Keep communication lines open for success

Once the franchise agreement has been signed, the need of creating and maintaining an effective and mutual communication channel by the franchisor for over all franchise success is equally important. Though franchising is a replication of a proven business system but the franchisee would always need the support and direction from the franchisor to achieve enhanced business performance. On the other hand the franchisor will be able to keep his brand equity intact. Communication is a key building block for franchisor-franchise relationship as it facilitates understanding in terms of day to day business operations. The information provided by the franchisee helps the franchisor to understand the challenges and issues relevant to the local market in that particular territory.

Franchisor and the communication system

The information exchange between the franchisor and franchisee is not only a confidence building exercise but also acts as a motivator to achieve desired objectives. It is an important franchise management tool which should be utilised optimally by the franchisor for smooth conduct of franchise business. The franchisor may adopt both verbal and written modes of communication to give suggestions and feed backs for operations, branding and marketing, training and human resource matters etc to the franchisee. Franchisor can also communicate to clarify or justify certain issues or even complaints to the franchise in case there is any inconsistency on his part which is against the procedure and policies laid by the franchisor.

Elaborating on the modes of communication adopted by his company for the day to day operations of franchisee, Inderpal Singh, Vice President, IndiaCan Education Pvt. Ltd comments, “The various types of communication adopted by us in particular is the most effective, efficient and transparent among the procedure adopted by others. We use different parameters such as DSR (Daily Sales Report), SRR (Student Registration Report), Accounting vouchers, Head Count reporting format, Periodic Book Dispatch summary for day to day mode of communication in writing from the franchise. Other than this, verbal communication happens with all the franchisees on daily basis by the respective Operations Team handling respective zone and territory for better and effective operations. A franchisor has a prime objective of achieving success and profitability which is the core essence in any business format. No other effective and efficient method other than the Communication helps in achieving the same. I strongly believe that if communication is to be used to achieve the goals and targets it has to be done in a most appropriate manner.”

Master franchisee and the communication system

A master franchisee has to take up the dual role of franchisor as well as a franchisee at the same time. It becomes even more challenging to have a robust and an appropriate communication system to be built and maintained by the master franchisee that can fulfill the need to manage its franchisee network as well as reporting to the franchisor.

Srileka Reddy, Director Marketing, SNAP Fitness, India, Master Franchisee of the US based company shares her view regarding the challenges faced by the master franchisee launching an appropriate communication channel to meet its dual requirement, “As a master franchisee, communication becomes even more crucial because we have to balance the equation between our parent company and our franchisees in India who have invested all their money based on their relationship and trust with us. We have to protect their interests and also maintain excellent relations with our parent company to protect our interests.

Without maintaining effective communication channels on both sides, it would be impossible to ensure success and profitability in the business. In the role of a franchisee, to keep communication lines open master franchisee need to do a meeting with the franchisor for at least once in a week preferably on skype where they talk about new club openings, any issues to be sorted out from franchisees in India, collection of royalties, support required. It is very important not to let issues build up but to sort it out immediately."

Need of franchisors to personally visit the franchisee

In addition to verbal and written communication it is equally important that Franchisors (or its representative) should visit franchisees’ operations some times, with a deliberate program to build trust and strengthen communication with its franchisee. In this context, Singh says, “Such timely visits ensure better and effective communication between the parties. Weekly, monthly visits and Audits are too carried by the franchisor on regular basis which not only helps in better clarity and understanding of work done by the franchise but also helps to streamline the process.”

And Srileka Reddy, Director Marketing SNAP Fitness says, “It is very important for the franchisor to meet personally with their franchisees from time to time since there are so many cultural and social differences in different countries. It is very important to be physically present to understand the market and build trust and confidence with their partners. From our end, we have a monthly meeting with our franchisees to resolve any issues and also have an audit team to visit the franchisees operations from time to time.”

Rudiments of effective communication

The franchisor should promote a collaborative culture so that major decisions are taken by taking the franchisee in confidence.  It is important that the franchisor communicates its corporate decisions such as operational procedures, new product launch, promotions even funding decisions to its franchisee in timely and appropriate manner so that latter feels that it is respected part of the franchise system. Ineffective communication hampers the team work between franchisor and franchisee. Franchisor should also avoid being only directive and they should rather welcome inputs from their franchisee regarding the various aspects of business. Franchisee should not be given the impression that he is not being heard. In case of severe disagreement, if the franchisor and the franchisee are unable to resolve their differences then there is always an option of seeking help of a third party to keep the communication channel open instead of maintaining the status quo which can hurt the franchise business profits and restrict its growth.

In nut shell, the problem between franchisee and franchisor arises when there is difference between company culture and faulty or no communication and it can lead to major misunderstandings. In case of things gone wrong, franchisor may have to face the brunt of the franchisee in form of a law suit against it. Talking can resolve issues and also bring clarity to various business issues to both parties. Franchisor can not always expect the franchisee to approve every decision it makes but will appreciate the fact that they are part of decision making process and this furthers trust between them.