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How to prevent the comfort zone from causing franchise disputes.

Updated: May 16, 2023

Many franchised businesses suffer from the comfort zone phenomena which can adversely affect both franchisees and franchisors. It is the cause of many franchise disputes


Many franchisees decide to join to achieve a better work-life balance. Franchisors realise this and many include it in their advertising. This is often where the problem starts because the ‘balance’ for a franchisor and a franchisee are seldom the same.


Franchisee getting comfortable

Not many franchisees share the burning ambition of the founder of a large, franchised business. Later, if the business is sold or floated on the stock market the founder is replaced by managers or shareholders, both of whom are rewarded for growth. So, for franchisors, growth is always the objective.


For a franchisee, a happy work-life balance is equally important. Why would a franchisee, who is already enjoying satisfactory earnings, want to take on the extra responsibility of more staff and relentlessly keep trying to grow the business? Even less so when it would prevent enjoying a round of golf on Friday afternoon or being at home with their family. Obviously, that attitude is not going to satisfy growing customer demand or keep the franchisor’s growth plans on track. Complaining to the franchisee isn’t going to solve the problem because they were recruited on the offer of a better work-life balance. It is hardly surprising that this disconnect has caused many disputes.


Reducing the territory of an under-performing franchisee isn’t a viable option because the removed area would not be large enough for a new franchisee. In any event it would alienate the franchisee and demotivate them even more. The message would soon spread that in this franchise a good work life balance will bring unwanted pressure from the franchisor. Litigation often ensues.


So, how can franchisors and franchisees avoid a comfort zone dispute?

Not surprisingly this can only be achieved by collaboration between the parties. The franchisee needs to be confident that by temporally sacrificing some leisure time, an even better situation can be achieved, and the equilibrium can be restored. That the enlarged business really can generate enough extra money to make the exercise worthwhile. The franchisor needs to know that if the tools for growth are provided the franchisees will respond and help to keep growing their businesses.


The process of avoiding comfort zone disputes starts right at the beginning of the franchisee – franchisor relationship with the decisions that they both make at the outset. The franchisor must only select those who will be receptive to the concept of continued growth and the franchisee must be confident that the franchisor will provide what is needed to sustain expansion. To bring the two together the promotional material should be designed to attract the right type of candidate.


The franchisor must resist the temptation to accept a prospective franchisee who appears to be marginally satisfactory, is keen to join and who has the funds to pay the signing-on fee. This type of franchisee would probably be less demanding but long term their branch could easily stagnate and stop growing.


The concept of continued growth should be explained at the first meeting and the franchisee should buy-in to it. The franchise agreement should contain minimum performance provisions that are linked to the right to renew. Harsh as it may appear, these need to be firmly but fairly applied because the whole franchisee network needs to feel that there is a common purpose. This may require the franchisor to remove underperforming franchisees, obviously in a professional and humane manner. For a franchisee, if the franchisor has lost the appetite for growth that was originally promised, they must be brave enough to decline a renewal opportunity and start again elsewhere.


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The drive for steady growth by the franchisees should be embedded in the company culture and in the initial training. The operations manual should include a growth path, with all the systems and processes to enable it to be achieved. Every effort must be made to make sure that the franchisee can easily run their enlarged businesses. It is essential that the tools are provided, together with evidence to show that the growing business will become increasingly easier to manage, more profitable and much more valuable.


A company culture needs to be established so that continuous growth is regarded as the norm rather than the exception. Healthy peer pressure between franchise owners can be encouraged with achievement awards, league tables, and rewards for achieving growth. It is important that the franchisees all feel that their efforts are acknowledged and rewarded at every stage.


Establishing a mentoring programme in which successful franchisees are rewarded for passing on their skills to new starters is a powerful tool for growth. It is also something that a prospective franchisee should look out for when making the decision on which franchise to join.


At the end of the franchise journey franchisees who continue to grow need to be able to sell their businesses and enjoy a good final payout. This will provide the franchisor of evidence to show that the effort is justified. It will also encourage those who make the effort to keep growing.


It takes much longer to build a, comfort zone free franchise network but in the long term it will produce far richer rewards for both the franchisor and the franchisees.

 

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