Tips for Managing the Franchisee-Franchisor Relationship

The franchisee-franchisor relationship is unique in the working world. It’s not like that of an employee and employer, where the employer is considered to be ‘the boss’. In a franchise relationship, the franchisee is effectively their own boss. But it’s not quite ‘equal’ either, as each party has their own distinct role to play.

One thing that is for certain is that it is a professional relationship that involves leadership from the franchisor, but also a degree of letting go and enabling independence for the franchisee. So while the relationship has a degree of interdependence – in that each party needs the other when it comes to expansion and growth of their business – it also involves considerable independence from each as well.

Relationship roles

Managing this relationship in a franchise business should start with a good understanding of the roles each party plays. While this may seem obvious, it may need revisiting from time to time!

  • Franchisor – provides the business operating systems, tools and coaching required for the franchisees to run their own businesses, in exchange for fees and royalties. The franchisor should also provide their franchisees with the support they need to succeed and thrive in their businesses.
  • Franchisee – executes the business systems provided by the franchisor and pays fees and royalties for the privilege of doing so, and agrees to the terms and conditions set down in the contract. Franchisees make many of their own decisions when it comes to running their businesses and hiring employees.

Relationship management tips

  • Treat your franchisees with respect – by doing so you are far more likely to receive respect in return. Remember you are there to provide leadership and support, but you are not their employer.
  • Practice clear and effective communication – it’s important to touch base regularly with your franchisees that goes beyond the odd email. This may include regular meetings, conventions and training, listening to suggestions for improvements, and keeping franchisees abreast of changes or new developments when they occur.
  • Respond to requests for support – your franchisees may not be employees but they should still be provided with the support they need. Make sure to respond promptly to franchisees’ requests
  • Genuinely care about your franchisees’ success – after all, it’s in the interest of both parties for franchisees to succeed and thrive. Show a sincere interest in your franchisees both as people and as business managers.
  • Deal quickly with conflict – if conflict and disagreements are left unresolved, they can fester and grow. Conflict resolution should be outlined by mutual respect and listening. If all else fails, you can always seek mediation through the Office of the Franchising Mediation Adviser. If it does get to the point that you really need to terminate a franchise relationship, make sure you have very good reasons for doing so (such as breaches or misconduct), and that you understand all the legalities involved.

For more assistance in managing franchise businesses, contact one of our franchise business consultants.

Thanks for reading,
The Franchise Institute Team
1300 855 435

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