There is a path on which I traveled as a franchisee and which almost
every other franchisee I have ever met has also traveled. The places
this path leads to are not physical, they are psychological in nature
and include emotions such as hope, joy, disappointment, frustration
and renewed confidence.
If you are beginning your journey into a new franchise business,
chances are you will also travel along this path. And in so doing
you will fall under the spell of what I have dubbed The Franchise
The Franchise E-factor is not a mental aberration or something
to be fearful of. It is simply a natural maturing of the relationship
you will have with your franchisor as you gain greater competence
and confidence in running your franchise.
Six distinct stages
If you have a commitment to your business and are prepared to work
through the ups and downs of life as a franchisee you will travel
through six distinct stages. Some people move through these stages
swiftly and more or less painlessly. For others the path is frustrating
and full of interpersonal strain and resentment. Some people even
get bogged down half way through and decide that franchising is
not for them.
If you are a franchisee you may find it useful to use The Franchise
E-Factor as a way of making sense of the frustrations you may feel
from time to time in your role as a business owner who wants independence
yet cant quite have it. As you read through these six stages
below it will become clear why this progression is called The Franchise
The Glee Stage
"I am very happy with the relationship I have with my franchisor.
They obviously care about my success and have delivered all they
said. I am excited about my new business and full of hope for the
Initially franchisees are filled with glee. Along with their decision
to buy a franchise comes the anticipation of whether things will
work out and of course the hope of making lots of money.
During the opening stages of the business the franchisor will also
be busy providing encouragement and support to their fresh and motivated
franchisee. Like a wedding ceremony, the speeches at opening ceremonies
of franchised outlets usually contain profound commitments such
"We will always be here for you";
"You are the reason for our existence"; or
"If you have any problems at all, just call and we will be
Positive emotions run high at this stage. There is a great sense
of achievement for everyone as the numerous hurdles in establishing
the business have now been cleared.
The Glee stage covers the lead up period to buying into the franchise
and will usually stay with a franchisee for between 3 and 12 months,
depending on their past business experience.
The Fee Stage
"Although Im making money, these royalty payments
are really taking the cream off the top. What am I getting for my
The second Fee stage kicks in as the franchisee gains more of a
handle on the businesss finances. It comes from a growing
appreciation that profit is the result of sales minus expenses.
At this point they may become particularly sensitive to the royalty
and advertising fees, which they see as annoying expenses that into
Questions such as, "What am I getting for my money?"
will surface in their mind, especially when they review their weekly
At this stage the franchisees level of satisfaction starts
There are basically two paths from the Fee stage - either back
to Glee, (this can happen when the franchisor provides significant
assistance, for example with a rent reduction), or into the Me stage.
The Me Stage
"Yes I am successful. But my success is a result of my hard
work. I could probably be just as successful without my franchisor."
As the franchisee moves into the Me stage he or she will typically
be thinking that their success is due purely to their own hard work
and effort. This natural tendency to take the credit for the good
things, is known in psychology as the Attribution Effect
or the Self-Serving Bias. Attribution theory explains
the thinking process we go through in searching for the best explanation
of an event and also suggests that we are not all as rational as
we might like to believe.
When we perform well or achieve something we tend to attribute
this to our inherent skills and personality. We take the credit.
But when we make mistakes or dont perform up to expectations
we tend to blame someone else or outside circumstances.
The human ego has always been a master at playing with our minds
- giving us reasons why we are right and others are wrong, why we
are good and others are bad, why we are smart and others are stupid,
and so on. For some people it is a way of protecting their self-esteem.
Not surprising, we find the Self-Serving Bias alive and well in
the franchise relationship. It tends to be at its strongest when
the franchisee moves through the Me stage where they will tend to
attribute their success to their own work and initiative. If things
are not going so well however, the franchisor is inevitably held
to blame. Either way the franchisor usually starts to receive some
The Free Stage
"I really dont like all these restrictions my franchisor
is putting on the way I run my business. I feel frustrated and annoyed
at their constant interference. I want to be able to do my own thing
and express my own ideas."
While the franchise relationship tends to begin with the franchisee
relatively dependent on the franchisor this does not last. As a
franchisees business confidence grows, their drive towards
independence will increasingly assert itself. A franchisee at this
stage might feel resentful having to follow the franchisors
standard operating procedures all the time.
The Free stage is characterised by a need to break free of the
restrictions and limitations of the franchise and a testing of the
systems boundaries. A franchisee might also test out how tight
the franchise agreement is and try to break free of their contractual
The franchisor might also decide to break free of the franchisee,
either through a forced sale or termination of the agreement. Obviously
chances of conflict are greatest at this point.
A franchisee who is stuck in this stage can become trouble to him
or herself and a negative influence on others. They may also be
a ripe target to be exploited by someone wanting to provoke trouble
in the franchise network. As we saw in Chapter 6, unscrupulous lawyers
or consultants have been known to use franchisees who are unhappy
about specific issues as their ticket to make some money.
At this stage the franchisee will either get bogged down in resentment
and continue to bicker with their franchisor, revert to the Me stage
with intermittent but harmless grumbling, or move to the next stage
- the quantum leap - the See stage.
The See Stage
"I guess I can see the importance of following the franchise
system. And I do acknowledge the value of my franchisors support
services. I can see that if we all did our own thing standards would
drop and we would lose the very things that give us our competitive
Conflict in relationships seldom goes away by ignoring it. For
the franchisee to move to the See stage there needs to be some frank
and open discussions, where franchisee and franchisor listen carefully
to each others point of view. There may be some blood letting
as previous disputes or disagreements are reopened. Mistakes and
misunderstanding will no doubt have occurred on both sides of the
relationship. There needs to be an acceptance and letting go of
the past by both parties.
The franchisor might need to be more open in involving the franchisee
in future planning or appreciating their specific needs. If the
franchise system has been managed fairly and effectively the franchisee
will generally come around to seeing that without consistency and
adherence to the systems, the strength of the entire group would
be lost. It is this shift in perception that characterises the See
The We Stage
"We need to work together to make the most of our business
relationship. I need some specific assistance in certain areas to
develop my business but I also have some ideas that I want my franchisor
From the See stage there is a natural progression to the We stage
- a move from independent to interdependent thinking. At this point
the franchisee is prepared to put his or her ego aside and recognises
that success and satisfaction generally come more easily from working
with, rather than against, their franchisor.
To reach the We stage a franchisee must be mature, objective and
commercially minded. Most importantly, they must be profitable.
As long as a franchisee is not making acceptable profits and feels
their franchisor is not responding to their needs they will shake
the system for change.
A franchisor that wants their franchisees to move into the We stage
must deliver on their obligations and be fair and consistent in
Franchisees who have negotiated their way through the franchise
relationship minefield to the We stage are a franchise networks
greatest asset. They will often be quiet achievers who keep one
eye on their profit and one eye on cultivating healthy business
relationships, not just with their franchisor but with their suppliers,
peers and, of course, their customers.
To find out more on The Franchise E-Factor and how to improve your
franchise relationships go to, www.franchiserelationships.com