Two Stories from 50 Years in Franchising

I was talking with my team the other day about how this is my 50th year working in the franchising sector. They suggested I use this Tip to share a couple of stories that have influenced my thinking.

Just for context, in 1975, when I commenced my studies in psychology, I also got a job as a part-time baker with a small chain of company-owned hot bread shops. When I qualified as a psychologist, I was sick of academia and took up an invitation to become a franchisee with the company, which had evolved into the Brumby’s franchise network. Later, I joined the head office team and experienced life as a franchisor executive.

After wrestling with many of the complex relationship challenges endemic to the franchising sector, I decided to combine my interests in psychology and franchising and start a research and education business specialising in the franchise relationship.

Here are two stories that came to mind as I reflected on my 50 years as an employee, franchisee, franchisor executive and educator.

The day Owen lost his temper

Owen was the first company store manager in our network to become a franchisee, and I worked in his store for a time. Early one morning, soon after he took over the business, we were preparing the doughs in the bakery area out back, when we heard the front sliding door of the shop open and close, followed by the rattle of the cash register drawer opening.

Owen frowned, put down the dough he had been kneeding, and went to investigate, with me close behind. As we entered the retail shop area, we saw the Area Manager stooped over the cash register, reviewing the takings from the day before. I remember the look of shock on his face as Owen grabbed him, spun him around and growled, “Don’t you ever come into my store again, and touch my cash register, without my permission!”

What was fascinating about this altercation is that the Area Manager had regularly followed this routine of coming into the store to manually check the takings (this was before the internet existed), and Owen had never been bothered by this. But now his mindset had transitioned from store manager to business owner.

Managers are like baby sitters. They’ll care for a business, but they’re happy to hand it back at the end of their shift. For a franchise owner, the business is their baby - it’s a different level of commitment. This is why franchisee-owned units typically outperform company-owned units. Owen’s store was no exception, growing significantly after he became a franchise owner.

Owen’s behaviour also got me thinking about the interesting power dynamics that play out between franchisees and franchisor executives. Previously, Owen reported to the Area Manager and was happy to be told what to do. But now he expected to be treated as an equal, and to even to hold the Area Manager accountable for his actions.

The shifting power dynamics that often occur between franchisees and franchisors is a fascinating area that we have researched at FRI. We have found that, if the roles are not regularly revisited and clarified, this can easily become a source of conflict. We have also developed a Culture of Franchising Workshop to help franchisor teams understand how to manage these power dynamics.

How we lost our franchisees

A few years after I became a franchisee, the franchisor company floated on the stock exchange and used some of the raised capital to expand the team and move into a fancy, renovated, double-story building. I was invited to join the franchisor team as Head of Marketing.

Danny had been one of our first externally recruited franchisees, and he ran a great business. I often called into his store if I was in the neighborhood, and we sent potential franchisees to talk with him as part of our recruitment process.

One afternoon I noticed Danny standing in the reception area, glancing around and looking lost. I walked out of my office and called to him. “Hi Danny, is everything okay?” He smiled with a look of relief. “Hi Greg, it’s good to see a familiar face.”

I invited him in for a chat, and what he said has always stayed with me. “Things have changed around here. The receptionist asked who I was, and no one except you has acknowledged or even looked at me. Some franchisees have also commented that things feel different since the float.”

What he said was true. Things were different. None of the new franchisor team, including the receptionist, had received training in how the franchise relationship worked, or the vital role our franchisees played in the business. Some executives even spoke about the franchisees as though they were assets on the balance sheet, rather than people.

Ignore culture at your peril

I have often seen this occur as franchisor companies grow and change hands, with professional managers brought in to run things. While there is usually a focus on the importance of the brand and how this needs to evolve, there is often a lack of attention given to the culture or “how we do things around here”. This can lead to longer tenured franchisees and franchisor staff feeling alienated.

I’d like to say that my colleagues and I took on board Danny’s concerns, but instead we rationalised them as trivial, because we were focused on “more important issues” to do with modernising our brand and store image. The consequence of us failing to pay attention to franchisee concerns about the changing culture was they dug in their heels and refused to engage with our new brand and store refurbishment program. In a sense, they punished us for ignoring them.

I learned a valuable lesson from this, and much of our work at FRI is reminding franchisors that the power in their networks largely comes from the pride and passion their franchisees feel for the history and values they share.

Understanding the franchisee reality

A theme both these stories have in common is the importance of franchisor teams understanding the franchisee reality. If you think your team would benefit from fresh insights into what franchisees want and how to best engage with them, you might like to check out our Culture of Franchising Workshop, which we’ve developed for this purpose.

Until next time,