Growing a Franchise with the Help of Your Franchisor

Your franchise is up and running, and you feel great about your success. Now, it’s time to take your franchise to the next level. What should you expect from your franchisor to help you grow your business?

First, you need to have realistic expectations. You should expect to receive what’s indicated in your franchise agreement -- nothing more, says Michael Seid, managing director of franchise consulting firm Michael H. Seid & Associates LLC. “If you are expecting more, then you should not have signed the agreement without including those modifications,” Seid warns.

Mark Leonard, a former franchisee, seconds the importance of understanding the limits of your franchise agreement. “Generally, the franchise agreement is extremely one-sided, favoring the franchisor,” says Leonard, whose Web site, Your Franchise Mentor (www.yourfranchisementor.com), helps prospective franchisees make good franchise investment decisions. “The agreement will not require the franchisor to provide very much in the way of help.”

However, Barbara Moran, president of Moran Industries, parent of automotive maintenance franchises including Mr. Transmission, says, “A franchisor that has a desire to see growth and success for their system understands the value in providing support services beyond the agreement. They believe in reinvesting in their system through helping their franchisees.”

A good franchisor will meet the obligations of the franchise agreement, Seid says -- but a great franchisor will exceed them. “A great franchisor has well-trained field support that can help you through the operational, marketing and financial aspects of the business and do so from experience,” says Seid. “A great franchisor will listen to you and provide you with continual communications about what is going on in the business and methods to help you succeed. A great franchisor understands what the competition is doing and continually looks for new products and services, modifications to existing products and services, lower cost ways to deliver those to you every day.”

As your franchise finds its groove, systems should get more efficient and sales should grow, says Dan Rowe, president of franchise development company Fransmart. “Every franchisee should demand that their business grows both top-line sales and bottom-line profits every year,” Rowe contends. “It’s the franchisors job to make this possible by [doing] research, tweaking the concept, [sharing] best practices, smart marketing and so on.”

Rowe’s company works with restaurant concepts, and in that industry, he says, there are only four ways to drive business: “new customer trial, customers coming back at an increasing rate, customers spending more per visit, and [increasing] the party size. Franchisors should have programs to drive all of these, and should know how to out-position the [concept] against the other options [customers] have.”

Gary Bauer, vice president of ServiceMaster Clean Business Services, which franchises a variety of residential and commercial service businesses, says the franchisor should offer financial guidance; market insights into expanding your business either geographically or vertically; assistance in reviewing your marketing plan, financial pro-forma and staffing plan; and training in skills specific to the next level, such as HR, financial, sales and technical skills.

One of the most important ways franchisors can help your business is by monitoring the overall system. “A truly great franchisor enforces the system standards firmly,” says Seid. “They take action against badly performing franchisees to protect the other franchisees in the system. Great franchisors do not allow poorly performing franchisees to damage the brand.”

What should you do if you’re not getting the help you need from the franchisor? First, make sure that you’re living up to your end of the bargain. Don’t expect everything to come from the franchisor. “Sometimes you need to go outside the system for help -- accountants, consultants, courses from universities, and so on,” says Seid.

If you are taking responsibility for your own success, but still not getting what you need from the franchisor, let them know. “Contact your field support personnel and request their assistance,” advises Seid. “If you do not get what you need, work up the ladder.”

Once you get the franchisor’s attention, Moran advises, “You need to be willing to be completely open in sharing all of your information with your franchisor. Also be willing to put your pride and ego aside. Both franchisee and franchisor must work together in analyzing financials and other proprietary information to determine where help is needed before [the franchisor] can offer it up effectively.

If the franchisor is not responsive, “Engage a franchisee advisory group if one exists in the system,” Bauer suggests. If there is no such group, Rowe advises forming a peer group of other franchisees or owners of similar businesses in your market and looking for ways to share best practices.

If worse comes to worst, Rowe adds, “You may have options to get out of the franchise system and re-allocate the royalties you are paying to another source that will provide what you need. You could start your own concept with this new perspective of what you liked and didn’t like about being a franchisee.”

In the end, growing a franchise is a team effort. “One of the biggest mistakes franchisees [make] is to demand help in a confrontational way,” Seid cautions. “Build a relationship with your franchisor -- show them that you are working their system as they trained you to do. Most franchisors will go out of their way to help franchisees that are trying to be good franchisees, but will do less for those that do not [keep] their half of the bargain.”