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by Greg Nathan

Many years ago, as an enthusiastic 30 year old, I accepted the offer of my boss to become the Marketing Manager of our fast growing national chain of franchise bakeries. I had previously worked with the group for 10 years in a variety of roles including baker, store manager, multi-unit franchisee, field manager and most recently State Manager. There was nothing, I thought, I didn’t know about running a successful retail bakery.

After having my new business cards printed and settling into a bigger office, I thought I had better learn something about marketing. Not that I needed it, because I had a postgraduate degree in psychology and, as I said, already knew everything.

But at the suggestion of my boss I enrolled in six day course on marketing basics. This, it turned, was a turning point in my life. Our teacher was a veteran marketer who headed the Marketing function at Black and Decker. He told us story upon story of how bad business decisions had crippled good businesses because of a lack of good research.

What great research looks like

I had already learned from my psychology training that good research means asking the right questions. But what I learned in this seminal course is that great research involves asking the right question from the right people.

So before putting my first marketing plan together, I put aside the multitude of creative ideas I had received from bakers, franchisees, friends, family and colleagues (after all everyone’s a marketing expert right?) and decided to ask the right questions from the right people.

Because we had no official research budget I called in a favour from some psychology student friends who agreed, in return for free bread, pastries and $5 an hour, to stand outside our stores and ask the right people, customers leaving the store, two simple but powerful questions. “What did you buy today and why?” and “How come you decided to shop in this store?”

What I discovered shocked and excited me, because after working in this business for over 10 years I had never understood the main reason why our stores were so busy and had grown so quickly. It wasn’t our special ingredients, the beautiful shapes of the products, the creative way the bread was displayed or the beautiful new tiling on the walls.

Our secret marketing weapon had literally been right under my nose and I hadn’t realized it. Yup, you guessed it, the smell. Most of these people said they made the extra effort to shop in our stores because they loved the smell!

Bingo, suddenly I understood why our stores were so busy in the mornings, even though the service was worse because the shop staff were distracted setting up the products for the day. Customers loved seeing and smelling the bread coming out of the ovens. Ironically we had been trying to work out how to get the bakers out of the shops earlier so the full range of breads could be displayed from opening time!

It was a battle to convince the bakers in the stores to start later and bake later, but where we succeeded, sales went up 20%.

The other group we often forget to ask

While this experience revolutionised my attitude to the customer side of the business, my education was not complete.

As I rolled out my great new marketing ideas many of them bombed, not because the ideas were bad, (many were brilliant even if I do say so), but because I failed to ask the right questions from the other group of right people – my franchisees!

Instead of asking my franchisees questions such “What do you like about this strategy?” and “What concerns do you have, and how come?”, I assumed they would follow me blindly - a big mistake. My lessons on how to get franchisee buy-in were thus longer, more painful and a lot more costly than my lessons on how to get customer buy-in.

That was 27 years ago and I’ve learned a lot since, such as that the success of a franchise network depends on the franchisor knowing what is going on in the minds of the end customers AND the franchisees. I’ve also learned that great research needs to be done on both groups.

Understanding what makes franchisees tick

While millions of dollars are pumped into consumer research each year, how much is pumped into really understanding what makes franchisees tick? At the Franchise Relationships Institute, this is our passion, it’s all we do – researching and trying to understand what drives franchisees success and satisfaction.

Along the way we’ve discovered an interesting thing or two, such as:

  • The biggest frustration franchisees’ experience, beside lack of profitability, is the feeling that they are not taken seriously by their franchisor.
  • On average, 18% of franchisees in a network will at any one time feel like they are in dispute with their franchisor. Furthermore the people in this 18% group will change as they move through various stages in their relationship with the franchisor.
  • The most powerful reason why franchisees will or will not recommend their franchise system to prospective franchisees is not how much money they are making, but how optimistic they feel about the future of the network.
  • Speaking of optimism, people that have the tendency to be optimistic as a personality trait, have significantly higher sales, deliver better customer service and are far more likely to be a good fit for the franchising culture.
  • And the factor that is most likely to differentiate between high and low franchisee performance has nothing to do with their personality. It is the extent to which they have great family and social support – people around them that care about their success and will provide the encouragement and inspiration to help keep them going during the inevitable tough times.

Of course there’s more, lots more, but that will have to wait for another article.

Meanwhile we are about to launch what I believe is the largest scientific global study ever conducted into what makes franchisees tick, and the factors that drive higher levels of franchisee success. If you are a franchisor reading this I’d like to invite you to join us in this study. The potential benefits to your company, your franchisees and the global franchising sector are significant.

To find out what’s involved and how participating could help you and your franchisees to be more successful, please visit our website at where you’ll see an expression of interest form and a briefing document.

So remember, great research means asking the right questions of the right people. One other thing I learned about great research. It’s important to do the right pilot testing on your strategies before you roll them out to your franchisees. But of course you already do that don’t you?

Hope you can join us in the Franchisee Success Study.


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Greg Nathan is the Founder and Chairman of The Franchise Relationships Institute. For more information on the Institute's research and publications go to

Phone: +61 7 3510 9000
Fax: +61 7 3870 2111


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