Clear communication: Open and transparent communication helps both parties understand each other's expectations and goals. Regular updates and feedback sessions can prevent misunderstandings and foster a collaborative environment.
Enabling success: A good franchise system has demonstrated unit performance and profitability. A franchise investment opportunity should be able to show it is a proven and successful business model, and it is possible for a franchisee to make money. Good franchisors can provide evidence of success, such as financial statements from previous years of operating, and details about the value it adds and support it provides through the business relationship.
Shared goals: Both franchisors and franchisees should work towards common objectives, such as brand growth, customer satisfaction, and mutual profitability. Aligning goals ensures both parties benefit from the franchise’s success.
Mutually supportive relationship: A good franchise system will support and uplift franchisees including through extensive training, and tailored support and engagement. This includes initial and ongoing training programs, operational guidelines, field support and continuous assistance to help franchisees succeed.
Innovation and adaptation: Good franchisors innovate and adapt their products or services to stay competitive. Franchisees, being on the front lines, can provide valuable insights and feedback to help drive innovations.
Fair policies: Implementing fair and transparent policies regarding fees, royalties, quality standards, supplier rebates, dispute resolution, and operational procedures builds trust and ensures that both parties feel valued and respected.
Governance alignment: Franchise systems are designed with varying degrees of autonomy and co-dependence. It is important that the franchisor is clear on the degree of compliance required or autonomy allowed. The franchisor and franchisee should be satisfied that the franchisee understands this and is agreeable to the arrangement.
Understanding that the relationship will evolve: Like any relationship, the franchise relationship will evolve over time. Early on, there will likely be a lot of excitement and expectation for success. Over time, the franchisor and the franchisee will have to work through challenges and determine who is responsible for solving them. This can be a difficult time. If managed successfully, the franchisor and the franchisee will find their stride with each other, and there will be a clearer understanding of what each brings and what each is responsible for.