Franchising at the Speed of Trust
The culture and contribution you make to your customers, your community, and other stakeholders thrive with trust. Indeed, trust is the very currency of great franchisor/franchisee relationships, and nothing is as fast as the speed of trust.
By Stephen M. R. Covey and Cheryl Bachelder
That’s not like you! That’s not how you lead! Franchise owners angrily hurled these comments at Cheryl and her team last summer.
Popeyes Louisiana Kitchen's years of regular trust deposits with their franchisees were threatened by a decision they made as a franchisor. Yet because of the consistent history of trust deposits, a potentially derailed relationship was rapidly put back on its tracks. The result of one of the highest trust relationships in franchising.
What triggered the angry reaction in the first place? A unilateral decision to do a marketing promotion without the alignment of the franchisees. Cheryl said, “Our franchise owners were mad at us for three weeks. We weren’t living the values we espoused. Trust evaporated — we had busted the process.”
In Stephen’s work helping thousands of leaders and organizations increase trust over the past 20 years, he’s learned that trust is not just a soft, social virtue. Rather, trust is truly a hard-edged, economic driver — something that all leaders can earn by increasing their own credibility, and by behaving in ways that inspire it.
When Cheryl joined Popeyes in 2007 she was told by one of their senior franchise owner/operators, “Miss Cheryl, you gotta understand. We’re like a bunch of abused children and you’re the new foster parent.” Cheryl and her team were paying what Stephen calls an “inheritance tax” where you enter a situation where trust is low to begin with, and as a result, speed has slowed (or stopped) and your cost structure is inflated due to what preceded you. Popeyes tax stemmed from four CEOs in seven years, declining restaurant profits, no insight to franchisee financials, and flagging product development.
Cheryl and her team determined that the greatest opportunity to grow the business and improve results was by focusing on the crucial relationship of trust with their franchisees.
At publicly traded companies, most CEOs and executive teams primarily focus first on their investors. Not at Popeye’s. Cheryl explains that “Trust with franchisees is the No. 1 success measure we look at as the Popeyes leadership team. Our franchise owners rate the Popeyes leadership team at 95 percent — the highest in our industry.”
How did Popeyes strengthen its relationship with its franchise owners, especially in light of a prior history of low trust?
How trust is built: Credibility and behavior
Trust is founded on two factors: our credibility and our behavior. When people and organizations are credible, they’re perceived as being trustworthy or believable. That perception is reinforced by how each party behaves. Stephen has identified 13 behaviors that drive all high-trust relationships, teams, and organizations.
Cheryl and her team understood this clearly in their work with their franchise owners. They looked in the mirror and started with themselves by seriously considered these questions: “Are we giving to our franchisees a partner they can trust?” and “How can we intentionally behave in ways that build trust?”
Srini Kumar, CEO of Craftworks, known as a turnaround/change agent among franchisors, validates this approach: “It’s so easy to say the problem is ‘out there’ with everybody else. The key to real influence is to start where you have the most impact, and that’s with yourself. Only when you’re seen as authentic and credible are you truly able to lead.”
This is particularly vital for franchisors since, as Aziz Hashim, Managing Partner of NRD Capital and former Chairman of the International Franchise Association points out, the franchise relationship is based on an asymmetrical business agreement. The power is imbalanced in the favor of the franchisor in most franchise development documents and contracts. Franchisors can rely on the power of their position to dictate the terms of the relationship. Yet franchisees often invest their life savings and trust the franchisor will do the right thing by them. As Aziz puts it, “That’s why it’s the franchisor’s responsibility to build trust — because they don’t have to.”
Increasing credibility by declaring intent
The intent that builds trust is a commitment to mutually beneficial relationships. If either party starts to lose, both parties will lose over time. No collaboration leads to no commitment. If you secure a deal without true involvement by the other party you’ll find what you’ve bought is mere compliance — a poor counterfeit for trust.
How do you declare your intent? First make sure it’s positive and based on mutual benefit. Then clearly state or declare your intent by always giving others the why behind the what.
Behavior
Credibility creates the conditions for trust but you must behave your way into trust. Behavior is observable, measurable — and remembered.
Listen first
This is almost always the best action to start with in any relationship. Cheryl shares, “I often tell our team, ‘Don’t tell and sell. Ask, listen, and learn.’ We had to teach ourselves to start meetings with blank Post-It flip charts vs. a PowerPoint presentation. Frankly, we were frightened the first time we did this. We had to live this behavior of listening before you speak because it’s the best way to demonstrate respect to what’s on the other person’s agenda.”
Aziz adds that it’s remarkable to have a franchisor like Cheryl show up at a meeting with a yellow pad and be willing to listen to what franchisees have to say. He points out that “experienced franchisees know that franchisors don’t need to act on — or even listen — to what they have to say. If franchisees don’t understand that they’re in the wrong business. That’s why it’s such a demonstration of respect when franchisors do listen.”
Create transparency
Talk straight about your intent or motivation and create open, transparent systems that people can verify for themselves. This is critical when you’re dealing with a bad decision, an inheritance tax, or a chronic low-trust relationship. Cheryl explains, “Our openness with our owners, especially to show them the real information and real challenges we face, requires us to take a risk that they might interpret the facts differently than we do.”
Being transparent about your expectations of how you’ll work together, measure results, and work through problems also increases trust. When Cheryl’s team acknowledged they had made a mistake with their marketing promotion, Aziz reported, “They said they were sorry, that they didn’t handle it well, and now we’re over it as franchise owners — there’s no hangover. It’s how you handle relationships. Can you acknowledge your responsibility, hear the venting, and not defend yourself or excuse it? If so, we learn and move on.”
Deliver results
Results matter enormously to the building of trust. Sometimes people merely think of trust as a soft virtue, or something nice-to-have, but not as essential to business outcomes. Nothing could be further from the truth. Your stakeholders aren’t just interested in a respectful relationship, they understandably expect you to deliver on your commitments.
Cheryl puts it this way: “I talk a lot about delivering results and getting them in the right way. Because I’m a teacher of Servant Leadership people just think we want to be nice. It’s helpful to be nice but we care deeply about results. We don’t make excuses."
Consider these results: under Cheryl’s leadership, average restaurant sales have increased 45 percent, market share is up from 14 percent to 27 percent, restaurant profits have doubled, and franchisees have built over 600 new restaurants around the globe. And now they’re being acquired by Restaurant Brands in a deal valued at $1.8 billion (21 times cash flow), which is an increase of over 450 percent over the 10-year tenure of Cheryl and her team.
Extend trust
The final behavior that fueled the improved relationship is to extend trust. The Popeyes transformation is full of examples of extending trust wisely, what Stephen calls “smart trust.” Cheryl says, “Extending trust wraps a blanket around all the other behaviors. It sets up an environment where you feel safe to argue and tell your point of view without having to worry about words being taken wrong. I think it’s this behavior that has fueled our success and helped us recover from our errors.”
That’s what Stephen calls “a trust dividend.” Your speed goes up and your costs go down. And not only do you get tangible, economic rewards but you also earn the intangibles of increased positive energy and joy.
Cheryl’s examples underscore the principle seen repeatedly, that trust is a learnable skill, and that it’s an inside-out process. Not only can get good at trust, you can get great at it. You can improve it if you understand how it works (credibility and behavior) and focus intentionally on creating it.
The business results matter. But how you do what you do matters as well. It’s the culture and contribution you make to your customers, your community, and other stakeholders. These only thrive with trust. Indeed, trust is the very currency of great franchisor/franchisee relationships, and nothing is as fast as the speed of trust.
Stephen M. R. Covey is the author of the New York Times bestseller The Speed of Trust. Cheryl Bachelder is the former CEO of Popeyes Louisiana Kitchen, a chain of over 2,500 stores. The authors collaborated to share their perspectives of why building trust needs to be the most important priority of franchisors with their franchisees.