I had used the perfect word to express my feelings, as well as its causes! That word ‘disillusioned’ was the key.

The dictionary defines ‘disillusion’ as ‘to free or deprive of illusion’. And, I definitely had been under a self-created illusion.  I believed that because the franchise relationship is based on the win-win principle, the parties involved must care ‘first’ about the other party; and, must always seek the win of the other party because it is in the other party’s win that they can find their own.

When the veil of illusion was lifted, I could see that I had created standards impossible to achieve. The problem was in the absolute nature of my belief. The use of the words “must,” “first” and “always” tainted an otherwise true statement.

People in most cases care more about themselves than they do about others. We even see it in the closest of families; so, why on earth would I think that a business relationship would be exempt of this human trait? The franchise relation is dictated by a legal and operational structure that invites more cooperation and more dependency than other business relationships. In more than one way the franchise relation resembles a family. Yet, although it invites cooperation, it cannot make an entrepreneur care more or less about others; nor can it make a franchisee be a better team player. People who are drawn to franchising their businesses, in most cases, feel the pull because of the economic and ego rewards it offers. Very rarely have I heard people express that their main reason for franchising was to help others. That has been my trip, my blind spot, and the cause of my disillusionment. I had created a belief to match my own preferences; and thus, when reality did not match my expectations I felt a sense of discontent and disappointment.

When illusions are lifted one can see, accept, and even appreciate, things as they are. There is nothing wrong with the franchise relationship. There is nothing wrong with franchisors seeking their own gain and franchisees doing the same. That’s just the way it is; these parties are human. The structure of the relationship makes franchisors aware that it’s to their best interest to support franchisees and likewise encourages franchisees to protect their brand and team.

Now that the illusion is gone, I can appreciate the franchise relationship even more for what it is and for what it’s not. In franchising we are dealing with people with their strengths and their weaknesses, and with their humanness. Yet, in franchising people are encouraged to bring their best qualities to the forefront; they have an economic incentive to do so; and when they don’t, they suffer the consequences. Franchisors who don’t support and/or abuse their franchisees experience a shrinking of their network of locations. Franchisees who decide not to follow the franchisor’s system or not to be part of the team have a harder time achieving the success they seek.

Last year’s debate triggered by the CNBC report “Behind the Counter: the Untold Story about Franchising,” in my opinion, resulted in the best of franchising coming forward as franchisees joined the franchisor of Cold Stone Creamery to defend their brand. This is what franchising is all about: the team, the single objective, the win-win. Franchisees and franchisors may have differences; but, like in many families, when an outsider attacks the system or the family, its members unite.

The recent economic downturn definitely has taken its toll and this time franchising was not able to escape it. As many franchisors were not able to respond quickly enough to the economic changes, their franchisees experienced drastic consequences and in many cases failure. Yet, overall, I bet that franchised businesses still have done better than most small independently owned ones.

So, yes, Franchising is not perfect. But, what is?

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During my first experience working in a franchising company I heard the voiced and common belief that franchisees are happy as long as they are making money. Now, after over 20 years of working in the franchise field, I know that the truth in this statement is not absolute. Although I also have  learned first hand that it always helps when franchisees are financially successful, but for most franchisees there is more to it than just ‘making money’.

I have found that franchisee success has to do a lot with the numbers, yet we must dig deeper. Non financial goals and objectives play an important role, although for some people more than for others. However, there is no question that the numbers are critical and how franchisors deal with them or ignore them can determine the success or failure of their franchisees.

Kate Groom is a franchise expert residing in Australia and her focus is franchisee financial performance. Kate assists franchisors have the much needed conversations around profit, performance, and results. I call these the ‘tough conversations’ because they involve topics outside of the comfort zone of franchisors and the franchisees.

“Most franchisors don’t have a financial background, and lack the experience talking about and managing this subject,” Kate said to me in a recent conversation. “The result of this lack of experience is that many franchisees don’t know where they are going nor do they know how to, or even when, they get there.”

I definitely agree with Kate. Franchisees need clear objectives and a way to measure their results. Kate mentioned: “These days technology has provided franchisors with a multitude of ways to gather, benchmark and report financial and operational information. Sadly, however, lots of people get caught up in the process of creating process; and, we make things complicated just because we can.” Kate continued;  “It doesn’t have to be difficult.”

Franchisors like to tell their franchisees that they need to get back to basics. It seems to me that franchisors need to heed their own advice. As Kate says: “It’s easy to get caught up in the ‘wretched hows’ and forget that we can make a difference one conversation at a time, one franchisee at a time. Sometimes a good place to start is with what’s simple and easy to do with what’s available.”

Kate has lots of great information in her blog; make sure to visit it at http://www.starfishconsulting.com.au/

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Gratitude is a positive emotion and a way of looking at the world that engenders a sense of well being. Studies have suggested that grateful people are happier, less stressed, and more satisfied with their lives and relationships. They are able to cope with difficulties in a more positive way, hence experience a sense of more control over their lives. So, what does all of this have to do with franchising? A lot!

Gratitude is a choice. We either choose to complain about what we have or don’t have or choose to see the beauty in what we do have and the blessings that come when something is not be present in our lives. It is in that choice that we find the control over our environment. We all have heard the adage that says: “we may not be able to control our circumstances, but we can control how we feel about and react to them.” So, what does all of this have to do with franchising? A lot!

Gratitude is a habit that we create by repeating our choice for the positive frequently. The more often we make this choice, the more ingrained this habit will be. So, what does all of this have to do with franchising? A lot!

If you are a franchisor, you can’t change the way franchisees behave, but you can certainly choose how you will react. Similarly, franchisees have no control over their franchisors’ actions, but they surely can choose whether or not they affect them negatively. It is all about what we choose to see. When either party is upset at the other they have the choice to remain dwelling in the negatives which only creates more discord, or choose to be grateful for the positives such as:

If you are the franchisee:

• The franchisor started a business, took the risk, and created systems.
• The franchisor shares his or her experience with me so I don’t have to make the same mistakes.
• The franchisor is thinking of ways for me to improve my bottom line.
• The franchisor has trained me and continues to train me.
• The franchisor invests in staff to support me.
• The franchisor spends a lot of money in R & D to ensure that my business has a future.

If you are the franchisor:

• Franchisees believed in my concept and in me.
• Franchisees trusted me and invested their life savings in my business idea.
• Franchisees paid me and continue to pay me money.
• Franchisees represent me every single day in their communities.
• Franchisees have stepped out of their comfort zone to implement my system.
• Franchisees share their ideas with me and they also help each other.

Did you hear a ‘but’ as you read the statements above? If so, you need a little bit of work on being truly grateful. Gratitude is all about shifting our perspective. It is not about denying the negative; it is about focusing on the positive that is always there, regardless of the situation or person. So, what does all of this have to do with franchising?

• Grateful franchisees are happier, better performers and validators.
• Grateful franchisors create a productive company culture.
• Gratefulness engenders good franchise relations.
• Gratefulness is contagious.
• Gratefulness produces a positive environment that invites communication.

Gratitude is not just for those ‘tree hugging’ folks, as some may say.  It is for all smart franchisors and franchisees who want success.

So, when was the last time you said ‘thank you’ to your franchisees or to your franchisor?

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A few weeks ago I commented on a colleague’s Facebook post agreeing with his argument to encourage franchisors to create and implement Social Media Policies and Procedures.  A franchisee of an unidentified brand also made a comment enraged at the original posting and at my agreement with it. Her argument was that franchisors should worry more about support than about policies and procedures. In her mind she saw the two totally different and she seem to see the issue as an ‘either/or’. I can understand her point of view and her anger as I have worked with and known of many franchisors whose only or main objective is the enforcement of the agreement or policies, whether or not they make sense or add to the success of the franchise network.

To me, policies and procedures are not about compliance as much as they are about the support of all franchisees. Franchise procedures are simply step by step explanations or directions of how to operate the business successfully. Franchise polices are guidelines of conduct that allow franchisees to communicate and relate with each other, their customers and the franchisor. These policies protect the brand and therefore the franchisees’ investments. Can policies and procedures be used for compliance purposes? Of course they can; and, in the appropriate circumstances, they should.

True, there are some franchisors who see policies and procedures as a way to control the behavior of franchisees; and, in some cases, just for the sake of this type of control. But successful franchisors learn that policies and procedures are tools to guide franchisees and the entire organization to success. They are not all about compliance, or enforcement, or control; they are about guiding and supporting franchisees; and, as the situation dictates, they provide the legal grounds to protect the brand and the franchise system.

Franchising is all about policies and procedures and successful franchisors use these tools to train and support franchisees. As new technology or methodologies are created such as for example the social media explosion, franchisors must update their franchise policies and procedures to guide franchisees about the best way to incorporate the new technology into their businesses. It is not only the franchisor’s right to do so; it is his or her obligation.

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In more than one occasion I have been called a Franchisee Advocate; and although this may not have been said as a compliment, I have taken it as such. I fought for their rights and what I thought franchisors owed to them, and this got me in trouble more than once. Today my approach is much more balanced but my strong feelings for franchisees remain the same.

I was first exposed to franchisees in 1986 and since then I have trained and supported thousands of them. I have always dealt with franchisees who are owner-operators, running their own businesses. And, I have found these franchisees to be very special people, totally different from employees and from true entrepreneurs, or investors. Of course, franchisees are unique individuals but, in my experience, they share many characteristics with each other. I can’t say that all my interactions with them have been 100 percent pleasant, but from the very beginning I simply loved them and here is why:

• Franchisees are courageous. They leave the known for the promise of a better future, yet they do it with care and choose a less risky road.
• Franchisees have taught me much of what I know today about franchising, and a lot about life and human relations. My toughest interactions with franchisees always left me with more skills, more knowledge and more understanding.
• Franchisees are compassionate.  Franchisees have shown me unique compassion when I have needed it the most. I treasure those memories.
• Franchisees can connect in deep ways. Perhaps it is the fact that franchisees have to go through personal transformation which places them at an emotional state that gives them a unique ability for deep personal connections. Whatever the cause, franchisees can connect deeply with and care about their clients, their franchisor and other franchisees.
• Franchisees are humble enough to know they need help. This is not always the case nor does it sustain, but at least when they first join the franchise system they know they need to learn a new way. They are not always able to do it, but most of them try.

I guess most people are capable of showing the above characteristics but as a group, franchisees are uniquely strong in all them. So, from the very beginning, they made their way into my heart.

What do you love about franchisees?

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• Reduce risk by investing in tested processes and models.
• Have a clear path of action and direction provided to them.
• Belong to an organization.
• Be in business for themselves but not by themselves.

So what’s in their make up? Franchisees are people who:

• Are normally risk averse,
• Need and want direction,
• Desire to belong to a team,
• Wish to own a proven business, and
• Seek to have more control over their destinies.

Does this sound like you? If you are a franchisor, probably not (except for the last point).

People who are considering franchising are searching for an organization to which they can belong; an organization that matches their own value system and that has an opportunity that matches their objectives. Although manifested and expressed differently, their needs normally fall in three categories: need for recognition, need for belonging to a family or team, and need for control of their work environment and decisions about their lives and businesses.

Individuals seeking to become franchisees are generally former middle or senior level employees used to a structured work environment, interpersonal interactions and recognition for their efforts. They are people in transition and as such they are subject to great internal upheaval. In many cases they are the middle-aged people who have been laid off, retrenched or down sized and their egos have been bruised. Fear of failure is a strong emotion in new franchisees.

People who choose franchising are looking for a lifestyle change. Lifestyle quality is measured in terms of: income and what it can buy, control and flexibility over one’s own time and the activities devoted to personal versus business as well as the sense of being your own boss. Franchise companies can foster a greater lifestyle quality by:

• Setting structures that allow franchisees to clearly define and achieve their personal goals without impeding the reach of company goals.
• Matching personal goals with territory size.
• Providing guidelines, direction and leadership within an environment of trust, support and flexibility.

Understanding the makeup of a franchisee is crucial to your success as a franchisor. Don’t make the mistake that many make seeking people like them. Franchisees should never be like you, the franchisor; to be successful franchisees they must be different.

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Fledgling franchisees and franchisors across the nation have a lot to juggle, from the new financial and time commitments to the potential strain on family and friends. In some registration states such as California, Illinois, Maryland and Virginia, new franchisors have an additional challenge. When they submit their FDDs for approval, state examiners may deem that franchisors can’t take money from franchisees until the initial training program is completed or until the franchise commences operations. Franchisors, however, often have other two options:

• They can put the money in an escrow account, or

• They can purchase a surety bond.

Surety bonds are crucial risk management and mitigation tools that have become increasingly important in recent months, on the heels of new demands for consumer protection. The shock-waves of economic scandals and crisis have made proper bonding all the more important — not just from a legal standpoint but a competitive advantage one, too. Surety bonds can also serve as credibility-boosting agents with prospective consumers. They can also help franchisees set themselves apart from competitors in their sphere.

The Surety Bond Basics
In essence, surety bonds help ensure that companies follow applicable laws and regulations. They also give consumers and other stakeholders a way to seek economic redress in the event they’re harmed. Surety bonds are three-party agreements between a surety company, a principal (the company doing the work or performing a service) and the obligee (the recipient of the work or the entity requiring the bond).

Here’s a quick example. Health clubs, in most states, are required to post a surety bond with the state Attorney General’s office. The bond basically ensures that club members can recoup membership fees if the club shuts down unexpectedly. That’s an important benefit because many clubs charge large pre-paid membership fees. So, if the club goes belly up, members can file a claim against the bond and seek to recover their money.

Why Bonds Matter
Health clubs are one of hundreds of business types and industries that require surety bonds in order to operate legally. It’s important for franchisees to understand the costs and requirements going in. But it’s equally important for them to know the benefits.

Surety bonds aren’t always required for entrepreneurs. But these tools can go a long way toward boosting consumer confidence and creating some separation from competitors. The reality is that stamping the phrase “properly bonded” on a business card can make a world of difference for consumers hungry for protection and beleaguered by financial scandals and a shaky national economy. On top of that, surety bonds can protect franchisees themselves. There’s a whole vein of bonds geared toward insulating business owners from harm in the event their employees commit acts of theft or otherwise harm consumers. These fidelity bonds can be a life saver for franchisees.

Surety Bond Costs
It’s difficult to pinpoint an exact cost for surety bonds because it will vary based on the type of bond you want and your own financial standing. Purchasing a surety bond is somewhat similar to obtaining a loan, in that there’s an underwriting process involved. Surety underwriters will look at an applicant’s credit history, finances and other pertinent information before rendering a decision.

Bond amounts will also change depending on where you live and the type of bond. For an example of New York surety bonds, consider the health club bonds mentioned earlier. A health club in New York state is required to purchase a $50,000 surety bond if it offers consumers a 12-month membership. That bond amount rises to $100,000 for a contract of 12-24 months.

It’s important for franchisees to remember that they’re not shouldering the entire bond amount. Instead, bond purchasers pay a premium, typically 1 to 3 percent of the bond value. That rate will increase for applicants with credit or financial problems. Insurance companies and surety bond carriers can issue surety bonds. Some low-impact bonds can be processed within a matter of hours. Others might require a bit more time.

A Final Note
Franchisees should put together a complete financial application when the time comes to apply for surety bonds. New entrepreneurs can struggle at times to find competitive rates when they lack a significant fiscal record as a business owner. That’s where the franchisor can help make the difference.
At the same time, franchisees should explore all of their options when considering bonding companies. Rates can shift among providers, who will all bring a slightly different underwriting approach to the table. It’s best to shop around for the best rate while making sure to work with a professional, trustworthy surety agent.

To learn more about surety bonds go to http://www.suretybonds.com/edu/faqs/

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In my experience, there are many traits typically attributed to women that make us ideally suited for franchising. The first that comes to mind is sometimes made into a joke, but joke or not, it is true that most women don’t mind asking for directions. This trait is critical in the success of a franchisee. Yes, I am generalizing, but as women, our egos are usually not so big as to prevent us from accepting when we don’t know something; and thus, from asking for help when we need it. These strengths make women able to fully take advantage of the greatest benefits of franchising.

Franchising is a proven model; that is, a business that has been demonstrated to be successful. In uncertain financial times it is even more important to reduce our risk of failure, and this is exactly what franchising does. Here are three reasons why:

• A franchise business has been proven (to do so the franchisor already made and learned from all the costly mistakes that an independent business owner will invariably make to arrive at a successful business formula.)
• A franchise business has been systematized so most people can easily replicate its success (to do so the franchisor has spent financial resources as well as time and energy developing the operating systems that increase revenue and control expenses; an independent business owner will have to go through the same process to create a sustainable business.)
• Franchisors exist to support and guide franchisees in the successful implementation of the franchise system (they have the experience and expertise to do so; and, the moment they became franchisors their mission changed to one of recruiting and supporting successful franchisees. Therefore, unlike an independent business owner, a franchisee is has someone on her side!

Women who desire to go out on their own will do themselves a disservice if they do not consider franchising as an option. If you are willing to follow a system; if you are willing to learn, work hard and persevere; if you are not afraid of asking questions; if you want the assistance and support of others, then franchising offers significant less risk than going on your own.

Another aspect of franchising that makes it especially appealing to women is the opportunity it presents to work in teams and to make contributions beyond our business. The camaraderie and support of women in franchising is evident in many franchise related organizations. One in particular comes to mind: WEBB (Women Empowered by Business). This organization is the brainchild of Lori Tyll, a franchise executive for FSBI, and Judy Stoleson, a franchisee and former franchise regional developer. WEBB offers webinars and many other learning and support opportunities to women who want to learn more about franchising and business ownership. In addition WEBB is doing a remarkable job at  raising money for the Susan Komen Foundation. Inspired by how many of the lives of FSBI franchisees have been affected by cancer, Lori and Judy decided to make a difference; and these two very special women most certainly are.

What I’ve liked the most about franchising has always been the feeling of belonging to a team and a family which makes it appealing not only to us, women, but also to men. This ability to be independent but to belong to a caring and close network of other small business owners is special when it comes to franchising.

Time to trade those suits for jeans… anyone?

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Whether or not we should, whenever we enter a relationship we have expectations; and, your franchisees are not any different. Franchisees are individuals, and as such, they will have somewhat different types of expectations, yet there are some common ones to which you should pay attention. In fact, one of the most important steps you can take to ensure a positive relationship with your franchisees is to know and respond to their expectations.

1.  Franchisees want to be treated as professionals and as people, not just as a store number or franchise location.

Franchisees want to know you care about them. They want you to solicit and respect their input and to create an environment where they can share. They want to be recognized for their accomplishments whether they are in their businesses or in their lives. They expect you to remember their names and their personal lives. They expect you to care.

2.  Franchisees want to trust you and you to trust them.

Lack of trust is a major factor in poor franchise relations. Your franchisees want and expect open, frequent, and honest communication from you, both formal and informal. Franchisees want you to trust them and to believe in them; and they want to place the same level of belief in you. Lack of, or simply poor quality communication erodes trust.

3.   Franchisees want you to take care of innovation and to be ahead of the competition.

Franchisees want to take care of today which involves operating their business. They expect you to take care of tomorrow through innovation and research. They want you to help them be ahead of their competition through technological, product, and process improvements as well as tools that can increase their efficiency, productivity, and bottom line. They expect you to earn the royalties they pay you every month by providing value to them.

There are many other types of expectations which vary from individual to individual but all franchisees want you:

• To care about them,
• To communicate with them frequently and honestly, and
• To provide value to them.

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Why not both: successful and right? I don’t subscribe to “either/or” any longer; I now embrace the beauty of the AND which allows for possibilities to come into my life. However, when it comes to success and being right there is clearly an either/or. That is, being successful and being right do not mix, in the sense that those who seek to be right truly desire someone else to be wrong; and, in this scenario, there is no room for success. The need to be right becomes more powerful and it blinds us to possibilities, new perspectives and answers. 

In my experience, many franchisees, especially at the beginning of their careers, are simply more interested on being right. They are not ready to accept that they may not know something or that which they are resisting is what may make the difference in their business. They also may feel so insecure in their new role that being right becomes more important.

Success is not about right or wrong. Success is about achieving what we desire and doing whatever it takes to get there. In most cases our success in new ventures calls for our transformation so we can achieve something different. Most successful people we admire had to undergo hardships before tasting success, and most of this adversity came from fighting their own personal dragons. This is always the same regardless of who you are. What’s different is how we react to the challenge.

When a franchisee is trying to prove that a portion of the franchise system or a procedure does not work, they are seeking to be right. The premise they use is not how a procedure or methodology can work, but why it does not work. At that point franchisees are more interested in being right than successful. The question is a challenging one and you will create unease when you ask it, but it is an important question: Do you want to be successful or do you want to be right?   

The moment a franchisee realizes that they were seeking to be right, an opening is created. Even when they decide that at that moment they still just want to be right, the awareness created starts the process by which they shift towards success, personal growth and learning.

But the question is not just for your franchisees. Ask yourself the same question. Are you perhaps more interested in being right and don’t know it? If something is not working, what can you do to change it? Are you pointing the finger at your franchisees, the economy, or your franchise sales people? The question is as valid for you as it is for your franchisees. Success is all that really matters. Being right is irrelevant when you achieve success.

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