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Managing System Change and Enforcing Brand Standards

Brands don’t evolve, improve or remain competitive without change.

Best practices abound, but they need to be balanced with an understanding that they often do not travel well from one company to another. To be effective management strategies, best practices need to be contextual and fit your business and your system’s culture.

enforcing-brand-solutions-300Collaboration with franchisees on the direction of the franchise system has always been essential.  After all, franchisees deliver your brand’s promise to consumers.  But collaboration fails when it is event-driven and not an integral and continuous part of your system’s culture.  Situational collaboration as a tactic often rests on the need to avoid conflict; taking too much time when time may be limited is generally no more than decisive compromise.

Decisive compromise fails as a method of sustainable brand management because it has limited benefit toward sustainable, long-term franchise relations.  Franchisees, in the long term, measure a franchisor’s performance on the ability to improve brand value and the equity they have built in their businesses.  They joined your system expecting you to lead the brand.

To be effective, collaboration needs to be part of a change culture that exists within a system in which effective communication exists and where franchisees are given a regular role in the strategic direction of the system.  That does not mean that franchisees are given an equal seat at the table or that their opinions equate to instructions to the brand managers, as that is not their proper role in the relationship and would not be either beneficial or effective. Franchisees invest in a franchise system for a host of reasons, but the ability of the franchisor’s leadership in managing the brand was likely near the top of their list.

Franchisees generally bring a micro view to an analysis and that localized understanding needs to be factored into the macro of managing the system.  Their most important value in a change culture is to provide such information as ideas, advice and essential push-back.  There can only be one arbiter of the direction for any company and despite the influence franchisees should play in brand management, their role is not to direct the system.  That role in franchising is the responsibility of the franchisor.

Having an effective change culture is a continuing process built on successful previous decisions, solid franchise relations and most importantly, frequent and substantive communication.  When changes are unexpected, well-managed franchise systems rely on an atmosphere of trust with their franchisees that allows for those situations to be dealt with in a relatively easy and routine manner.

Trust in franchising is a byproduct of effective and constant communication, ethical business practices, a history of good decision-making and a clear understanding of everyone’s role in the relationship. It is the foundation for establishing an environment that supports change. Building a culture of change based on trust enables the franchisor to make the occasional misstep without push-back from franchisees that too frequently occurs in some systems.

Culture of Change Requirements

Michael Seid, CFE

Michael H. Seid, CFE, is managing director of MSA Worldwide, chief concept officer of CFWshops and an IFA board member

Developing a culture of change takes time and should be supported by both franchise system management and by franchisees.  It requires:

  • An extensive, ongoing and frequent communication structure that keeps franchisees informed about both the good and the bad that is happening to their brand.
  • Routine information on system performance to be regularly provided and that includes administrative matters, changes to the competitive landscape, anticipated system changes including new products and services being evaluated, information on most issues they need and even things they may not need, but simply wish to be familiar with.
  • A franchisee advisory council or a constructive relationship with an independent franchisee association is essential.  How they are used and in what areas they are best used are fairly well established.  But FACs and IFAs are not communication filters or replacements for direct communication with your franchisees.
  • FACs and IFAs are important, but franchisees should be included as part of your strategic planning team.  It is unnecessary that the franchisees you choose to be part of the strategic team be drawn from the leadership of the FAC or IFA, but franchisees can add an important voice that may be missing from your internal team.
  • Empowering your field staff is important to successfully managing a culture of change.  If used properly, staff can build trust and improve system performance.  But to be effective, staff needs to be trained, qualified and kept informed about the details of the company’s strategic direction.  The staff’s span of control and decision-making authority need to be clearly defined, but broad enough to deal with most local decisions.
  • You have little wiggle room in compromising how the public views your brand.  If a franchisee’s lack of compliance negatively affects the brand, and by extension, the equity other franchisees have built in their businesses, a culture of change does not mean accepting poor performance at any level.  While automatic letters and emails may be efficient in communicating with franchisees, avoid them as a first step.  Instead, phone or visit with the franchisee first to discuss the problem. Make sure that your staff is empowered to come to a resolution; don’t have someone with “Esq.” behind his name make that first call. It is not the role of legal counsel to be on the front-end of solving most problems.
  • Learn from each situation with a focus on improving your selection and onboarding process of franchisees. Follow the leads of some of the great franchise systems and treat the franchisee with dignity, even if it’s a difficult situation.  Franchise systems are glass boxes and other franchisees and your staff will watch how you handle situations, especially when the franchisee was at his most vulnerable point.
  • If the best approach to a problem is having the franchisee exit the system, focus on allowing the franchisee to exit the system with the maximum amount of equity achievable from selling the business to another operator.  Litigation is expensive and in the end, even if you win, your focus was taken off the business of managing the system.
  • Stay away from “politically correct talk.”  Franchising is not a partnership, franchisees are not family and they are not your customers.  While closeness in the relationship is expected and beneficial, using euphemisms have unintended consequences as the interests of the franchise system, as a whole, may on occasion not be in alignment with those of the individual franchisee. Franchising is truly a beneficial relationship and it does not need or benefit from politically correct and inexact descriptions of the relationship.

Countless changes will need to be managed in the normal course of business, and with relatively few exceptions, none of these changes should be a surprise or arise suddenly on franchisor management.  But when unexpected changes occur, how well you have established and managed a culture of change will enable franchisees to trust your direction and decisions, including those that they may not be legally obligated to accept.

Franchise management is hard, and exceedingly harder than managing a non-franchise system.  But having a culture of change, supported by communication and proper brand management, makes it more likely that standards will be executed by franchisees on a consistent and sustainable basis. Enforcement is necessary, but instilling a culture of compliance is much more sustainable.

Michael H. Seid, CFE, is managing director of MSA Worldwide, chief concept officer of CFWshops and an IFA board member.  Find him at fransocial.franchise.org.

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