Understanding Franchisee Behaviour

by Greg Nathan, Managing Director,
Franchise Relationships Institute

This article is an excerpt from the book, The Franchise E-Factor, by Greg Nathan.

Accountability and Creative Tension

If you want to become a better manager of the people issues in business, or in life for that matter, you will find it useful to have a framework for understanding why people do the things they do. Having a framework enables you to be more objective in how you respond to common interpersonal challenges such as heated disagreements or managing people who are de-motivated. In other words a framework helps you to be more in control of yourself and the situation.

The Franchise E-Factor is a framework I developed to help franchisees and franchisors better understand the psychology of their relationship. In particular why their dealings inevitably become strained and how they might reduce this tension to a level that, instead of undermining the relationship, it actually enhances it.

Yes, some tension can be good in a relationship. The word often used for this positive, creative tension is “accountability”. Accountability at the right level stimulates sales, productivity and good decision making. However when it is overused it creates a punitive, blaming culture that actually reduces people’s motivation and productivity.

One of the most important lessons that franchisors and franchisees need to learn is how to strike the right balance in holding each other accountable.

All Behaviour Has a Purpose

All human behaviour has a purpose. Regardless of how irrational or destructive someone’s behaviour may appear from the outside, human beings are fundamentally goal-seeking creatures and therefore always do things for a reason.

Often the purpose of someone’s actions will be to meet one of three fundamental emotional needs, shared by everyone:

  1. To have the respect of other people.
  2. To feel a sense of belonging or connection with others.
  3. To believe that your life has meaning and makes sense.

If you reflect for a moment on your own life, in particular a time you were restless or unhappy, you will probably find there was a gap in one of these needs. You may have believed you had been undermined. Maybe you felt “on the outer” with your family or a group that was important to you. Or perhaps you were becoming unsure or confused about the values of your organisation or which direction to take in your life.

Because these needs are so fundamental to people working productively and cooperatively with each other we will revisit them later in this book. However let’s first look at a practical example of why these needs are important for understanding behaviour in the franchising context. And what can happen if they are undermined.

Three Types of Relationships

Despite, or perhaps because of, the close interdependence of franchisees and franchisors on each other, strained relationships are common. Over the years I have sat in hundreds of meetings, large and small, with unhappy franchisees and franchisors blaming each other for all manner of things including being unfair, unreasonable, disloyal and dishonest. The similarity between these meetings and a marriage counselling session is often not lost on the people involved!

Like a marriage relationship, the franchise relationship moves through stages starting with the bliss of the honeymoon. Then, as we realise that our partner has their own pet needs and is not as perfect as we imagined, we begin to question what we have got ourselves into. Finally as both parties come to understand and accept their strengths and weaknesses, the relationship becomes stronger, more stable and more satisfying, though not without its strains.

These three types of relationships are often referred to as dependent, independent and interdependent. The first is driven by short-term needs. (In a marriage these can be sex, security or convenience. In a franchise relationship they can be money, security or convenience). The second type is driven by the need to be free from the demands of other people — to be our own person and express our unique talents and gifts.

For the third interdependent type of relationship to prosper there needs to be adequate maturity, acceptance and respect from both parties. In interdependent relationships there is an appreciation that, while we might from time to time feel like a prisoner of our relationships, in reality we all have the power to choose how we think about the relationship and how we respond to the other people involved. And of course whether we even want to continue in the relationship. In other words both parties accept responsibility for shaping the quality of the relationship.

The Six Stages in the Franchise E-Factor

While the Franchise E-Factor framework incorporates these three types of relationships, as you will read in the following chapters, it has six stages briefly described as follows. As you read them you will see why it was logical for me to name this progression, The Franchise E-Factor.

Glee: The franchisee is somewhat nervous about their new venture but is also excited and optimistic about the future.

Fee: The franchisee starts to become sensitive and concerned about the value of the fees being paid to their franchisor or the costs of services or products received.

Me: The franchisee concludes that their success is due mainly to their own effort and plays down the contribution of the franchise system. Or if they are struggling they play down their own deficiencies.

Free: This stage is characterised by the franchisee’s need to demonstrate his or her competence and assert their independence, thus testing the franchise system’s boundaries.

See: Through frank and open discussions the franchisee and franchisor better understand and respect each other’s points of view.

We: The franchisee recognises that success and satisfaction come more easily from working with, rather than against, their franchisor.

While I have explained these six stages in other publications (for example, see the book Profitable Partnerships), this is the first time I have provided specific tips for franchisors on how to manage the six stages of the Franchise E-Factor.

Franchisees at the We stage are a franchise network’s greatest asset and, as a franchisor, you need to be able to facilitate the development of your franchisees through to this stage.

In doing so you are more likely to become a more successful and profitable franchisor with a franchise system of profitable, happy franchisees.

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