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The relationship between the franchisor and franchisee is a delicate one. As a result, franchisors must strike a balance between policing franchisee behavior to protect their own interests and partnering with franchisees to improve the system as a whole. The more that franchisees are treated as true partners, the less likely behaviors such as shirking and free riding will exist. The infrastructure implemented to manage the franchise relationship should be one that promotes desired behavior and facilitates communication, thereby minimizing the need for monitoring and control. Before proceeding onto the next aspect of an SDS—marketing—we’d like to leave you with some pearls of wisdom (see TIP 5-3) that mirror the ground covered in this chapter on how to maintain a strong franchisor–franchisee relationship.

Tip 5-3 Theory into Practice: Seven Ways to Build and Maintain a Lasting Franchise Relationship

Based on the experience of Bob Rosenberg, former CEO of Dunkin’ Donuts

  1. Franchisee attitudes are directly proportional to ROI and to the growth of profitability at the unit level.

  2. Many franchisees need to participate and self-actualize beyond store management. The best franchisees learn and grow as business leaders in their franchise systems and in their communities.

  3. Involvement in governance (e.g., advisory councils) can be beneficial, but it is very difficult for the franchisor to achieve the right balance between listening and leading.

  4. Transparency in contract and ongoing relationships is essential.

  5. Expectations must be set up front. Franchisor and franchisee should share a common objective with regard to unit profitability.

  6. New products and programs should be tested and meet financial tests before being rolled out.

  7. Franchising is a relationship business that takes continuity, face time, and delivering on promises to build trust.



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