7 Phases of franchise success

Over the last 11 years, as I have worked with and experienced the highs and lows of several franchise relationships, I have come to realise that all franchise partners experience the same journey.

By Pieter Scholtz

The journey to successful franchise relationships has fascinated me to the extent that I highlight its pitfalls to all franchise prospects in our business. It is my belief that all prospective franchise partners need to understand not only 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. To this end, I spend a certain amount of time ‘educating’ potential franchise partners on what it takes to be successful and how to build strong relationships with other franchise partners as well as with the franchisor.

The better prepared a franchise partner is for their role as 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 (FRI), 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 own journey as a franchisor. Each and every franchise partner will, in my opinion, go through these phases — some more so than others.

Phase 1: Due Diligence Phase 
(Apprehension)
During the Due Diligence Phase the potential franchise partner experiences mixed emotions ranging from excitement to fear. Excitement insofar as they are now clear in their own mind that they now know what they are going to be doing in the future, but despite having conducted a full due diligence they may still be fearful and apprehensive.

As a franchisor, it is important to recognize this and to keep your franchise partner focused on those factors that have been 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: The Glee Phase 
Glee is an early phase of the journey and is preceded by having completed the full franchise training programme. The franchise partner feels invincible and is ready to take on and change the world. This phase is characterised by high levels of commitment from the franchisor and a strong franchisee-franchisor relationship. Fully committed to their own success as well as to the success of the brand, the franchise partner has started their business and experienced early success and growth. The Glee Phase can last for 12 to 18 months.

The franchisor should focus on building a strong relationship with the franchise partner and meet regularly to assess the health of the business and to identify early signs of tension or areas of discontentment. The franchise partner should stick to the system and be fully transparent with their franchisor on all issues affecting their business.

Phase 3:  The Fee Phase 
During the Fee Phase the franchisee becomes increasingly aware of the costs (royalties and advertising) paid to the franchisor and starts to question what they are gaining in return. They also start to question whether they would be better off had they not joined the franchise team and set out on their own instead.

Dispel any concerns the franchisee may have about having joined the franchise team by taking them back to the reasons behind their decision for joining the franchise system in the first place. It is also important that franchisors communicate what the fees are being used for. Personally, I like to have a conversation around the royalty and advertising fees they currently pay versus the costs they would have to carry had they set out on their own instead.

From here franchise partners will either revert back to the Glee Phase or move onto the Me Phase.

Phase 4:  The Me Phase 
Having concluded that their success in the franchise system is due solely to their own input and that is has little to do with the products and systems developed by the franchisor, franchisees in the Me Phase are often of the opinion that they would be better off if they ‘went it alone’. Alternatively, the franchisee may be going through a rough patch which they attribute to inadequacies on the part of the franchisor rather than their own shortcomings.

As a franchisor, it is always important to strengthen communication channels with your franchisees, but perhaps particularly with those in the Me Phase. Personally, I have benefitted from open discussions with my franchise partners, highlighting to them that they are in the Me Phase and revisiting with them their reasons for opting for a franchise system in the first place. Building a strong community within the franchise system is important; I have often found that, despite their perceived ‘personal’ success, franchisees want to stay in the system, if only for the sense of community they experience.

Phase 5: The Free Phase 
During this phase franchisees feel hamstrung by the restrictions placed on them by the franchisor and hanker for the freedom to operate outside of the system. The Free Phase is often characterised by high levels of conflict that could impact negatively on other franchisees if not managed carefully. Open and frank communication is critical.

However, if no progress is being made to move the franchisee to the next phase, it may be advisable to terminate the contract, but this should only be pursued as a last resort.

Phase 6: The See Phase  
Franchise partners in the See Phase start to see the value in adhering to systems that ensure consistency of delivery for the entire network.

As mentioned above, frank and open communication is key. We recommend inviting franchise partners to participate in future planning and to contribute to decisions affecting the network.

Phase 7: The We Phase 
The We phase is characterised by a move from independent to interdependent thinking and a realisation 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 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.

RECOMMENDED READING: The Franchise E-Factor, by Greg Nathan. Get your copy here: http://www.franchiserelationships.com/books-1/the-franchise-e-factor