The various phases of franchise success

Over the last 11 years I have worked with and experienced the highs and lows of several franchise relationships and have come realize that all franchise partners experience the same journey—some more so than others—but they all go through the phases.

This journey has fascinated me to the extent that I have highlighted both the pitfalls and the successes of franchise journeys to all franchise prospects in our business. I have a firm belief that all prospective franchise partners need to not only understand the “technical and product” aspects of what makes a franchise successful but also the mindset that is required to be successful as a franchise partner. Because of this, I spend a certain amount of time “educating” potential ActionCOACH franchise partners on what it takes to be a successful business coach, how to build strong relationships with other franchise partners as well as with the franchisor. The better prepared a franchise partner is for the role of a franchisee the better for all involved.

A couple of years ago I attended a workshop with Greg Nathan, Founder and Chairman of the Franchise Relationships Institute and was impressed with the manner in which he described the phases of franchise relationships as I could relate to all the phases during my journey as a franchisor. As mentioned above, each franchise partner will—in my opinion—go through these phases and some more so than others. I will expand on these phases below whilst adding some additional phases:

Phase 1: Due Diligence Phase – Apprehension
During this phase the potential Franchise partner has a range of mixed emotions that range from excitement to fear. Excitement insofar as they are now clear and in their mind that they know what they are going to be doing in the future, there is also a part of them that, despite full due diligence, is filled with fear or apprehension.
As a Franchisor, it is very important to recognize this and to keep your Franchise partner focused on those factors that have proven to deliver success in your Franchise. It is very important to entrench the FTS Factor – Follow The System and you will achieve success.

Phase 2: Glee
This is the early phase of the journey as a Franchise partner, and is preceded by having completed the full Franchise training program. During this phase the Franchise partner is “invincible” and is ready to take on and change the world. Relationships between Franchisor and Franchisee are strong and are characterized by high levels of commitment by the Franchisor as well as the Franchisee. The Franchise partner has started his business and has seen early success and growth. They are fully committed to their success as well as to the success of the brand. This phase can last for 12 -18 months.

As a Franchisor, it is important to build a very strong relationship with the Franchise partner, meet regularly to assess the health of the business as well as to identify early signs of tension or areas of discontentment. As a Franchise partner, ensure that you stick to the system and be fully transparent with your Franchisor on all issues affecting your business.

Phase 3 – The Fee Phase
During this phase the Franchise partner becomes increasingly aware of the costs being paid to the Franchisor, namely, Royalties and advertising. The Franchise partner starts questioning what they are getting in return for the fees paid. In addition, they start questioning whether they would not have been able to do better if they went on their own as opposed to joining the Franchise team.

As a Franchisor, it becomes important to communicate to the Franchise partner what the fees are being used for. In addition, I try to dispel the concerns of the Franchisee by taking them back to why they decided to join the Franchise system in the first place. It is my experience that often Franchise partners forget why they joined in the first place. Secondly, I discuss with them Royalty and Advertising costs within the Franchise system versus what costs they would have had to carry had they been in business on their own. Franchise partners can either revert back to the Glee phase or move onto the next phase which is the Me phase.

Phase 4: The Me Phase
It is during this phase that the Franchise partner believes that his success in the Franchise system is all due to his input and very little or none as a result of the products and systems that were developed by the Franchisor. The Franchise partner believes that he would better off if he “went it alone”.

There is also the possibility that a Franchise partner is going through a “rough patch” and that his lack of success has nothing to do with him but everything to with the Franchisor.

As a franchisor, it is important to strengthen communication channels with all franchise partners, particularly though this phase. I have benefitted from having open discussions with my franchise partners, highlighting to them that they are in the ‘Me Phase’ and revisiting with them why they decided to join the Franchise system in the first place. It is very important to build a strong community within the franchise system as I have often found that franchise partners, despite their personal success will want to stay in the system, if only to be part of the community off franchise partners.

Phase 5: The Free Stage
During this phase, the Franchise feels hamstrung by the “restrictions” being placed on her by the franchisor and believes that she wants to have the freedom to operate outside of the system. This phase is often characterized by high levels of conflict that could impact negatively on the rest of the tem if not managed carefully.

As a franchisor, open and frank communication is critical. If no progress is being made to move the franchise partner to the next phase it is often better to move towards terminating the contract. However, this must always be the last resort.

Phase 6: The See Phase
During this phase, the franchise partner starts to see the value in adhering to systems that ensure consistency of delivery for the entire franchise system.

As mentioned above, frank and open communication is an important part of the process. It is also recommended that Franchise partners are invited to be part of any future planning as well as being given the opportunity to contribute to any decisions that may affect the franchise network.

Phase 7: The We stage
This phase is characterized by a move from independent to inter-dependent thinking. A phase where all parties realize that for the Franchise system to work all parties need to deliver on their obligations.

franchise partners who have negotiated their way through all the above phases and reached the ‘We Phase’ are a franchisor’s greatest asset. They tend to keep one eye on profit and the other eye on developing strong relationships with other Franchise partners whilst being prepared to contribute to their success as well – to the benefit of the entire franchise system.