Franchising is a huge industry. Depending on how you count companies and their subsidiaries, the U.S. is home to around 3,500 franchisors covering roughly 300 economic sectors. Thanks to this diversity, nearly any franchise candidate can find a business model to suit their individual needs and goals. But exactly how do you find your perfect fit in such a huge industry? We’ve published a number of blog posts on that topic, including tips on how to find a franchise that suits your leadership style, financial horizon, level of business experience, and more. Here’s one more factor to consider: the kind of franchisor relationship you want to have.
Why Franchisor Relationship Matters
When you’re evaluating franchisors, it can be easy to focus purely on the business side of things, or on detecting red flags. Are the company’s finances in good order? Do you think the product or service is in high demand and properly priced? Does the setup–home-based vs. brick-and-mortar–suit your needs? But relational fit is just as important as those other factors, perhaps even more so. Franchisors know this. It’s partly why they evaluate franchise candidates so carefully.
Franchisor cultures are as diverse as the industry itself. If you choose a company with a good cultural fit, you’ll be better able to build a positive franchisor relationship. You’ll feel more confident about your business and experience less day-to-day stress in running it. You may be able to earn privileges like early access to new territories or preferred suppliers. On the flip side, a bad cultural fit can have the reverse effect. It can raise your stress level, make you feel uneasy about your business, and block your attempts at expansion. You may end up having to choose between suffering through a miserable arrangement or bailing on your investment before you’ve achieved your goals.
Figuring out the Franchisor Relationship You Want
To help you figure out the kind of franchisor relationship you want, you should ask yourself some questions.
How close do you want the relationship to be?
Do you want a franchisor that checks in on you regularly (or requires you to provide frequent progress reports), or one that leaves you at arm’s length? Do you want to feel like you have a personal relationship with the company’s leaders, or are you happy to deal primarily with a support representative or someone like a regional liaison? Smaller franchisors, such as regional brands, usually provide a closer connection to company leadership, while large national brands may feel less personal.
How much support and guidance do you want?
If you have limited business or leadership experience, you may want some hand-holding. Look for franchisors that assign you a personal support representative, provide detailed operating manuals, and/or offer a robust software platform. On the flip side, if you’re a highly experienced executive, you may prefer to chart your own course. In that case, look for franchisors who have more flexible business systems, let you choose your own suppliers or software, and don’t charge hefty fees for marketing or support services you won’t use.
How much do you care about peer-to-peer relationships?
For some franchisees, the owner network is the most important part of the franchisor relationship. If that’s you, plan on speaking to several franchisees when you’re evaluating a company. Ask questions like: Do your fellow owners feel more like competitors or colleagues? If you’re stumped by a problem, how easy is it to pick up the phone and ask a fellow owner for advice? Is the network diverse in terms of backgrounds and experience levels, so that franchisees can benefit from a variety of perspectives or easily build a sub-network of peers? Do the owners in your network meet up regularly to swap tips and stories? Are more senior members of the network open to mentoring new franchisees?
What kind of pace or pressure level works for you?
Do you like quick growth and high-pressure environments, or are you looking for a more relaxed experience? If you’re the first type of franchisee, a newer brand that’s experiencing explosive expansion may suit you. Or you might prefer a franchisor with a high-performing culture, one that treats owners like an ambitious coach treats top players. These types of franchisors set ambitious revenue targets, reward top sellers with bonuses, or expect multi-unit owners to expand rapidly. If you want a more relaxed culture, an established brand that focuses on slow, steady growth may suit you better. Also look for franchisors that allow single-unit ownership or have higher profit margins, so you can hit your revenue targets by selling fewer products or booking fewer appointments.
Do you care about diversity?
You don’t have to be part of an underrepresented group to appreciate or benefit from diversity. For instance, research shows that diverse organizations are more likely to have above-average profitability and to outperform their competitors. Additionally, if you are a candidate from an underrepresented background (e.g., women, people of color, or veterans), you may feel more welcome in a diverse franchise. Such companies may also have more support and financing programs tailored to your needs.
To evaluate the true impact of diversity on the franchisor relationship, ask about it at all levels of the organization. Are the leadership team, employee base, franchisee network, and customer base diverse? Is franchisor marketing diverse and culturally sensitive? Does the franchisor have a good supplier-diversity program? Do franchisees from underrepresented groups feel that they have positive relationships with the franchisor?
Need some help evaluating whether a franchisor is a good cultural fit for you? The Empowered Franchisee can help. Book some time with one of us to start the process–just a 20-minute conversation will get you on your way to professional and financial freedom!
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