Franchisors Financially Helping Franchisees: A few thoughts

helpRecently, I posted a discussion on the International Franchise Association group on LinkedIn about the topic of “Franchisors Financially Helping Franchisees.” Surprisingly, there were only a few responses on such an important topic.

The first responder stated, “…considering the economic conditions we’re dealing with. I’m interested in hearing what others are doing in this area.” I agreed and stated, “I just hope the franchise industry doesn’t put it’s head in the sand and expect things to be status quo. As I’ve mentioned in one of my blog posts, putting one’s head in the sand leaves a very important ass-et vulnerable for all the world to take advantage of. Not a pretty site!”

Anyway, I thank the franchise professionals that did share their thoughts. Every little bit helps in our dedication to franchise success at all levels.

A Director of Franchise Relations at a national franchise concept wrote: “We feel it is important to do what is within our means to help our franchisees succeed. After all, isn’t their success our success? We have waived royalties for franchisees that have experienced a slower ramp up, provided they are doing everything called for within our system.”

A Director of Franchise Development at a national franchise concept added: “We put a ton of resources behind the support we offer our franchisees both at the initial launch stage, and on an on-going basis. As such, we’ve viewed royalty waivers or reductions as methods that may help reduce some bleeding, but not as a means to turn things around. We would rather focus additional resources on local marketing and sales driving efforts designed to build sales and the franchisee onto solid footing. Cutting royalties only address on part of the problem without really getting to what may be the cause of the lower than expected performance in the first place. [Landlords] that indicate they want to see a franchisor reduce royalties as a condition of offering rent relief may not be aware of the investment already being made by the franchisor to help build sales. Ultimately, in our business, it is the ]landlord] that needs to live up to their end of the bargain in bringing traffic to the centers where our franchisees operate.”

And, the President of a business development organization rounded out the discussion by stating: “I think the decision to help and how to help is very complex. The franchisor has a lot to lose when a franchisee fails but not every franchisee will survive the current economic climate. If the franchisee is truly following the book, is capitalized as required, is willing to listen and not resist/mistrust the efforts of the franchisor, I believe the franchisor has an obligation to go well beyond what they might otherwise do. Sit down, assess the situation, formulate a mutually beneficial plan, get to work. A franchisor must never forget that the best and cheapest PR comes from its franchise system and that it cuts both ways!”

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Are Relationships With Your Franchisees Strengthening Your Franchise?

The following is an article submitted by Guest Author, Katryn Harris. Katryn is the CEO of Open Box, a company focused on helping franchisors use technology to build their franchises. She brings her background in management, business strategy and communication as well as her team of technical experts to work with franchisors, ensuring that their technology fits their business strategy and moves their franchises forward. Be sure to check out Katryn’s blog at

Are Relationships With Your Franchisees Strengthening Your Franchise?
as submitted by Katryn Harris

business-relationshipsAs a franchisor, you are in the business of building relationships; relationships with your franchisees, with your potential franchisees and with your end customers. Relationships build sales, build your brand and build your franchise.

The franchisor /franchisee relationship has interesting challenges that may not be seen elsewhere in the business relationship world. It’s not employer/employee, it’s not quite a partnership, and there are elements of both financial dependence, and inter-relatedness. The franchisor & franchisee depend on one another, and are both accountable to one another, and the success of each depends strongly on the success of the other.

One of the key success factors for good relationships (with both potential & existing franchisees) is to set your boundaries and expectations clearly. Some franchisors are more or less consultative, some are more or less friendly with their franchisees, some are more or less clear from the outset on expectations and accountability (and whole books have been written on which of these is right and which is wrong). I highly recommend
a) Knowing the pros and cons of leaning towards either side of the spectrum (do your homework)
b) Being clear about where you sit along the spectrum, and
c) Communicating where you sit to your franchisees and, particularly to potential franchisees.

Whether you are more or less consultative in your relationships is actually less important than knowing why you have chosen that position, being clear about where you stand, and then finding franchisees who are looking for that particular degree of consultative relationship. If you can attain these three, the franchisor/franchisee relationship will be strong and rewarding for both of you & lead to strong franchise growth.

One great resource for building your franchise through strong relationships is Greg Nathan and his books about the franchisor/franchise relationship, such as The Franchise E-Factor.