Honoring the Trust Code: Building Relationships to Drive Economic Value

January 23, 2015

Trust always affects two outcomes: speed and cost.

By Cheryl A. Bachelder

This past February, I had the privilege of speaking at the International Franchise Association annual convention in New Orleans. In my remarks, I presented a business case on how a strong franchisor-franchisee relationship was driving sustained performance results at Popeyes Louisiana Kitchen. Afterwards, I spoke with many of the attendees about this topic and I was reminded of this reality. My message was common sense. But common sense is not often common practice.

Distrust works against our joint success.

In the bestselling book, “The Speed of Trust,” author Stephen M. R. Covey tells us that total return to shareholders in high-trust organizations is almost three times higher than the return in low-trust organizations (2002 Watson Wyatt study). He goes on to teach the “economics of trust.” Trust always affects two outcomes: speed and cost. Low trust slows down progress and increases costs. High trust accelerates progress and decreases costs. High trust drives superior performance. What about your personal experience? Think about doing business with a person you trust completely? Did it go well? Was it efficient, successful and effortless? Compare that to a business dealing with a person you don’t trust? How did that go? We know the facts. We know from personal experience. Trust drives better business outcomes. So I ask the question: Why wouldn’t we want to build high trust between franchisor and franchisee as a strategy for business success? What else do we need to know? In looking at this topic for nearly 20 years, I have concluded we just don’t know how to build trust. To that end, I humbly submit five ways a franchisor and franchisee can build trust, creating the conditions for business success.

Five Ways to Build Trust

1.Respect the passion of the franchisee. Franchisees invest the financial and human capital to build the retail outlet. They took big risks. They took out loans and second mortgages. They sweat the cash flow challenges in the difficult years. They lost sleep many a night to get the business off the ground. If you had this much “on the line” you might get emotional too. Allow passion to be expressed in your exchanges. Honor the emotion. It is the emotion of an entrepreneur. And it tells you that they care deeply about the business. Hear it that way. 2.Listen carefully to each another. When challenge enters a business situation, our natural instinct is to defend our own point of view. Just as we do in a marital spat, when emotions run high, our first instinct is to talk louder. But has it ever worked? The best way to demonstrate respect for another person is to listen carefully. An angry person may not articulate their opinion well on the first try, but instead of trying to talk them out of their anger, what if you only did three things: Listen carefully, ask clarifying questions and restate the problem as you understand it until the person says “That’s correct, you understand my problem.” When I remember to do this, and it is difficult to do, I’m amazed at the new level of understanding I gain on the issue. I may still disagree with the person, but I typically learn something important to both solving the problem and getting the relationship back on track. Listening yields a new level of understanding — a new learning. When a person feels heard and gives you a new insight, trust builds and collaboration begins. 3.Be fact-based. What is the antidote to passion? Facts. It is the franchisor’s responsibility to collect, analyze and share the facts of the business performance — bringing sales, traffic counts, market share, guest satisfaction and restaurant profitability statistics to the table. This factual information balances the conversation with our passionate franchisees. Once a franchisee was loudly challenging me on the performance of a promotion event. He said, “That event nearly bankrupted the system.” I responded and said, “Actually, that promotion event delivered the highest average dollar profits of any promotion in the last two years.” He said, “Wow, do you know that?” I said, “We collect restaurant level P&Ls from several hundred restaurants each period.” The franchisees calmly answered, “Then I guess you know.” The conversation was respectful and fact-based. With the facts in hand, the emotion left the room. 4.Be personally accountable. There are only two options for accountability:

Do what you promised and do it well.
Apologize for falling short of what you promised, and commit to righting the situation.

In the franchisor-franchisee relationship, we do so many initiatives together. There is no chance either of us will be perfect. As an example, a franchisor may, with good intentions, launch a new technology for the retail store. But despite all efforts, the technology is not working well for the store. The accountable answer is: “I’m sorry. The technology is not working as we promised. We will work together until the problems are completely fixed. We want to get it right for you.” Similarly, the franchisee signs a contract to maintain the standards of the brand. If they fall short of a brand standard, accountability says, “I fell short of the brand standard and I plan to right the situation promptly.” When we both keep our promises, our business model performs. When one of us fails to deliver, a simple apology and a commitment to address the problem quickly rebuilds trust. 5.Attempt to be humble. Author C.S. Lewis wrote one of the most compelling treatises on the value of humility, yet acknowledged, “I wish I had got a bit further with humility myself.” True humility is just plain hard to do. Let’s be honest with one another. Humility isn’t the strong suit of either franchisors or franchisees. We have this deep rooted need to be “right” in every circumstance. It just plain feels better to be right, than to admit any failing of any kind or to admit the other party adds any value at all. Can we laugh out loud about this together? We are so often arrogant, self-absorbed and determined to get our way. Just like the two-year old throwing a fit in the grocery checkout line because he didn’t get the candy bar. The most disarming and healthy thing we can do for each other is to laugh and say, “I don’t know why it is so important that I win this argument. Let’s start again and see if we can find common ground – a win-win solution.” Trust is like air; we can’t always tell if it is there, but we certainly know when it is not present. Take these five ideas to the next meeting between the franchisor and franchisee and see if we can build on a new trend of trust, a trend that drives superior results! Cheryl A. Bachelder is CEO of Popeyes Louisiana Kitchen, Inc., which has 2,315 operating restaurants in the United States, Guam, Puerto Rico, the Cayman Islands and 26 other countries, as of Oct. 5, 2014. Find her at fransocial.franchise.org.