“Seriously entertaining”

“Thought provoking”

“The wisest advice in franchising”

“A true expert’s insights”

“Reminds you of what’s important”

Greg NathanAuthor of Profitable Partnerships

FranchiserelationshipsBOOK OF

THE

FranchiserelationshipsBOOK OF

THE

A collection of the acclaimed Healthy Franchise Relationships Tips

Copyright © 2013

Franchise Relationships Institute Pty Ltd 

ABN 91 927 769 093

This book is copyright. Apart from any fair dealing for the purposes

of private study, research, criticism or review, as permitted under the

copyright Act, no part may be reproduced by any process without

written permission from the publisher.

This book can be purchased in bulk for distribution to franchisor

management teams.

For details contact the publishers:

Franchise Relationships Institute

PO Box 8487 Armadale Victoria Australia 3143

Email: info@franchiserelationships.com

Website: www.franchiserelationships.com

Tel International: + 61 7 3510 9000

Cover design and layout: Rebecca Nathan.

Back cover photograph: Stephen Nathan.

Printed by: Printcraft, Queensland.

ISBN 978-0-9924003-0-9

Nathan, Greg, 1955 –

The Franchise Relationships Book of Tips

1. Franchises (retail trade)

2. Business communication

What people say about Greg Nathan’s TipsReading Greg’s Tips is a great opportunity to step back from the everyday bustle

and remind yourself of what’s important. Both entertaining and insightful, they

always generate a thought about how I could do something better or differently.

Jonathan Layton, Executive Director, Chemmart

I’ve been in franchising for over 30 years and Greg’s Tips are the only thing that I

stop to read every time - they nearly always remind me of something important

or give me a new angle of thinking.

John O’Brien, CEO, PoolWerx

Since Greg’s Tips were introduced I have been an avid reader as they give me

new insights and help me prepare myself for the future. I am always looking

forward to the next story.

Michael Ermer, National Operations Manager, Boost Juice Bars

The two things I like about Greg’s Tips are they make me pause and reflect,

and they convey a genuine desire to assist without preaching. There is also

an analytical depth to each Tip, which is important in this era of superficial

information. Australian franchising has been blessed to have had someone with

Greg’s professional skills and wisdom providing this type of input.

Stephen Giles, Partner, Norton Rose Fulbright

Greg’s Tips are always interesting, relevant, thought-provoking and, often, ‘laugh

out loud’ funny. Greg has a humorist’s eye for the absurdities of everyday life,

a psychologist’s understanding of what creates such situations, and an expert’s

knowledge of how they relate to franchising and the lessons to be learned. I am

sure my copy will soon be as well-thumbed as Greg’s other books.

Simon Lord, Editor, Franchise New Zealand Magazine and Website

Some of the wisest advice about franchising I have ever encountered is from

Greg Nathan. I get so many emailed publications but the ones I always look

forward to are the thought provoking ones from Greg.

Bob Beaumont, Executive Chairman and CEO, Beaumont Tiles

We love reading Greg’s sharp, punchy Tips which are a fabulous gift to

franchising. They really make us think about how we can operate as a world class

franchisor.

Debb Meyer, Director, Narellan Pools and 2013 FCA Franchise Woman of the Year

I always look forward to reading Greg’s Tips. Greg’s writing style is unique and

the subject matter depth provides great insights into how to build and maintain

healthy franchising relationships.

Simon Ovenden, National Manager, Franchise Banking, National Australia Bank

About the author

Greg Nathan is an internationally respected psychologist who specialises in

the relationship dynamics of franchising. In addition to his academic training,

including a Masters degree from Monash University, he has been a successful

multi-unit franchisee and was for many years National Marketing and Operations

Manager with Brumby’s Bakery.

He has written several popular books, including Profitable Partnerships and The

Franchisor’s Guide to Effective Field Visits. He has also developed a number of

models and tools to help franchisors understand the dynamics of the franchise

relationship better, such as The Franchise E-Factor and The Franchisor Wheel of

Excellence.

He was recipient of the inaugural Contribution to Franchising Award by the

Franchise Council of Australia in recognition of his pioneering research and

educational work, and is the first person in Australia to receive certification with

the Institute of Certified Franchise Executives.

Greg is also Founder of the Franchise Relationships Institute.

About The Franchise Relationships Institute

The mission of The Franchise Relationships Institute is to provide evidence-based

knowledge and tools that help franchisors and franchisees create profitable

partnerships. The Institute has a vibrant, ongoing research program examining the

factors that contribute to successful franchisee and franchisor performance.

From this research it continues to publish useful materials, and develop cutting

edge education programs and management tools for improving the performance

of franchisees and franchisor executives. These include:

The Franchise Effectiveness Survey which measures the health of the culture in

a franchise network, as well as franchisee satisfaction with the services offered by

the franchisor.

The Nathan Profiler, a scientific diagnostic tool for assessing the suitability of

potential franchisees and the development needs of existing franchisees.

Workshops and Bootcamps for franchisor executives, providing them with the

knowledge, skills and confidence to deliver effective leadership at the business

and personal levels.

Conference presentations for specific franchise sector groups which blend

scientific thinking, positive human values and pragmatic commercial strategies for

sustainable success in the unique franchising environment.

For more information about The Franchise Relationships Institute and useful

resources visit www.franchiserelationships.com.

Foreword

I have always enjoyed reading fairytales, traditional stories and even comic books.

The life lessons they contain are often easier to absorb than a more academic

approach to the question of what constitutes a good and noble life.

I have also always enjoyed writing - poems, short stories, research articles and

even the occasional song. When I failed English at high school, my grandfather,

Sol Nathan, a businessman, poet and sports journalist, encouraged me to keep

writing, saying he thought I had talent. It reminds me how important it is to have

supporters who believe in you.

My other love is good quality research. I find it genuinely exciting to hear stories

about dedicated scientists or inventors and their single-minded commitment to

finding answers to whatever their big question is. My big question has been, “How

can franchisors provide quality leadership that enables everyone in a franchise

network to enjoy their work, contribute to the community and make a sound

commercial return on their investment and effort?”

In writing these Tips over the past few years, I have combined useful insights from

research, including our own work at FRI, with light hearted stories that have a

message. Usually a piece of research or an experience will get me started. I then

keep writing, editing and rewriting until the piece feels complete.

While on the topic of editing, I am grateful to my in-house editor, aka my wife

Ann, for her trusty red pen and enduring patience, especially when I hand her a

sheet late on a Sunday night saying “I need you to read this as I want to send it

out tomorrow!” Thanks also to my other valued editors, Nicole Simpson and Karli

Furmage. They are usually softer with their initial feedback before telling me a

point doesn’t make logical sense or needs to be expressed more clearly.

Another talented colleague, graphic artist and niece, Rebecca Nathan, has always

been available at odd hours to lay out the Tips so they look good for our clients.

Rebecca has applied her usual flair to the cover and layout of this book. Thanks also

to my cousin, Stephen Nathan, photographer extraordinaire, for getting up extra

early before work to take the back cover shot. This really has been a family affair.

Speaking of supporters, a huge catch all “Thank You” to the enthusiastic FRI team

for enabling me to live my dream of writing, researching, speaking and generally

mucking around. Same goes to my advisors and mentors. I apologise for not

naming everyone because there are a lot of you. I really do appreciate your support.

Finally thanks to the readers of these Tips, especially those of you who have

sent responses to a story that has provoked your interest. I hope you enjoy this

compilation of my Healthy Franchise Relationships Tips.

- Greg

The seven-year itch in the franchise relationship

R emember that iconic movie scene of Marilyn Monroe standing on a subway grate with her dress blowing up around her? It’s from the

movie The Seven Year Itch, about a businessman having a mid-life crisis in his seventh year of marriage.

Indeed psychologists have found the quality of a committed relationship

(you can read this as a marriage or a franchise relationship) tends to decline

over the first four years, after which satisfaction stabilises. However in a

study of 500 couples, Dr Lawrence Kurdek of Wright State University, found

there was a second dip in satisfaction at the seven year mark.

Are your franchisees facing a mid-life crisis?

There are two reasons I am raising this and they both relate to important

findings from our own research. Similar to marriage, franchisee satisfaction

drops to its lowest point at around the four year mark and then stabilises.

Our study also reveals the average tenure of franchisees in Australia is

currently around seven years! Does this mean the bulk of our franchisees

are facing a mid-life crisis? I’d suggest the answer is yes.

Consider that at seven years the majority of franchisees well and truly know

the basics of how to run their business. This is not to say they necessarily

do it well. Consider also that after seven years many are probably getting

tired, bored and a little distracted.

Combine this with rising costs, flattening sales, and changes to customer

buying patterns and you have a recipe for franchisees questioning their

commitment to the future of the business. So how do we help them to get

their mojo back?

A new model for understanding the franchisee journey

We have developed a new model around the six business stages franchisees go

through, which we call The Franchisee Journey.

1. Investigation – the franchisee is deciding whether or not this franchise

network is right for them

2. Initiation – the franchisee joins the network and is introduced to its culture

and systems

3. Perspiration – the franchisee works through the challenges of establishing

the business

4. Consolidation – the franchisee is profitable, has regular customers and a

stable team

5. Maturation – the franchisee becomes bored, distracted or complacent

6. Reformation – the franchisee creates a fresh approach to running the

business

The fifth stage, Maturation, is equivalent to the seven-year itch. The

opportunity for franchisors is how to move their franchisees from Maturation

to Reformation. This is where they set new goals and commit to running the

business with a fresh approach. Perhaps they decide to expand into more

units, take on a mentoring role within their franchise community, refurbish their

business or bring in a business partner. It may also mean it’s time to develop an

exit strategy.

With an increasing number of franchisees in the Maturation stage, franchisor

support teams would do well to take a fresh look at their operational systems

and culture, ensuring these are relevant to the needs of this group. Is your

team capable of managing franchisees through the seven-year itch and onto to

bigger and better things?

At the seven year mark, franchisees know the basics of how to run their business and are at

risk of getting tired, bored and distracted.

The cobbler has no shoes

I was at a large international conference of psychologists where an academic shared her research into the business planning styles of entrepreneurs. She

explained that most entrepreneurs were either proactive planners (goal directed with a structured approach) or opportunistic planners (opportunity directed with a flexible approach).

I am more of an opportunistic planner and was initially pleased to hear that both

approaches encourage high team motivation and deliver positive outcomes.

However my self-satisfaction turned to embarrassment when she presented

her findings on how each style impacts on stress levels. People working for

opportunistic planners suffer significantly higher levels of stress and strain.

We have an extremely motivated team but I had been concerned about the high

level of stress many seemed to be under and was suggesting what they might do

to reduce this stress. It never occurred to me that I might be the problem!

One of my favourite sayings is “The cobbler has no shoes”. In other words the

thing you are supposed to be an expert in is often your blind spot.

As well as highlighting my own foibles this research reminded me of a particular

complaint we regularly hear from franchisees. Many buy a franchise because they

are looking for a structured approach to growing their business and franchise

companies preach the importance of following systems and procedures.

It is not uncommon for founders of franchise companies to be opportunistic

entrepreneurs. Franchisees in these networks often say their franchisor’s lack of

structured planning when rolling out new initiatives drives them nuts. “How can I

plan my local promotions”, they say, “when our franchisor keeps moving the goal

posts with the national marketing strategy?”

All strengths turn to weaknesses when used to extremes. While some structure

is important to the efficient implementation of plans, it can turn into dangerous

rigidity when overdone. On the other hand flexibility is critical for innovation, but

can lead to chaos – and high levels of stress on other people – if not tempered.

Like most good things in life a balanced approach is recommended. This is often

best achieved by having a team around you that has different strengths from you.

And of course listening to them rather than trying to cure them!

Your area of expertise in is often your blind spot!

11 ways to immediately improve field visits

F ield managers can make a big difference to a franchisee’s business, providing they focus on the right things and engage with franchisees in the right way.

Here are 11 of my top tips for improving the effectiveness of field visits.

1. Work up a joint agenda with the franchisees prior to the visit. Once the agenda is agreed don’t deviate from these topics. If they weren’t important, you or the franchisee would not have raised them.

2. Have a clear purpose for every visit. Ask yourself “If the visit were to go as well as it reasonably could, what would be achieved?” Review this in your mind just before you start each visit.

3. Have your wits about you. Give people your complete attention during the first few minutes of the visit. You don’t know what has been going on prior to your arrival, so check before raising any compliance issues.

4. Be friendly but not friends. If you decide to socialise, for instance have a meal together, do this with a business purpose in mind. You are there to add value to the franchisee’s business, not for any other reason.

5. Arrive at decisions together, especially when analysing financial data. While you may have your own understanding, you’ll get better results by allowing franchisees to first contribute their thoughts.

6. Make it clear to franchisees how and why data is being collected. They can sometimes be defensive or even a bit paranoid about how you intend to use their business information.

7. Explain compliance in terms of brand protection. Remind franchisees how much has been invested in building the reputation of the brand and how quickly this can be undermined to everyone’s detriment, including theirs.

8. Keep discussions constructive by asking solution focused questions. For instance, “What would be a good outcome? What can I do to help?”

9. Finish on a positive note. The tone of your next visit will start from where this visit ended. If the visit has been challenging, acknowledge this and restate your commitment to the franchisee’s success.

10. Look after yourself and your energy. The positive energy you give out will have more bearing on the effectiveness of your visits than any other single factor.

11. Finally, always ask the magic question. This is “What could I do to make my next visit more useful for you?” This demonstrates you care and creates a learning opportunity on how to continually improve your performance.

The franchisor who missed the point

T he new Head of Franchise Operations walked confidently onto the stage. He had spent weeks locked away in his office working on a new financial

management tool that could help franchisees improve their performance and he was convinced they would lap it up. But he was about to miss something important.

“Obviously” he declared with a smirk, “no one runs a business because they enjoy

it!” While he expected a laugh he instead received stony-faced stares.

He continued, a little less sure of himself. “The only reason we are all here is to

make money, right?” Again no response. I sensed mild bewilderment from the

audience. I was watching the franchisees from the sidelines and was pretty sure I

knew the reason for the disconnect.

His statement was not entirely true, and saying it with such certainty had

damaged his credibility. It was as if the franchisees were thinking “Hang on a

minute, I actually enjoy running my business. Does he think we’re all just a bunch

of money grubbers?”

The session continued with him pushing on with his presentation.

What really motivates franchisees

There is good research to suggest that self-employed people are significantly

more satisfied with their work than corporate employees. In our recent

Franchisee Success Study of over 2,500 franchisees from 75 franchise systems,

87% agreed that running their business was enjoyable and satisfying. Don’t be

fooled into thinking this is because they are all making a lot of money or having

it easy. The majority of small business people face higher levels of financial stress

and work longer hours for less money than employed executives.

Of course franchisees want to make money and, indeed, building greater

personal wealth is the most popular response when they are asked to rank their

reasons for buying their franchise. But most are also strongly motivated by other

psychological factors, such as the following.

While franchisees want to make money, most are also strongly motivated by

other psychological factors.

Flexibility Nearly as many franchisees who rank building wealth as their number

one priority, say they bought their business primarily to be able to have greater

flexibility in how they run their lives.

Independence A significant number of franchisees say they bought their business

to escape the politics, rigidity and frustration of working for a boss.

Achievement For many people, their business is a vehicle for them to express

their creativity and prove to themselves they can achieve success through their

own hard work.

Contribution Franchisees often see their staff and even their customers as an

extension of their own families. Many talk passionately about the satisfaction they

gain from developing young people, improving the lives of their customers and

making a contribution to their local community.

Respect We all have a need to feel respected and many franchisees use their

business to build a sense of status and respect in the eyes of their family, friends

and colleagues. The importance of respect often only emerges when it is not

shown.

Back to our story. How did the franchisees respond to the franchisor’s new

financial tool? It bombed. Barely anyone adopted it. While there had been

past issues that undermined franchisee trust, I am sure a major reason was the

franchisees didn’t trust his judgment because he had misjudged them.

Greg Nathan is a psychologist,

author of four popular franchising

books and an international expert

on the franchise relationship.

In recent years Greg has been

sharing his insights on franchising

and life through a regular series of

tips that remind us how positive

leadership values can be found

in all aspects of daily life. This

compilation contains 79 of Greg’s

most popular tips, with many

enhanced in light of his ongoing

work and research. They are

designed to stimulate fresh ways

of thinking and to inspire those

who work in the franchising sector

to lead with clarity and integrity.

Some of the wisest advice about franchising I have ever encountered is from Greg Nathan’s thought provoking tips.

Bob Beaumont, Executive Chairman and CEO, Beaumont Tiles

I’ve been in franchising for over 30 years and Greg Nathan’s tips are the only thing I read every time – they always remind me of something important.

John O’Brien, CEO, PoolWerx

We love reading Greg Nathan’s sharp, punchy tips as they really make us think about how we can operate as a world class franchisor.

Debb Meyer, FCA Franchise Woman of the Year and Director, Narellan Pools

Australian franchising has been blessed to have had someone with Greg Nathan’s professional skills and wisdom. I am an avid reader of his tips and am delighted he has chosen to put them into a book.

Stephen Giles, Partner, Norton Rose Fulbright

Published by

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9 780992 400309 >

ISBN 978-0-9924003-0-9