Franchisor, franchisee relationships - getting it right

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We have refined our processes to the degree that we can anticipate each phase in the relationship and proactively address it.

For instance, there is the well-known 'glee' or 'infatuation' phase that we call the honeymoon period. We know from experience that this lasts six to 12 weeks, depending on the size of the town and variety of competition - and we know that this early success can easily go to the head of the franchisee. Sometimes the franchisee can believe it is all his own doing, forgetting the novelty factor and the franchisor's reputation typically precedes it.

Apart from inflated expectations, it can also allow a degree of mismanagement to seep in as franchisees lift their foot off the pedal. In addition, without constant micro-management and controls, gross margin can fail to live up to expectations. It is human nature perhaps then to blame the franchisee for false promises. After all he or she has no control over his gross margin and has to sell at a designated price. However, experience suggests the usual culprit is pilferage resulting from poor controls, or failing to cut staffing levels after the honeymoon is over.

We anticipate each of these issues - usually just in a small minority of cases - and ensure we are in constant communication with franchisees to advise them as we see issues materialising. In fact, any difficulty is easy to manage with our systems and controls - provided the owner is prepared to accept touch conversations.

We guide and train the franchisee on controls, which is a massive aspect of his scope of management. We show him and implement the systems, but they thereafter must be maintained. The secret is daily stock takes, tight control of receiving and both regular and random inspections to keep staff on their toes.

We take franchisees through our rigorous staff selection process and screening checks - once again, this discipline has to be maintained. Of course, managing a store is not all about checks, controls and micro managing - a manager will also not succeed without some empathy for his staff. An ability to listen is one of the most under-rated management skills, as this establishes trust. If staff believe the owner is on their side, they will assume a greater sense of duty.

The franchisor-franchisee relationship similarly works better, where both parties can also have open dialogue. Some franchisees like to keep a closed book, not wanting the franchisor to know how well he is doing. This is to totally misunderstand the nature of the relationship. The franchisor only does well where franchisees do well, so our interests are fully aligned.

We go to a great deal of trouble to select the franchise manager carefully, as he is the fulcrum of the relationship. We ensure we appoint individuals with an empathy and understanding of entrepreneurs - who look at problems not just from our perspective but understand the owner's point of view. This is no checklist-relationship, but based on understanding and a willingness to point out to owners what could happen if they fail to follow our tried and tested systems and controls. The consumer expects a certain experience based on what the brand stands for. We have a combined 200 years' experience in this business, which franchisees can learn from.

We are clearly in a challenging economic cycle and the key to the relationship is for management to remove as many barriers as possible to the owner spending as much time as possible on the shop floor with diners.

Owners are going through a challenging time. We are pleased that despite these difficult times, the number of feet going through our shops is increasing - but revenue is not increasing at the same rate, meaning owners are having to work much harder. In this environment, a store can attract both millionaires and the penurious - and it is the owner who determines whether they become repeat clientele.

For this reason, our policy is to ensure our franchise managers do not rotate regions before they have developed a solid relationship with franchisees, yet one that does not induce complacency.

The most important method of avoiding complacency is for the owner to be on the shop floor - it is his investment and he will ensure systems are implemented and staff trained.