaders:

  1. Consistency: As the franchisor, your franchisees will be looking up to you. Being consistent and following through on your word will let them know that they have a leader they can count on.
  2. Planning: Your franchisees are invested in the business, so it’s natural that they will want to know where it is headed and the steps necessary to get there.
  3. Communications: Make certain to share your vision with franchisees as well as with your team in an open, transparent manner to ensure confidence at all levels.
  4. Support: As a franchisor, everyone in the organization is your team member—meaning you have a vital role as a pillar of support and encouragement.
  5. Positivity: Focus on creating a positive space for your franchisees. This will help strengthen your bond and let them know you have their back.
  6. Respect: Every franchisee makes mistakes—it’s just a part of the business. Making sure your franchisees know you still respect them even when they slip up will go a long way. The same will be true for franchisor mistakes, but only if earned through mutual respect.
  7. Face Time: You can’t be expected to visit every franchise location every day. However, the occasional impromptu visit will help you learn more about the day-to-day operations and struggles of each individual location—and let them know you’re invested in solving their problems.
  8. Passion: Franchising means getting to work with talented, passionate colleagues who love what they do. Believe in the brand and believe in your franchisees—your passion will shine through and inspire them, as well.

Fear And Consequences of Failure: A True Story Retold Once Again

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I’ve been asked time and again to post the following article that I’ve written about in 2011 regarding my own personal experience as a multi-unit franchisee where I succeeded at first, only to crash and burn later on. Over the years, this article has been posted on several of my blogs, picked up by numerous other blogs & online publications, and discussed on various podcasts. I have received numerous comments and inquiries about the article and my experience as well as individuals sharing their own personal experiences and requests for assistance. Although I cringe at the thought of any business failing, I admire and respect the fact that franchisees and franchisors alike (small business owners and individuals & teams running larger organizations as well) know when to put their pride aside and ask for assistance, and I always look forward to providing my experience and expertise to help determine a practical resolve to their problems. 

I’m proud to say this article has been instrumental in helping a number of businesses keep their doors open and work towards recovery. On the other hand, I’m also sad to say several businesses were not as fortunate, but at least the owners were able to exit with dignity and in few cases, with less liability than they previously thought possible. And, in one case, the business owner actually exited in the black when we were able to facilitate the sale of her business when she previously thought about just walking away. Considering the difficulties many small business owners, restaurant operators, franchisees, entrepreneurs and organizations have experienced over the past two years and with challenges continuing, I’m sharing this article once again.

Fear and Consequences of Failure (unedited from 2011)

I can personally relate to the trials and tribulations of owning franchise businesses as I have “been there and done that” and have experiences on both ends of the spectrum from achieving overwhelming success to dealing with bitter failure. I have definitely come to understand the fine line between success and failure in trying to nail down the American Dream.

I know it is sometimes counterproductive to even mention failure which is why the subject is always avoided and never discussed. Yet, it’s out there and it’s real. Once franchisees face the possibility of failure and its very real consequences, they can be motivated to understand that failure is not an option and commit 100% to a plan that addresses immediate problems and provides solutions accordingly. Even if it’s necessary for the plan to be quite drastic or aggressive due to prevailing circumstances, franchisees that unequivocally realize that failure is not an option are prepared for immediate action.

Let me emphasize one point. Franchisees should not view poor sales and disappointing profits as either potential or immediate failure and stick their heads in the sand. I made that mistake in the past and suffered the consequences. Instead, franchisees should build upon the courage it took to become a franchise business owner and recommit to success as they did when they first took the entrepreneurial plunge.

They need to remember their wishes, hopes and dreams that prompted the decision to own their own business. They need to remember the admiration of family and friends when they heard about the new venture. They need to remember the excitement when they actually signed the franchise agreement.

Unfortunately, there’s a very distinct possibility the root of the problem is embedded in the franchisee’s actions, non-conformity to the franchise system and unwillingness to face reality. However, as there was some shining light evident during the franchise award process, it may not be a totally lost cause if the franchisee is made to completely understand the implications and consequences of failure.

As franchisors are faced with the potential of closed units [during this recession] that may be the result of things out of their control, it’s imperative they don’t lose even a single unit just because a franchisee just flat out needs a snap back to reality. It’s worth the effort.

Let me clarify something. I failed as a franchisee. Not because of anything the franchisor did or didn’t do but because I put and kept my head in the sand and did not face reality. I could go on and make excuses about things that happened around me but at the end of the day I could have turned things around if I got my own head out of the sand, made some difficult decisions and took full, immediate responsibility.

Unfortunately, I was scared of failing. I was afraid of what people would think. I was ashamed at what other franchisees, ones I put in business, would think of me. I couldn’t even think of facing my family. All lame excuses for not taking responsibility. Maybe a hard swift kick you-know-where would have helped.

Did I mention that I previously ran the franchise company where I failed as a franchisee? Did I mention I was elected by fellow franchisees, President of the National Advisory Council? Did I mention that I owned and operated five franchise units?

If I had clearly understood the implications and consequences that were looming on the horizon and if I was able to get my big ego out of the way and address things head on, maybe I could have survived. Maybe I could have at least implemented an exit strategy that would have, in some small way, paid back the loyalty and support of my employees, family and friends.

In the end, I may not have survived because it may very well have been too late when and if I finally took action and responsibility. But maybe I could have at least exited with some dignity. Also, I could have saved many innocent people a great deal of hardship, embarrassment, wasted effort and ill-spent resources if I did face reality. This includes my family, my employees and yes, my franchisor; all who believed in me.

Yes, it was a tremendous learning experience but not one I would bestow or wish on anyone. Now, all I can do is to offer my experience to anyone in the franchise industry that needs assistance. As we [prepare to enter 2012] in the realms of economic uncertainty, I’m certain already difficult situations have been compounded but I’m confident a snap back to reality could only help. If just one franchise business is saved from the consequences of failure, then we’ve made progress. Progress we’ll continue to build upon.

Strengthen Franchise Relationships by Saying “Thank You”​

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To celebrate Franchisees, I cite the lyrics to the Alabama hit song, “Forty Hour Week”. It’s my way of expressing gratitude for the many, many franchisees and their employees that do their parts every day to make, not only their franchise brands run each and every day, but also our great country. We often take so much for granted when things run smoothly, almost seamlessly. Of course, during COVID there were challenges, but many franchisees did what they had to do, and persevered.

And then, it hit me as I reread the last verse of the song…

There are people in this country who work hard every day. Not for fame or fortune do they strive. But the fruits of their labor are worth more than their pay. And it’s time a few of them were recognized.

Wow, how could I miss something that should be standing out front and center? Is it obvious? Do you see it yet?

Okay, let me make it easier to spot. In the verse above, change “people” to “franchisees” – Ah, there it is! There are franchisees in this country…

At times, there is some discourse (maybe more than we’ll admit) today around the franchise relationship and it really doesn’t need to be the case if the focus is clearly on relationship basics, and that starts with appreciation. Remember, many franchise organizations refer to their system as a family. Isn’t being family enough to expect appreciation?

Think about when a franchisee signs their franchise agreement and remits the franchise fee – they’re quickly told, “thank you” and they’re even recognized in the brand’s newsletter and also in press releases announcing them as a new franchisee. Yes, that’s awesome.

Now, ask yourself, is that the last time franchisees are actually thanked or recognized? Most likely that is often the case. But I’m not just referring to systemwide accolades. I’m talking about someone from the brand’s leadership team picking up the phone for a quick call or planning to visit when in the franchisee’s area. Or at the very least sending a hand-written note just to say, “thank you” and that they’re appreciated for their investment in the brand, for how they represent the brand, and for how they’re committed to protecting the brand.

So, why not jumpstart an improvement in your franchise brand’s culture by starting with “thank you” as the norm, rather than as the exception?

There are franchisees in this country who work hard every day. Not for fame or fortune do they strive. But the fruits of their labor are worth more than their pay. And it’s time a few of them were recognized.

What Would Pop Do?

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I frequently think about a particular interview when I was asked my opinion about why some Private Equity firms fail in their efforts at operating what was originally considered a successful franchise system, while others take the system to even higher levels of success…

As you’ll see by my response below, I actually started at the end and worked backwards. But in the end, there is a common theme and it’s built around relationships, or lack thereof. Certainly, systems play a big part in the success equation but losing sight of “people” is a sure way to create a disconnect, even within the most perfect systems. My response and theory may be too simple for many to agree, but I do feel it lends towards the foundation of any successful business in one way, shape, fashion or form.

All too often you hear about founders buying out the Private Equity firm. I personally, know of two that have done so recently, and for different reasons. And even though only one was a franchise company, there was a common denominator in the circumstances that had developed within the organizations that led to the founders deciding to buyout the PEs… the “parent” company lost sight of its relationship with its “employees & franchisees” and the end-users, “clients & customers”.

My opinion is that “true” mom & pop operations are typically built upon the foundation of relationships, and it’s the strength of those relationships that build the foundation of a strong organization complete with common beliefs, values and mission. It definitely becomes an interdependent relationship. I have rarely seen that occur when PEs get involved where it’s more numbers, numbers, numbers. Don’t get me wrong, numbers are important. But it’s the lack of balance between driving towards making the numbers and building relationships that is often missing. Ultimately causing rifts in the organization with the customer or client feeling the lingering effect of diminishing service levels.

Let’s look at a similar situation that occurs all too often in a very typical mom and pop setting even without the inclusion of a PE in the equation. Mom and Pop have run a very successful business for 25 years. They have done quite well over the years, building the business very methodically, never taking on too much debt at any one time – but still progressive in growing to meet customer demands. Sure, their product or service stands out as excellent. But it’s the relationships they have fostered over the years that have truly made the business successful.

Looking ahead, Mom and Pop have structured a very strong succession plan. Junior has gotten his MBA and is primed to take over the business. In fact, Pop has insisted that Junior also work five or so years out in the corporate world so he can gain some hands-on experience, and mature. Mom and Pop have met with their attorney and CPA and have everything in place for Junior to take over the family business. What’s next is a situation that occurs all too often when Mom and Pop are no longer in the picture.

Junior, complete with new ideas, a wealth of education, and some successful business experience, begins operating the business. He introduces new technology, replacing the antiquated systems that had been in place since day one. Junior streamlined operations, improved inventory control, and basically tweaked here and there to the point that the business appeared to be transformed to a business that appeared bigger than it was – almost like it was a part of a national chain.

Initially, customers loved the transformation and the buzz within town was full of praise and admiration for the family. But what transpires over the next few years as things begin to change as the business becomes less personal and more structured is actually the beginning of the end.

Strict policies have been put in place for both customers and employees. Product and service lines have become more defined, but at the expense of some customer favorites being eliminated. Customer service, having become more automated has reduced the necessity of a large staff. In-store signage has taken over where courteous employees once stood. Well, the list goes on… to the point of the business losing sight of people and relationships. Employee turnover continues to increase. Customers’ faces are no longer familiar. And, when a true national chain opens on the edge of town, foot-traffic starts to diminish.

You see, with all the great succession planning that Mom and Pop painstakingly put into place, they missed a key component to the success of the business. And when Junior transformed the business, he also lost sight of that key component. It basically comes down to WWPD… “What Would Pop Do?”

WWPD is basically the relationship part of the business. To put it simply, Pop knew when to put his arm around an employee. Pop knew when to come out from behind the counter. Pop knew how to make a customer feel special. Pop knew to carry certain items that some of his “regulars” loved. And, again, the list goes on… Pop knew, but Junior didn’t. It’s the classic example of the disconnect between WWPD and MBA, and it’s a similar disconnect between a founder-run business and a PE-operated business.

Now, I’m not saying that it can’t be done, or shouldn’t be done… meaning the sale of a successful business to a PE. Absolutely, it’s the American Way! Instead, along with the financial and legal succession plan needs to be a visionary succession plan that basically outlines and teaches, “What Would Pop Do?”

So, in addressing the original question, let’s just insert Mom and Pop for the franchise, the employees and customers for the franchisees, and Junior for the PE… and the scenario fittingly plays out.

A Few Thoughts on Developing Corporate Culture

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According to author, Kris Dunn in her blog post, Keys to Developing Corporate Culture, “Corporate culture is all about really what you value as a company, what you value in terms of how you serve your customers, how business gets done, and what you value from a performance perspective across your talent base.” Although he concedes that there is no single definition that could be overlaid across all of corporate America, Dunn stresses that, at its core, culture represents the manifestation of the guiding principles that underpin every part of your company.

“Like style,” Dunn says, “you kind of know good culture when you see it.”

Culture is less about “free soda and ping pong tables” and more about performance, Dunn argues. Keeping a fun workplace atmosphere may be part of the image that your company presents, but what culture should actually be built on is an unrelenting focus on factors that “create a DNA map of the type of employee that a company looks for.” Find the characteristics that lead to high-performing team members, and your company becomes stronger and more successful.

A while ago, I had shared Dunn’s blog within various LinkedIn groups and posed two questions, “What are your thoughts on developing corporate culture? Would you be willing to let go of top performers if their management style is detrimental to your culture?” Here’s what various members of the groups had to say…

“There is no question that any company is only as strong as their weakest link. Too many leaders wait too long before they let poor performers or those with poor attitudes go. They are afraid of legal repercussions or more commonly, those “difficult conversations.” The biggest error is not clearly knowing and expressing the caliber of work expected from the team, giving the team the tools to be successful, and them holding them to account. Leaders don’t consistently document performance. They wing it. Just because someone is in charge doesn’t mean he or she has the knowledge or training on how to create and implement a company culture that endures and helps the company thrive.”

In our business, not one person can be above the values or culture that we have established. Most franchises, good ones at least, have that culture built into the fabric of their operations and in everything that they do. It’s one of the reasons that people invest in therm. It is what helps make them successful. I have had to relieve some top performers before because their method or interpretation of our culture was not in alignment with what was important at the client level and the staff/store level. It looks on paper like it may be painful to the business, but in each case, it was the best decision for the business. Ours is an owner/investor model so day to day is run by an on-site manager so it isn’t always apparent at the 5000-foot view. To answer the question above, if members of our management teams at the store level is not in alignment with our culture and they are successful, it is generally in spite of themselves and our stores and staff are bigger than any one individual or leader.  Make the move and upgrade.”

“If the answer is no, then you have no culture, and culture doesn’t matter to you. Being a top performer is a part of our culture. Diversity is part of our culture. Acceptance of diversity is part of our culture, but style isn’t culture. If style is part of your culture, maybe your culture is superficial? We used to call that an office full of empty suits. If diversity, acceptance of diversity, and being a top performer aren’t important cornerstones of your culture, you may have a dysfunctional culture. The answer has to be yes. It’s a trick question, right?”

We’re looking forward to additional thoughts and perspective. What are your thoughts?

Developing and Cultivating the Right Culture

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Recently, in a discussion about organizational culture, the exchange was quite robust and included the following statement from a CEO participant who stated, “The challenge becomes determining where and when things might be out of alignment. So, developing the methodology about how to realign must be developed and committed to early on.”

To the CEO’s point, the development and management of organizational culture is much like that of developing and cultivating a brand…

It must be planned.

It must be nurtured.

It must be allowed to grow.

It must be invested in.

It must be protected.

It must be promoted.

It must be cherished.

It must be the center of the universe.

I believe it’s relatively easy to determine when and where things are out of alignment in a franchise organization – disgruntled franchisees, refusal of franchisees to develop additional locations and instead are investing in other brands, frequent franchisor employee turnover… just to name a few that would be very apparent. Obviously, these are the results of, but not the root of the problem that may have caused things to move out of alignment. Mostly the problems occur (and fester) due to poor communications and lack of transparency between franchisor and franchisees. Inconsistent messaging adds fuel to the fire. Basically, similar problems to a marriage or other types of relationships that fail.

As for methodology to realign, that takes full commitment and focus from all parties to the relationship. However, in a franchise relationship it takes the franchisor to take the bull by the horns and lead the charge. The franchisor must spearhead the initiative to create open, honest, transparent communications, and especially through difficult scenarios. Franchisees have made a significant investment in the brand, and they must be kept aware of the good, bad AND ugly. Two precarious points include: How much is too much? Do franchisees need to know everything? Getting back to square one, a benchmark of sorts is critical as emotions running high will dictate more rather than less. Actions must speak louder than words!

At workshops and seminars, as well as within coaching and consulting projects, I talk a great deal about creating and delivering positively memorable experiences at all times. I believe it applies to the franchise relationship as much as it applies to customers & clients. I won’t get too deep here as this past week I shared my thoughts on the topic in this newsletter and in the past in the IFA’s Franchising World magazine. Instead, I will share my thoughts on a guideline that will help monitor the experience factor in any transaction or relationship. This guideline is what I refer to as, “The Emotion Circle”.

The Emotion Circle

There are seven key steps within the circle. Think in terms of a clock with the top being the starting point. This is where the relationship begins. Once something occurs that doesn’t meet expectations the first reaction is surprise. From there, emotions may escalate to the next steps of disappointment and doubt. Or it may not escalate but another “incident” will definitely move the needle along. Sometimes, even an unaddressed issue will move it.

Of course, it is inevitable things happen, and expectations aren’t met or even understood. This is why proactive, open, transparent communications are paramount. If the issues are discussed openly and frankly in a respectful way, the needle can be moved back to the 12 o’clock position with minimal or no chance of fueling a fire. We must keep the emotions within the blue section of the circle. This is key!

However, if issues are not addressed in a timely and respectful manner the fire burns rapidly and on occasion to the point where it flares up and / or quickly burns out of control. And, just like wildfires in the forest, these fires can and will jump across roads from house to house and community to community with devastating results.

If not brought under control in a swift manner, the next emotions are often expressed in rapid order through the pink sections and into the red circle. These include frustration, anger, hostility and yes, remorse (think “buyer’s remorse). Ultimately, the end result is broken trust and as we know, trust is the backbone of ANY relationship. Moving back from the pink section is extremely difficult, but not impossible. However, once emotions escalate into the red section, the possibility of salvaging the relationship is almost impossible. Trust will need to be earned back without any assumption on the part of the offending party that it will.

In order for realignment to occur throughout the emotion circle, issues must be addressed expeditiously. It’s paramount that trust be rebuilt before further escalation of emotions. It’s certainly not easy – but it can and must be done. However, it does take huge, ongoing commitment to be established, to remain in place, and to be built upon.

An important question to ask yourself or of an organization’s leadership – Are we truly committed to our relationships? If the answer is not a resounding yes, rest assured trouble is on the horizon. As such, it’s essential to find out the reason(s) and immediately take action to correct. The foundation of developing and curating the right culture depends on it.

Are You Confused by Franchise Terminology?

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Many, including myself, refer to franchising as an industry… even though we know it’s really not an industry. A business model is probably one of the better definitions, but what does that really mean?

The International Franchise Association (IFA) defines a franchise as:

A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising.

When referring to a franchise, even many within franchising choose from a variety of terms as a point of reference – franchise organization, franchise system, franchise company, franchise brand.

The IFA definition continues:

There are two different types of franchising relationships. Business Format Franchising is the type most identifiable. In a business format franchise, the franchisor provides to the franchisee not just its trade name, products and services, but an entire system for operating the business. The franchisee generally receives site selection and development support, operating manuals, training, brand standards, quality control, a marketing strategy and business advisory support from the franchisor. While less identified with franchising, traditional or product distribution franchising is larger in total sales than business format franchising. Examples of traditional or product distribution franchising can be found in the bottling, gasoline, automotive and other manufacturing industries.

Of course, there are also the varying terms relating to the franchise relationship – franchisee, franchise partner and not to mention the slang, zee. And to the other side of the relationship – franchisor, head office, corporate office, parent company… and yes, zor.

And what’s the difference between franchisor and franchiser?

Confused yet? Maybe the IFA definition will help clear the air:

Franchising Is About Relationships

Many people, when they think of franchising, focus first on the law. While the law is certainly important, it is not the central thing to understand about franchising. At its core, franchising is about the franchisor’s brand value, how the franchisor supports its franchisees, how the franchisee meets its obligations to deliver the products and services to the system’s brand standards and most importantly – franchising is about the relationship that the franchisor has with its franchisees.

Franchising Is About Brands

A franchisor’s brand is its most valuable asset and consumers decide which business to shop at and how often to frequent that business based on what they know, or think they know, about the brand. To a certain extent consumers really don’t care who owns the business so long as their brand expectations are met. If you become a franchisee, you will certainly be developing a relationship with your customers to maintain their loyalty, and most certainly customers will choose to purchase from you because of the quality of your services and the personal relationship you establish with them. But first and foremost, they have trust in the brand to meet their expectations, and the franchisor and the other franchisees in the system rely upon you to meet those expectations.

Franchising Is About Systems and Support

Great franchisors provide systems, tools and support so that their franchisees have the ability to live up to the system’s brand standards and ensure customer satisfaction. And franchisors and all of the other franchisees expect that you will independently manage the day-to-day operation of your businesses so that you will enhance the reputation of the company in your market area.

And franchise locations are independently owned and operated. Yet, the franchise relationship is interdependent… or at least it should be interdependent and not dependent or independent upon… Well, you get it, right?

Franchising Is also a Contractual Relationship

While from the public’s vantage point, franchises look like any other chain of branded businesses, they are very different. In a franchise system, the owner of the brand does not manage and operate the locations that serve consumers their products and services on a day-to-day basis. Serving the consumer is the role and responsibility of the franchisee.

Even more confusing is the difference between a franchise and a license. The IFA explains it correctly below but it’s still confusing unless you can follow the bouncing ball:

Franchising is a contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to consumers. While every franchise is a license, not every license is a franchise under the law. Sometimes that can be very confusing.

Now let’s look at the people serving the franchise community. Yep, franchise community is another reference for the franchise list above but let’s move on. Franchise consultants, do they sell or consult? How about franchise brokers, coaches, sales agents, sales representatives, and again, franchise consultants.

Is there embarrassment in being involved in what really is a sales process? To that point, is a franchise sold or awarded? If awarded, along the lines of receiving an award at the Oscars (no Will Smith / Chris Rock jokes, please!), maybe the term should be presenter?

Of course, there are references to segments within franchising such as master franchising and sub-franchising… Which one is correct? And isn’t the sub-franchisor actually the master franchisee? I guess it all depends on which end of the relationship one is on. In any event, these terms aren’t being used as frequently as in the past. Maybe it’s because correctly defining these relationships were confusing. Again, unless you could keep up with the bouncing ball.

Back to the IFA definition:

The definition of a franchise is not uniform in every state. Some states for example, may also include a marketing plan or community of interest provision in the definition. The definition of what is a franchise can vary significantly under the laws in some states and it is important that you don’t simply rely on the federal definition of a franchise in understanding any particular state’s requirements.

Put another way, in a franchise a business (the franchisor) licenses its trade name (the brand, such as BrightStar Care or Sport Clips) and its operating methods (its system of doing business) to a person or group operating within a specific territory or location (the franchisee), which agrees to operate its business according to the terms of a contract (the franchising agreement). The franchisor provides the franchisee with franchising leadership and support and exercises some controls to ensure the franchisee’s adherence to brand guidelines.

How about now – confused yet or are things starting to appear clearer? But wait…

Moving down the chain there are franchise suppliers, service providers and vendors… What’s the difference? Preferred or approved? Is there really a difference?

Franchise services means what, and providing services to who? Franchisee to end-user? Franchisor to franchisee? Franchise service provider to franchisor and/or franchisee? Or are they suppliers as is the reference to an IFA committee of franchise service providers that are referred to as suppliers?

Same can be said of franchise marketing, right? Does marketing in a B2B or B2C scenario but within a franchise environment mean that it’s franchise marketing? Or is franchise marketing actually marketing to franchise candidates?

Speaking about franchise candidates, when is a candidate actually a candidate and not a lead, prospect or just an interested party? Does this fall under franchise sales or franchise development? Or back to the sale versus award question, should it fall under franchise awards. And who’s in charge – the VP of Franchise Sales, VP of Franchise Development, or VP of Franchising? And along the line of the many creative titles nowadays, maybe VP of Franchise Awards??

Then there’s reference to franchise professionals. Is a franchisee a franchise professional? How about if the franchisee is a multi-unit franchisee with 25, 50 or 100 locations? How about a franchise attorney (or is it franchise lawyer)? Are they franchise service providers or seemingly ridiculous to say, suppliers?

If a franchise executive is a franchise professional, at what level of management or leadership does one begin to be considered a franchise professional? How about within the franchise organization itself? How about others within the franchise corporate office if their support is purely administrative as opposed to an admin that actually communicates with franchisees?

Oh, and should the CEO or others senior executives of a franchise company be considered a franchisor as we often refer to them as such at franchise events? And if a franchisor operates corporate locations, should they also be considered franchisees? Yes, that’s a stretch… sorry, but I often hear franchisors claim their locations are treated just like franchise locations and remit the same fees for marketing and hold positions on franchise advisory boards, etc.

Let’s take a last look at the IFA definition:

Investing in a franchise or becoming a franchisor can be a great opportunity. But before you select any franchise investment and sign any franchise agreement, do your homework, understand what the franchise system is offering and get the support of a qualified franchise lawyer.

Although this author firmly believes the International Franchise Association does a great job on behalf of franchising and I’m not sure I could even think of franchising without their tireless efforts to protect franchising, I do believe some efforts must be focused on minimizing confusion around franchising rather than adding to it.

From personal experience with highly educated senior executives at American Express around their ignorance about franchising, my concern always reverts to the individuals investing their life savings not clearly understanding what it is that they’re agreeing to. I’m also concerned that because of confusion, many don’t even consider a franchise as a viable opportunity. But then again, as many franchisors claim and heavily promote, a franchise is like a family, I’m ecstatic more franchisees don’t have BurgerIm as their “family” name.

After all, isn’t it ironic how franchising is the replicating of a system with focus on consistency in image, appearance, product and service from one location to another? Yet, there’s little consistency in the terminology used to define many aspects of franchising.

Note: The IFA definitions referred to above may be accessed HERE. All kidding and sarcasm aside, it really is great information and again, I do truly appreciate all IFA efforts!