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THE ART OF FRANCHISE NEGOTIATING

If you don't ask, you'll never know what you can get!
by Jerry Wilkerson
 

"If you want to persuade people, show the immediate relevance and value of what you're saying in terms of their needs and desires... Successful collaborative negotiation lies in finding out what the other side really wants and showing them a way to get it, while you get what you want." - Herb Cohen

First, say no! Then negotiate because the final decision could be maybe. I learned this maxim from some of the best hagglers in the world after working for ten years on Capitol Hill in Washington. We have all met rascals who, in a fifty-fifty proposition, insist on getting the hyphen, too. This is not one of their stories.

In franchising, we are supposed to play by the rules. From the original franchise contract to renewals, the rules are specified within the agreement between the franchisor and the franchisee. However, how we arrive at those rules could be negotiable.

Good franchisors are interested in franchisees' ideas, and franchisees are interested in the range of experience franchisors bring to them. Neither side needs to cheat or bend their principles, the rules, to succeed in business through franchising. As with playing a game, it's no fun to win by breaking the rules. In the franchise business, one can still beat the competition, stick with what they believes in, follow the rules of the contract, and prevail without being deceitful. Each must know the rules, understand them, and when all is said and done, be willing to accept them or question the rules from the start and, perhaps, challenge them for change.

That is precisely why the contract is in place. It helps illuminate the way to understanding and success. But before a potential franchisee forces a discussion to the point of an argument with the franchisor, he or she should take a good look at all sides, their side and, perhaps, the outside. Inevitably, the franchisor will always have the final word.

Some potential franchisees may fear that they will be required to conform to an overpowering, intimidating corporate system that the franchisor has established. This kind of pressure, of course, exists to some degree in all organizations and businesses. Without it in franchising, we could not protect the brand, the quality, consistency, or other franchisee's investments within the system. Efficiency dictates such rules, and devoid of them, no franchise chain could stay organized or fulfill the contract agreement.

Talking is a natural way of doing business. It generates new ideas. If a franchisee has an opinion, a proposition, a proposal that would alter the franchise contract, or anything about which he or she feels very strong, my suggestion is: speak up. Not all franchisors will listen. But, if one doesn't ask the question, one may never know the answer.

Nothing is more difficult and, therefore, more precious than the ability to make one's own decision. Franchisees always hold that card. They can choose not to buy into a system but rather to take their money, their will to work and to succeed, and go elsewhere.

From the franchisor's perspective, it is helpful to figure out in advance where the potential franchisee would like to end up. At what point will the franchisee sign the agreement and still feel as if he or she is coming away with a workable deal? This is much different from, "How far can we push them?" Many times a negotiator can push someone to the wall and still reach an agreement, but the resentment will haunt that relationship for the term of the contract.

As with all binding accords of legal consequences, it is important to remember that the big print giveth and the small print taketh away. Franchisees should read the contract in full, every word, and understand it. Knowledge is what one gets from reading the small print in a contract, and experience is what one gets from not reading it.

During my 23 years in franchising, I have found that the first-rate franchisors will try to surround themselves with strong, driven, ever inquiring franchisees. The second-rate franchisors will surround themselves with third-rate franchisees that will question the system and bend the rules to their needs. The third-rate franchisors will surround themselves with anyone who can pay the franchise fee and who really doesn't care to remember the rules. These franchisees are the ones who will say that they agree to the contract in principle when they truly mean they haven't the slightest intention of carrying it out in practice.

Abraham Lincoln once declared, "When I am getting ready to reason with a man I spend one-third of my time thinking about myself and what I am going to say, and two-thirds thinking about him and what he is going to say."

We all need to listen better, and, on occasion, put ourselves in the other person's billet. Do we really understand what someone wants? Have we tried to accommodate his or her request? Is it possible to do more than expected, yet keep the deal in place while providing for a fair, just, and equitable relationship?

My experience is that most franchisors will listen if the franchisee makes a good point and can defend his or her position with a sturdy argument. One must be within the realm of acceptable business practice, and, of course, economically balanced. In other words, the proposal should make sense to the franchisor and be equally worthwhile. After all, the franchisor wants to promote the system, and the new franchisee is the proverbial engine that pulls the train.

A franchisee with average ability, good discipline, a definite goal, a clear conception of how that goal can be gained, and the power of application and labor will succeed. This individual is highly sought after by franchisors the world around. This franchisee brings much to the table for discussion, and discussion leads to negotiation; negotiation can direct the way to an agreement, which clearly represents an acceptable understanding of the rules.

Considering the myriad of possible consequences, one can view the art of franchise negotiation not so much as a case of crafty maneuvering but as one tempered with common sense. You may never know what you can get unless you ask for it because that final decision could be maybe!



Reprinted with permission from BIZ/Successful Franchising Magazine.
 
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Jerry Wilkerson is a former president and executive director of the International Franchise Association (IFA), in Washington, D.C., and founder of Franchise Recruiters Ltd.®, an international franchise talent acquisition corporation with offices in Toronto and Chicago. He recently marked his 32nd year in franchising.

Contact:
Email: franchise@att.net
Internet: www.franchiserecruiters.com


 
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