June 12, 2006
By Lynette McKee, CFE
Today’s franchise companies are experiencing dramatic changes, either through mergers and acquisitions, exponential growth and or through changes in brand identity and executive leadership.
During a corporate shift in strategy, the risk of damaging the relationship between franchisor and franchisee runs high if the franchisor does not have a clear strategy for maintaining a positive relationship with its franchisee network. Franchisees have an equally vested interest in a successful franchise program. The franchisee has committed financially in the relationship with the same objective of achieving profitable results. It is the responsibility of the franchisor to play an active role throughout the process of corporate change, keep franchisees up to date with the organization’s future plans and to keep them informed of all changes that will affect their business. It is critical for both parties to have a mutual understanding in order to address the challenges each will face during transition and that is required to help them meet their goals.
Communication is Key
One of the major obstacles of the franchise relationship, particularly during corporate change, is communicating effectively throughout the franchisee network. Franchisees need to constantly be kept informed of the franchisor’s plans towards making their business better. Communicating key corporate messages on new programs and initiatives designed to help grow the business, ultimately benefiting franchisees and the franchisor, requires a very strategic communications plan.
Create a Franchisee Forum
It’s not only essential to keep franchisees abreast of all corporate changes, shifts in strategy, but it is also important to provide a platform where select franchisees can share their opinions and provide their franchising expertise on corporate strategy. This allows franchisees to play an active role in corporate decisions and shows how much their opinion is valued by the franchisor.
Creating a Team Organization
Understanding the roles, responsibilities, differences and accountabilities of the franchisor and the franchisee relationship is important, especially during a time of corporate change as these may shift depending upon the franchise organization’s new strategy.
A market alignment structure helps the franchisor communicate internally and helps everyone within the organization to understand strategy and objectives, helping the entire organization to communicate effectively to the franchisees. It involves a straight or dotted line from each discipline within the organization to the leadership of the market and or region. With these members working in concert within the market, everyone’s objectives are targeted toward the same goals. Team members create a business plan for the market that includes operating standards, training, marketing, development and human resources. Everyone is involved in building the plan from the ground up and ‘owns’ the plan throughout the implementation. Strategies for the brand, then ‘roll up’ from the market teams’ efforts. It’s a win for everyone.
With corporate changes come new messages that need to be communicated across the organization and the franchisee. The franchisor needs to present the reason for corporate change clearly and effectively, explain why it’s happening and what the objectives are behind the change.
Communication within the brand becomes synergized with the creation of the market teams. With the building of the ground-up plan, everyone is “in the know” of what needs to occur in the market from personnel, marketing, implementation of operational standards and so on. The teams also work in concert with the franchisee community. It becomes “one voice” no matter who from the team is the communicator. This type of communication to the franchisee community is refreshing. How often does a franchisee say, “I get a different answer from everyone I speak to.”
Work Closely with Franchisees During
Aggressive Expansion
System growth can be negatively affected if a franchise organization does not have a clear strategy for communicating the expansion plans with franchisees. As today’s franchise organizations experience rapid growth in effort to gain a national presence, a strong market alignment structure is needed to keep franchisees informed on expansion plans and also help plans stay on track. Franchisees need to work closely with the organization and be kept abreast of all changes as they happen. The support of franchisees is critical to executing an aggressive expansion plan successfully.
Keep Realistic Expectations
When planning a national expansion plan, it’s important to keep realistic and obtainable goals. Franchisors should work directly with franchisees to determine the appropriate number of units for each market it plans to expand in.
Buy-in to Expansion
As a mutual partner, franchisees share the same goals as the franchise organization—building their business to be bigger and better. Getting franchisees’ buy-in on a new strategy is important to making it work.
Several methods can be used to encourage the franchisees to align with the same goals of the franchisor. Communication is critical. Getting franchisees together with the leadership of the brand can provide a moral booster, if the right message is presented. The franchisor must be prepared and organized and be able to speak to the business plan and how it is to be implemented. When setting the strategic direction, include the franchisee community: it will go a long way. So many times, franchisees feel that the franchisor does not include them in the planning of the business, and when the plan is announced, it is contrary to what they believe will benefit them.
Explain the Changing Face of Franchising
T oday’s franchises facing aggressive expansion are targeting large area developers for multi-unit deals. More than 1,500 U.S. franchise companies are conducting business through more than 760,000 units. An increasing number of franchisors in a variety of different industries are selling development rights only in multi-unit packages. Franchisors should explain the shift in strategy to existing franchisees.
Franchisee Recognition
Franchisors should promote franchisee relations through incentive programs designed to acknowledge franchisees for their accomplishments and strong leadership skills.
Executing such incentive programs can help the franchisor grow in an existing market and can also provide the opportunity for a successful franchisee to enter a new market and be the mentor for new franchisees entering the system. Franchisees should always be encouraged to work together collaboratively, creating and sustaining teamwork across the franchisee network.
Kick off a New Initiative
Franchise conventions offer an interactive place to get all franchisees in the same room and create excitement over a new initiative planned for the franchise organization. Conventions give franchisors the opportunity to interact with the franchisee community and discuss how they look to them for added growth within the system. A convention also provides a forum for franchisors to announce and educate franchisees on new initiatives planned for the brand.
The Road to Expansion
Corporate change, such as planning an aggressive expansion, is an exciting venture filled with its own challenges. Preparing your business for the different stages of growth and knowing how to address the main points along the way is essential to making franchise expansion a success.
Lynette McKee, CFE, is the vice president of franchising for Dunkin’ Brands. She can be reached at lynette.mckee@dunkinbrands.com.
By Lynette McKee, CFE
Today’s franchise companies are experiencing dramatic changes, either through mergers and acquisitions, exponential growth and or through changes in brand identity and executive leadership.
During a corporate shift in strategy, the risk of damaging the relationship between franchisor and franchisee runs high if the franchisor does not have a clear strategy for maintaining a positive relationship with its franchisee network. Franchisees have an equally vested interest in a successful franchise program. The franchisee has committed financially in the relationship with the same objective of achieving profitable results. It is the responsibility of the franchisor to play an active role throughout the process of corporate change, keep franchisees up to date with the organization’s future plans and to keep them informed of all changes that will affect their business. It is critical for both parties to have a mutual understanding in order to address the challenges each will face during transition and that is required to help them meet their goals.
Communication is Key
One of the major obstacles of the franchise relationship, particularly during corporate change, is communicating effectively throughout the franchisee network. Franchisees need to constantly be kept informed of the franchisor’s plans towards making their business better. Communicating key corporate messages on new programs and initiatives designed to help grow the business, ultimately benefiting franchisees and the franchisor, requires a very strategic communications plan.
Create a Franchisee Forum
It’s not only essential to keep franchisees abreast of all corporate changes, shifts in strategy, but it is also important to provide a platform where select franchisees can share their opinions and provide their franchising expertise on corporate strategy. This allows franchisees to play an active role in corporate decisions and shows how much their opinion is valued by the franchisor.
Creating a Team Organization
Understanding the roles, responsibilities, differences and accountabilities of the franchisor and the franchisee relationship is important, especially during a time of corporate change as these may shift depending upon the franchise organization’s new strategy.
A market alignment structure helps the franchisor communicate internally and helps everyone within the organization to understand strategy and objectives, helping the entire organization to communicate effectively to the franchisees. It involves a straight or dotted line from each discipline within the organization to the leadership of the market and or region. With these members working in concert within the market, everyone’s objectives are targeted toward the same goals. Team members create a business plan for the market that includes operating standards, training, marketing, development and human resources. Everyone is involved in building the plan from the ground up and ‘owns’ the plan throughout the implementation. Strategies for the brand, then ‘roll up’ from the market teams’ efforts. It’s a win for everyone.
With corporate changes come new messages that need to be communicated across the organization and the franchisee. The franchisor needs to present the reason for corporate change clearly and effectively, explain why it’s happening and what the objectives are behind the change.
Communication within the brand becomes synergized with the creation of the market teams. With the building of the ground-up plan, everyone is “in the know” of what needs to occur in the market from personnel, marketing, implementation of operational standards and so on. The teams also work in concert with the franchisee community. It becomes “one voice” no matter who from the team is the communicator. This type of communication to the franchisee community is refreshing. How often does a franchisee say, “I get a different answer from everyone I speak to.”
Work Closely with Franchisees During
Aggressive Expansion
System growth can be negatively affected if a franchise organization does not have a clear strategy for communicating the expansion plans with franchisees. As today’s franchise organizations experience rapid growth in effort to gain a national presence, a strong market alignment structure is needed to keep franchisees informed on expansion plans and also help plans stay on track. Franchisees need to work closely with the organization and be kept abreast of all changes as they happen. The support of franchisees is critical to executing an aggressive expansion plan successfully.
Keep Realistic Expectations
When planning a national expansion plan, it’s important to keep realistic and obtainable goals. Franchisors should work directly with franchisees to determine the appropriate number of units for each market it plans to expand in.
Buy-in to Expansion
As a mutual partner, franchisees share the same goals as the franchise organization—building their business to be bigger and better. Getting franchisees’ buy-in on a new strategy is important to making it work.
Several methods can be used to encourage the franchisees to align with the same goals of the franchisor. Communication is critical. Getting franchisees together with the leadership of the brand can provide a moral booster, if the right message is presented. The franchisor must be prepared and organized and be able to speak to the business plan and how it is to be implemented. When setting the strategic direction, include the franchisee community: it will go a long way. So many times, franchisees feel that the franchisor does not include them in the planning of the business, and when the plan is announced, it is contrary to what they believe will benefit them.
Explain the Changing Face of Franchising
T oday’s franchises facing aggressive expansion are targeting large area developers for multi-unit deals. More than 1,500 U.S. franchise companies are conducting business through more than 760,000 units. An increasing number of franchisors in a variety of different industries are selling development rights only in multi-unit packages. Franchisors should explain the shift in strategy to existing franchisees.
Franchisee Recognition
Franchisors should promote franchisee relations through incentive programs designed to acknowledge franchisees for their accomplishments and strong leadership skills.
Executing such incentive programs can help the franchisor grow in an existing market and can also provide the opportunity for a successful franchisee to enter a new market and be the mentor for new franchisees entering the system. Franchisees should always be encouraged to work together collaboratively, creating and sustaining teamwork across the franchisee network.
Kick off a New Initiative
Franchise conventions offer an interactive place to get all franchisees in the same room and create excitement over a new initiative planned for the franchise organization. Conventions give franchisors the opportunity to interact with the franchisee community and discuss how they look to them for added growth within the system. A convention also provides a forum for franchisors to announce and educate franchisees on new initiatives planned for the brand.
The Road to Expansion
Corporate change, such as planning an aggressive expansion, is an exciting venture filled with its own challenges. Preparing your business for the different stages of growth and knowing how to address the main points along the way is essential to making franchise expansion a success.
Lynette McKee, CFE, is the vice president of franchising for Dunkin’ Brands. She can be reached at lynette.mckee@dunkinbrands.com.
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