Rebuilding Trust between Franchisors and Franchisees February 25, 2021 Tim Tang, Director, Enterprise Solutions Retail Technology false The keys to rebuilding trust in franchising are to consider the consequences, create credibility, and effectively communicate. Primarily based on a Restaurant Franchising and Innovation Summit interview with Daven Aker, president of Pizza Inn Franchise Association Like many marriages, there’s a honeymoon phase in franchising. In the beginning, franchisees are excited about the prospect of creating a new future for themselves. Franchisors are also thrilled to see the brand grow and the business expand. Sometimes the honeymoon ends, and both parties are confronted with the sobering reality of this long-term relationship. Too often, the dream is overwhelmed by business and operational challenges. Franchisees are shocked at how hard they have to work to break even. Franchisors become frustrated when their proven business models are not succeeding. The question is, “How do you recover and rebuild a franchise relationship?” Consider the Consequences “We lost a lot of stores. They lost a lot of good people…. We hit a brick wall.” Daven Akers Ironically, perhaps one of the best places to start in rebuilding a relationship may be to consider the consequences of doing nothing. While most people are reluctant to change, they will do so if enduring the pain of the status quo is harder than changing. Highlighting the pain of the status quo is often an effective first step to encouraging new attitudes and new thinking. The ongoing open hostility between franchisees and franchisors is not free. There are heavy consequences to pay when there isn’t trust in the franchise system. High-performing individuals on both sides are quick to understand the writing on the wall. When the internal fighting continues without signs of resolution, people lose heart and give up. When failure is all but certain, the best course of action is to get out of the situation early. The longer you stay, the more you suffer. As a result, quality individuals on both sides are quick to get out. The higher the quality, the faster the exit. Understanding the consequences of failing to restore the relationship can be a powerful motivator for both sides to reconsider deeply entrenched positions. Create Credibility “Let’s just start having some little wins. Let’s have some victories to build trust.” With each win, opposing sides experience the fruit of collaboration, which inspires motivation for more collaboration and more success. Start the journey with small projects with a high probability of success. Instead of leaping forward with extremely expensive capital investment (e.g., POS upgrade, digital menu boards), consider some smaller operational optimizations (e.g., new employee training curriculum) where both sides can taste success and feel good about the relationship. This is where a franchisor’s intimate understanding of the system and the market brings tremendous value. They know which adjustment returns the greatest benefit for the smallest investment. When there is no trust, even a molehill will look like a mountain. As trust between franchisees and the franchisors grow, the mountains will become smaller. The full strength of franchising is most evident when both parties start pulling in the same direction instead of against each other. Effectively Communicate “If nobody is listening to you, you are not communicating, you are just talking. Communication is not just talking…it’s figuring out how to get people to listen to you.” Effective communication is not only about the content but also about the speaker. For example, one Franchise Business Consultant (FBC) may use the same words as another FBC to communicate ideas to improve operational efficiencies. With the first FBC, the franchisee hears encouraging advice. With the second FBC, the franchisee hears unfair criticism. Because the franchisee is listening with all the baggage that comes from previous experiences with the FBCs, they will respond to the same content with dramatically different interpretations. When a franchisor has difficulty with a particular franchisee, perhaps the first voice to leverage may be the Franchise Advisory Council (FAC) or perhaps another franchisee. Similarly, when the FAC has difficulty with a franchisee, they may consider asking the franchisor to engage. When it comes to effective communication, achieving the desired outcome is a higher priority than following standard protocols of franchisor/franchisee engagement. Summary When it comes to restoring a broken franchise relationship: Consider the future consequences of the status quo to motivate both sides to change Create credibility and new opportunities to collaborate by pursuing small wins. Effectively communicate by using the right speaker whose message will be well received. Watch the full video interview here. To learn more about Hughes franchise services, please visit: https://business.hughes.com/industries/franchise. 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