Entrepreneur Success # Franchising
# The Human Element Understanding The Franchisor/Franchisee Relationship
Thinking about franchising? Find Out How to Best Understand the Franchisee/ Franchisor Relationships. You can run a franchise system and ignore all this stuff but you’ll run a sub-optimal system.
Right, so you have a business model that can be franchised and that is ready to franchise. It is now time to recruit franchisees to grow your business. But are you aware that the type of support a franchisee needs will change over time as they become more familiar with running their business? It may be beneficial for you to incorporate this new found knowledge to your franchisor/franchisee management program.
Greg Nathan, a psychologist widely recognized as a leader on managing the people issues in franchising, has investigated the lifecycle of a franchisee. He developed a model called The Franchise E Factor, which describes how a franchisee's satisfaction level and needs change over time.
Greg Nathan segments the franchisee/franchisor relationship into six stages.
The GLEE Stage: Highest Satisfaction Level- Highly Dependent on Franchisor Franchisees are excited about joining. They have set themselves up for a new venture and have high hopes. There is a lot of enthusiasm and satisfaction with the franchisor. They have been dealing with the franchisor regularly for a while now to get the business off the ground. The initial excitement is accompanied by nervousness, anticipation, and the hope of making lots of money.
Greg Nathan recommends “This is a time during which the franchisee needs training and reassurance.”
The FEE Stage: Declining Satisfaction Level- Dependent on Franchisor
After they have been in the franchise for a little while, they start looking at the fee they are paying to the franchisor. This usually happens about a year down the track. Satisfaction levels start to drop a bit. This is when the franchisee starts to think “I am making this amount of money but I am paying OUT this amount of money”. It is not an overly dangerous stage but the franchisor needs to be aware of it. The more money the franchisee makes the less this becomes an issue.
Greg Nathan recommends: “This stage needs open, non-defensive communication from the franchisor.”
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