Franchising World March 2012
By: Lauren Reid
Whether a franchisor sells protected or open territories, the “not in my back yard” mentality of franchisees is a challenge that every growing franchise system will eventually face. Even if every new franchisee understands the company’s expansion strategy and exactly what the terms are for their franchise territory at the time of agreement signing, the education process can’t and shouldn’t ever stop there.
Securing franchisee buy-in to the national growth plan and educating owners about the benefits of being associated with a larger and stronger brand is an ongoing process that needs to remain a priority for every executive team. When franchisees understand the company’s growth strategy and embrace the “strength in numbers” mentality, they will help validate when potential candidates contact them, and thus help drive your brand’s expansion.
Transparency From the Beginning
The key tactic to avoiding a territorial system is by being 100 percent transparent when speaking with franchise prospects about exactly what their territory consists of from the beginning.
Building a culture of getting franchisees to understand the strength in numbers mentality should begin when franchisees are prospects during the sales and discovery process, and continue through their onboarding and training, and go strong throughout the life of the franchisee-franchisor relationship.
At the outset, if your system offers open territories, it needs to examine what processes have been put in place to foster a culture of collaboration among franchisees versus heated competition. If territories are exclusive or protected, be able to answer the question, to what extent? A franchisor has to be prepared to explain why its approach is in the best interest of each franchisee and the system as a whole. If both parties are on the same page from the very beginning, the risk of facing a territorial franchisee down the road is greatly reduced.
Consistent Communication is Essential
Consistent and effective communication within a franchise system can often be a challenge because of the decentralized nature of the business, so it is essential to have a comprehensive internal communication strategy that reinforces how a growing brand will benefit each and every franchisee in the system. In essence, there should be an eternal campaign that promotes the idea of strength in numbers throughout the life of a franchise brand.
The company’s franchise sales philosophy and growth strategy needs to be formed at the executive level and made transparent to the system. This can be accomplished through regular news bulletins to the franchisees, online discussion forums and ongoing in-person visits with franchisees in their markets. When I joined PuroClean as CEO in early 2010, I took it upon myself to spend 100 days traveling to meet with franchisees and hear all of their concerns, successes and challenges. I was also able to clearly communicate my vision for the company and share strategies for growth of the brand. Investing the time, effort and cost of face-to-face meetings with franchisees goes a long way in building their trust and confidence.
Once the message regarding the company’s vision and mission is developed and communicated by the chief executive, it must then remain intact as it trickles down through the various support people that interact with franchisees on a regular basis. Does your business employ a team of business consultants or field support specialists who provide ongoing support and training for franchisees? If so, these employees should be trained in how to reinforce the vision set forth by the CEO and how to empower franchisees to help the company achieve its growth goals.
The “growth is good” message should also be threaded into annual franchisee conventions and regional meetings. However, it’s important to be consistent yet subtle with the messaging. This is a fine line, yet extremely critical, as franchisors who are too aggressive with the message could face resentment from some groups of franchisees.
Promote the Rewards of Growth
As you reach some of your system growth goals, use the milestones as an opportunity to promote how the achievements have led to a stronger brand and how they directly impact the franchisee. Did the company achievements lead to a national business award, an impressive industry ranking or positive publicity in a national publication? Has the growth of the system allowed the executive team to land national accounts or lock in a promotion with another nationally recognized brand? These are just a few examples of the benefits of growth that should be touted internally.
Keep Up the Support
Probably the most common reason franchisees become territorial is when they feel that the franchisor’s focus on unit sales has compromised the level of support that existing locations receive. The key aspect to keeping franchisees happy and continue to have them see the rewards of a growing system is to build on your support. Growth of the system should always come with increased infrastructure. As new locations are added, the franchisor either has to add new staff at the home office or build upon a team of field support consultants. Also, as your system grows, make sure to continue to provide education and training in such vital areas as managing cash flow and marketing the business, all while managing expectations and being careful not to overpromise on deliverables.
Incentivize Your Franchisees
One often overlooked tactic for fostering a company culture that embraces growth is incentivizing franchisees to promote the brand and franchise opportunity among their professional associates, friends, family and so forth. Satisfied franchisees are critical to validating the business opportunity to prospects, but they are more likely to talk up the opportunity among their social circles if they are offered direct rewards for helping to grow the system. Incentives can be in the form of discounts on royalties, vacation packages or cash prizes for franchisees that bring in franchise leads that turn into signed agreements. The business can also recognize them in company newsletters or at your national convention by branding them as true team players who realize that growth of the system is good for everyone.
Changing the Mindset of Territorial Owners–Speed is of the Essence
Once a franchisee believes that franchise expansion in his or her market is hurting business, the franchisor must work quickly and strategically to change that mindset. The franchise company can’t afford to have a few disenchanted franchisees damage the brand or hurt the validation process with prospective franchisees. Any “red flag” franchisees should be immediately addressed with additional support, communication and education.
It is important to not get defensive or scold franchisees for potentially costing the company a franchise sale, but instead, reinforce how the brand’s expansion in the market will potentially help the company land larger clients, afford more aggressive marketing and advertising that will directly boost their bottom line. Of course, results speak louder than words and eventually the franchisee will see that theory turn to reality. But as the brand’s presence grows in a market, encourage the franchisees to form a co-op that works together to solve business issues and strategizes on local partnerships and sponsorships to strengthen awareness among their target audiences.
Building the mindset among franchisees to embrace and even promote franchise growth in the communities they serve is an ongoing process. It should begin even before a new franchisee comes on board, but ongoing education and communication are critically important to the system so that the company’s vision and growth goals are reinforced and clearly understood. The key point to avoiding a territorial system or group of franchisees is to continue to provide the level of support needed to help them succeed as the system grows. If at some point owners become unhappy with brand growth in their market, turning around that mindset is a challenge, but not impossible. As franchisees are shown the rewards of a growing system and are in the know about how they stand to benefit, they’ll embrace being a part of a larger, stronger brand.
Lauren Reid is the CEO of PuroClean, a franchise network of 320 locations providing fire, water, mold and biohazard property damage restoration services across the United States and Canada. Reid is a noted restoration industry veteran with a track record of success in new business development. He can be reached at email@example.com