Why Franchisees Go Sour

A franchise recruitment manager asked me why franchisees, who were once strong supporters of their network, go through a “sour” phase. While there are many reasons for this souring phenomenon, I’d sum it up as a loss of hope. The good news is, there is a cure. In this Tip I’ll share four areas we’ve discovered through our research that promote what we at FRI call an ACE Mindset. This is where franchisees are Advocates for the business, Committed to stay, and Engaged in supporting network activities.

Maintain credible leadership

Based on thousands of franchisee responses to our ACE Surveys we can confidently say the biggest reason franchisees no longer want to recommend their franchise is low confidence in the leadership team. (These are the people seen as having the power to control the direction of the business).

Specific causes for this loss of confidence are:

  • They believe the franchisor is putting its self-interest ahead of franchisee interests.
  • They think the leadership team is making poor strategic decisions.
  • They feel the leadership team has dishonoured important commitments.
  • They believe the leadership team is hiding or distorting information.

The cure is to clearly explain the reasons behind decisions; do good research and share this; be consistent with your words and actions; and be as transparent as possible with data and information. Most importantly, remember when perception meets reality, reality always comes out second best. So listen deeply and carefully for misunderstandings, and communicate four times more than you think you need to, especially during times of significant change.

Watch for the Negative Nellie Effect

Our research has demonstrated how an optimistic mindset contributes up to 14% of a franchisee’s financial performance. Optimism is also a major predictor of franchisee advocacy. Franchisees become pessimistic because:

  • They believe they are not making a suitable profit for their efforts, and never will.
  • They think the business model no longer fits the needs of their local market.
  • The people they associate with have a negative or overly critical mindset and this affects them. These can be franchisee peers, field managers, family or friends.
  • Their energy has become depleted due to ill health or overwork, and they don’t have a positive support network or the lifestyle habits to help them cope.

The cure is for the franchisor to seriously focus on unit level profitability; closely monitor customer trends and be prepared to adapt the model to fit changing needs; ensure all members of their team are positive and encouraging; and provide training in how to build supporters and maintain personal vitality.

Nurture passion for the brand and culture

There is a huge correlation between the ACE Mindset, and franchisees having a passion for the brand and culture. But this can be lost because:

  • The brand’s reputation has become tarnished.
  • Franchisees no longer relate to the style of communication within the group.
  • They have lost personal connection with the culture, perhaps due to the way meetings are held, or because regular meetings are not being held.

The cure is to be proactive in educating franchisees on what makes your brand special (using plain language they understand, not corporate speak); ensure there is consistency between your brand (who you say you are) and your culture (how you actually do things); involve franchisees in the running of meetings and make sessions relevant and interactive.

Constructively address conflict

Unresolved conflict produces anxiety and stress, which can suffocate the ACE Mindset. Festering conflict also makes people cynical and passive-aggressive. One way they will hit back is to make snide remarks if asked for an opinion about the business.

The cure is to recognise that some conflict is inevitable in franchising, and to ensure franchisor executives and franchisees have the skills to constructively manage it. Many of our clients familiarise their people with my Franchise E-Factor model and equip them all with a copy of the book, Profitable Partnerships, which is full of practical relationship management strategies.

At FRI we spend our lives seeking to understand what really matters to franchisees. While they want to make money, I can categorically say that money alone will not prevent them from going sour. Please consider using our books, attending our educational programs, involving us in your conferences and using our ACE Franchisee Satisfaction Survey. We might just be able to help prevent the souring phenomenon or, if it does occur, to help you turn lemons into lemonade. :)


Greg Nathan is a psychologist, author and an international expert on the franchise relationship. Connect with him on Google+ or Linkedin.

Subscribe to Greg’s Tips via Email

These blog postings are part of the series “Greg’s Tips for Healthy Franchise Relationships". If you would like to receive these tips by email, please provide your details below:

• Required Field

Copyright © 2017 Franchise Relationships Pty Ltd • Contact Us Company Privacy Statement