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Bulletin

Three new practical tools to facilitate a better strategic partnership within a franchise network

Fasken
Reading Time 6 minute read
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Franchising Bulletin

The global crisis caused by the COVID-19 pandemic highlighted the importance of a healthy, proactive, real-time collaboration between a franchisor and its franchisees.

This collaboration, often referred to as a strategic partnership, involves genuine franchisees’ participation in the management, evolution, sustainability and growth of the network.

A variety of means are already used by most franchisors to promote such involvement of franchisees, including, among the best known, advisory committees, various meetings (of the entire network, by region, by groups and individuals), working groups and various communication tools in all three directions (franchisor to franchisees, franchisees to franchisor and between franchisees).

For many, the COVID-19 crisis provided an opportunity to experience new, faster and more effective communication tools (including virtual meetings) and to explore the possibilities for improving and accelerating communication within a network.

The experience gained in strategic partnerships has also opened the door to new ways of encouraging greater participation by franchisees in the life of a franchise network.

Three of these will be discussed in this newsletter: franchisee mentoring, peer committees and committees of excellence.

Franchisee Mentoring

As a franchise network grows, it gradually begins to include franchisees with varying degrees of experience, skills and abilities.

 

Some of these franchisees have good communication skills and others become role models for their fellow franchisees.

 

In order to allow the network to take advantage of these different levels of experience, as well as the skills and competencies of its best franchisees, why not engage them as mentors for franchisees who are less experienced, less successful, or who are experiencing problems in the management or operation of their franchised businesses?

 

There are many ways to implement a mentoring program within a franchise network, but, generally speaking, the participation of franchisee-mentors is voluntary, while the participation of franchisee-mentees can be voluntary or prescribed by the franchisor.

 

Some basic training in mentoring is recommended for both franchisee-mentors and franchisee-mentees, in particular to enable them to fully understand their respective roles (and their limitations) and to prevent false expectations from such mentoring.

 

The franchisor must, of course, remain available to respond to questions and concerns of franchisees participating in its mentoring program, as well as to provide additional support to franchisees who need it.

 

In almost all cases, such a program is very well received by the franchisees (both the franchisee-mentors and the franchisee-mentees).

 

Peer Committees

 

A second tool to encourage the involvement of franchisees in improving the management of the network consists of peer committees (e.g., committees between franchisees).

 

Unlike advisory committees, whose purpose is to provide the franchisor with franchisees’ opinions, comments and recommendations on its plans, projects and initiatives, the purpose of peer committees is to allow franchisees to share their practices (both the best and those to be improved), challenges, opportunities and difficulties with one another.

 

The franchisor generally does not participate in the meetings (in person or virtually) of these committees unless invited to do so by the franchisees who are members.

 

Such committees may, for example, be established by region and by the size of the franchisees who are members. They may be permanent or temporary (e.g., to ensure greater success of a new network program).

 

Each peer committee may also constitute a private group within a social network, website or computer platform to further promote exchanges between its members.

 

Committees of Excellence

 

Committees of excellence are a particular variant of both peer and advisory committees.

 

These are committees that bring together franchisees whose performance is well above average either generally or with respect to specific aspects of the management or operation of a franchised business (such as, for example, the delivery and sale of certain products, the provision of certain services, the implementation of significant changes, etc.). They may also include franchisees who are particularly successful in the execution of a franchisor's initiative or program.

 

These committees, whose members are selected by the franchisor on the basis of explicit criteria known to the franchisees (which are essentially based on outstanding performance or results), allow participating franchisees to discuss among themselves the reasons for their success and performance in order to (i) further improve them, and (ii) design and implement, in collaboration with the franchisor, means and tools to disseminate their know-how to other franchisees, for the benefit of each franchisee and of the network as a whole.

 

The franchisor obviously participates in the meetings of these committees of excellence, but plays a background role in order to give as much voice as possible to the franchisees who are members of these committees. The franchisor's primary purpose is to understand why these franchisees are successful and how the franchisor can integrate the factors of their successes into its operating tools, programs and initiatives to improve them and make them more effective (including in regard to their implementation and execution).

 

As with peer review committees, each excellence committee can also form a private group on a social network, website or computer platform to further promote exchanges among its members.

 

They are therefore an interesting way to share within the network the best practices of the most successful franchisees.

 

For example, the franchisor could very well invite one or more members of such a committee of excellence to participate in communications, presentations and training for all franchisees in the network.

 

Such committees of excellence also represent a form of recognition for the franchisees appointed to them.

 

It is also often appropriate for the franchisor to accompany these means with various incentives to encourage the active participation of franchisees, including, among many others, various forms of recognition (such as awards, prizes, plaques, trophies, etc.) and compensation (such as reimbursement of expenses, attendance fees and various other privileges).

In addition to their immediate benefits, these means of encouraging greater participation by franchisees in the improvement and growth of the network also increase the sense of belonging of franchisees and their pride in contributing positively to the improvement, success and performance of the network as a whole.

Some franchisors have already expressed a certain reluctance to promote meetings and exchanges between franchisees in which they would not participate themselves.

Is there not a risk that this could lead to a pooling of recriminations and demands from franchisees to the franchisor or exacerbate misunderstandings regarding the franchisor's decisions or actions?

This may indeed be a risk in networks where franchisor-franchisees communication is already deficient and where there is already a certain lack of franchisee confidence in the franchisor. For these networks, it may be preferable to improve the quality of communication and the climate in the franchisor-franchisees relationship before implementing peer committees or mentoring between franchisees (although, even in these cases, when properly designed and presented in a timely and appropriate manner, these tools can help to improve communication and trust).

However, for franchise networks as a whole, the franchisor has an interest in maximizing communications within its network and channelling them into efforts to improve franchisee and network performance.

In any event, a franchisor cannot prevent communications between franchisees. It is therefore preferable for the franchisor to be the driving force rather than leaving it to one or a few franchisees who, on their own initiative, decide to take on a leadership role (not always in a positive sense) among their fellow franchisees.

Fasken has all the experience and resources to help you better manage your franchise network, achieve your goals, take advantage of opportunities and avoid potential pitfalls.

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