Three Difficult Business Decisions Every Franchisor Will Face
Most business owners will tell you that running and growing your own business can be an exhilarating and ultimately very rewarding experience. However, they are also highly likely to tell you that owning a business involves having to make some very tough decisions at times, which can result in extreme levels of stress and many sleepless nights.
The role of a franchisor comes with significant and multi-layered levels of responsibility. The franchisor leads their team of franchisees, who are all business owners in their own right and who have invested in the franchisor's brand, both financially and emotionally. Any business decision that the franchisor makes not only impacts on the franchisor's business, but potentially affects the business of each and every franchisee within the network.
Whilst some decisions that a franchisor will make during their business journey will be straightforward and present as almost a no-brainer, there are others which all franchisors will have to take at some point in time and which will inevitably involve a lot of thought and consideration whilst weighing up the pros and cons of the situation.
Saying "No" to a potential franchisee
Particularly at the early stages of franchising when the franchisor will have made a significant financial investment to get the brand franchise-ready and put everything in place to be able to recruit their very first franchisees, a would-be investor who is raring to sign on the dotted line with cheque book in hand is incredibly tempting. There will be times though when saying "No" will be the right thing for the franchise brand, however difficult taking and then communicating that decision may be. Franchise recruitment decisions are based on many factors, the most important being that the new recruit is going to be a great "fit" for the brand and existing team and possesses the right skills and qualities that make them an ideal franchisee. Poorly judged franchisee recruitment decisions can be incredibly expensive and damaging to the overall business - it can certainly be a case of "Recruit at haste, repent at leisure"!
Parting ways with an underperforming franchisee
Even if the recruitment process has been spot on, things change and at some point in their franchising journey all franchisors will undoubtedly encounter issues with a franchisee who is not performing to the standards expected of them. There can be many reasons why this has happened, either personal or business related or a mix of both, and of course the franchisor should look to get to the root of the issue and see what additional training and support can be offered to the franchisee to get things back on track. Sometimes though, help and intervention will either not be accepted or will be unsuccessful, and in that case the franchisor will need to make the difficult decision to terminate the franchise relationship. Particularly when the relationship has been a close or long standing one, this can be a very tough decision to make and can feel very personal. However the franchisor has a responsibility to the brand and the rest of the network to uphold and the focus should then turn to how to end things between the parties on a good note if possible.
Introducing change
Whether it is change to the core product or service, implementing new systems, introducing fresh branding or bringing in a new offering, any change that is going to directly impact on the franchisee’s individual business and their way of doing things is a decision that cannot be taken lightly by the franchisor and may not always prove to be a popular one! But balanced with the need to keep franchisees happy is the requirement to keep the brand and business moving forward and to adapt to changing trends and markets. Making the decision to make a change may well be a tough one, but how it is going to be communicated and then implemented is key. Making sure that franchisees understand the reasoning behind the decision, utilising franchisee advisory councils as part of a consultation process, carrying out pilots before roll out, getting key franchisees on side with the changes and to help onboard the rest of the network, and ensuring that there are lots of opportunities for "Q and A" sessions and discussion can help to ensure that once the decision has been made, that the next steps are as smooth as possible for the franchisees and that the franchisor has fewer obstacles of resistance in their way.
The additional layers of responsibility that are part and parcel of the role of a franchisor can mean that making any decisions regarding the direction or wellbeing of the business can feel a heavy burden at times. However, in order for the franchise brand and therefore the franchisees to succeed, a franchisor needs to be strong and resilient enough to be able to trust their own judgement and instincts, face challenges head on and make brave decisions in order to steer the franchise forward on the path to success.
