Greg Nathan’s Franchise Relations Tip #18

Franchise Relations

In Greg Nathan’s Franchise Relations Tip #18 Greg talks about how to build your franchise relationship bank account by understanding the seldom discussed “psychological contract” between franchisees and franchisors.  Greg”s research at the Franchise Relationships Institute shows that how well people work together is more influenced by psychological than legal, or even commercial, factors.   Read on to find out …

What Makes Franchisees Go Berserk

Franchise Relations Tip #18 by
Greg Nathan, Managing Director
Franchise Relationships Institute

Remember when you were young and got blamed for something you didn’t do? Think about how much that feeling of injustice hurt. We all have an inbuilt sense of justice and when this is undermined, our reactions can range from mild resentment to outright rage.

Every franchisee who joins your network signs an important legal contract, a franchise agreement, which spells out their and your obligations.  However there is another type of contract, seldom discussed but more powerful in influencing people’s behaviour. Social scientists call it the “psychological contract” – defined as implied mutual expectations that people have of each other. In everyday life we might refer to this as good manners or basic decency. Paradoxically, it is in not writing down or discussing these mutual expectations that give them such power. “They should have known better!” we say indignantly if we believe someone has done the wrong thing by us.

How to build your franchise relationship bank account

Our research at the Franchise Relationships Institute clearly shows that how well people work together is more influenced by psychological than legal, or even commercial, factors. A franchisee’s willingness to comply with their franchisor’s policies and initiatives can be largely predicted by how they feel about the following three questions:

1.    Can I trust the people running this franchise network?
2.    Are they concerned for my long-term success?
3.    Do they know what they are doing?

Trust, concern and competence – these are the currency of the franchise relationship. Here are three things franchisor executives can do to increase their franchise relationship bank balance.  Be transparent with how decisions are made. Where possible, share factual data and information with franchisees about strategies and outcomes.  Remind franchisees at every opportunity that you care about their success. Explain how initiatives and decisions will impact on their profitability.  Properly pilot test new projects and consult franchisees on significant initiatives before releasing them.

On the other hand a franchisee who believes their franchisor is hiding important information, acting in an overly self serving manner or making poor decisions can interpret these as breaches of the psychological contract. “This is not what I bought into” they will be thinking.  They may then feel morally compelled to act against these perceived injustices and in serious cases go berserk – just like you felt like doing when you were a kid.

Makes you think doesn’t it?

We’ll dig in deeper on how to build your franchise relationships bank account at our upcoming Profitable Partnerships Boot Camp on October 5 & 6 in Atlanta.  Hope you can join us!

Greg Nathan
Managing Director
Franchise Relationships Institute

P.S.  We’ll be holding 2 more free webinars this

summer.  We”d love to have you join us. Space is limited so sign up today!

August 18, 2010 at 1:30 MST
Improving the Effectiveness of Your Field Visits
https://www2.gotomeeting.com/register/384330627

September 8, 2010 1:30 MST
How to Run Fantastic Conferences and Meetings
https://www2.gotomeeting.com/register/197969458