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Recently Darnelle White posted a media blog on married couples successfully operating small businesses and I suspect this subject varies little in Australia, the US, Canada and everywhere else where small business and franchising exists.
This blog is about consequences, pitfalls, strategies that are employed against franchisees and the positive role that franchisors can take to protect the brand to minimise the likelihood and cost of relationship break downs.
In my working career I have encountered many amazing couples who made the successful operation of their cooperative roles in business look easy. This piece of advice seems to fit with most of the successful couples I have encountered;
The key to our success is we really try to work independent of each other; you have to maintain your own self, your own personality. Marcia Dominguez
But it can go terribly wrong when couples entering into a business arrangement are not aware that it is rarely trouble-free. Rather than focus on advice to make the arrangement work, I suggest here that couples need to first understand the potentially disastrous consequences, for franchisees in particular, when it doesn’t. Much of the following information should also be considered by people considering the classic business partnership.
I won’t overly focus on the relationship affects of bad franchising, however; many in prolonged conflict with a franchisor tend to underestimate a number of the relative aspects particularly, but not only, when an individual franchise is the target of an unscrupulous franchisor.
Firstly; franchisees need to be aware that many offending franchisors know that conflict will wear down the relationship and they expect to benefit from an anticipated implosion. There are many variations of demands that can be employed specifically targeting one or both of the partners so as to apply added pressure to the relationship. There are too many to describe here so suffice it to mention onerous and vexatious audits and pointless yet expensive training demands as examples; all quite legitimate within the context of the contract.
There have been reports of franchisors that even stooped to beginning bogus rumours that one partner was stealing from the other and other outrageous and false rumours of infidelity typically targeting a relationship already under various forms of pressure. Even when the targeted partners may never consider any truth in such gossip, knowing that it exists has a damaging and often traumatizing affect. Such strategies, as intended, are commonly effective in creating angry, poorly considered and dangerous responses by franchisees.
No matter how it is achieved the reality is that many fall prey to their own mistakes where they become distracted from critical business needs such as effective staff management, ensuring customer satisfaction and the maintenance of stock, ancillary purchasing and equipment. Inevitably sales and profit suffer and there comes about trends in declining customer numbers, increased staff turnover, increased operating costs, slowly vanishing business standards and an eventual inability to pay creditors and pursue such normal business practices as local marketing.
It is a snow balling affect that adds to the likelihood that the business and the relationship will collapse. As anticipated; franchisees get lost in the influx of these and other stressful strategies and bi-products of conflict designed to profit from their failure. Rogue franchisors typically are reluctant to resolve conflict unless an introduced consequence has to be confronted or a deal can be struck where most of the desired result can be achieved with immediate efficiency.
Should a divorce eventuate for any reason and/or where one party to the business wants, or needs, to extract themselves then the franchisor has the right to require a new and ‘current’ agreement and in many cases a new assignment fee but in almost all cases there will be legal costs and a requirement to comply with whatever interpretation the terms and conditions that the franchisor deems appropriate to approve the transfer.
It may be that a franchisor might reject a renewal for any number of reasons. When that occurs it leads to difficult and virtually loss certain vulnerability for the franchisees of a broken relationship where they must confront a decision to continue on in hell or possibly lose everything with early termination and that breach of contract.
The breakdown of the relationship can get very costly to the point of breaking the financial back of the business while continuing to leave the franchisees vulnerable to the terms of the franchise contract including but not limited to lost revenue to the end of the contract term, any guarantees given, lease agreements and variable tax issues to name but a few typically ignored or unknown considerations.
Many franchisors are known to refuse to release an ex-franchisee from a guarantee long after the partnership has been legally and financially dissolved on the grounds that the single partner does not reflect a necessary level of guarantee confidence.
Then of course there are the many other non-business costs, including the emotional which affect the entire family into somewhat of an indeterminate future.
For rogue franchisors dedicated to churning franchises headed toward the collapse of a partnership can be a windfall and a welcomed bi-product that hastens turnover. There is a long history of appalling franchisors protecting their schemes by blaming the franchisee operators and so, the collapse of the relationship becomes a nice fit. And ever reliable franchisees typically make emotional decisions that support the scheme.
For quality franchisors the loss of performance, growth and potential brand damage is quite simply an expensive and often times avoidable setback. The franchisee partnership collapse does not tend to happen overnight. All bad things tend to seem to require various stages of pain including, for the franchisor, increased support needs, customer complaints, declining standards and generally lousy compliance. Of course there is the common tendency for franchisees to be unreasonable and sometimes irrational and volatile. People in the middle of emotional turmoil tend to lash out. Add to that the loss of a substantial lifetime effort and all hell can break loose.
For married franchisees the collapse of a partnership is usually closer to devastation than it is to relief. If the cause is not associated with a bad franchise then franchisees can take responsibility for the usual failures to;
But these are the elements of success or failure that should be confronted prior to considering a partnership and also elements for periodic and objective review. This is material you should also see in business plans but rarely, if ever, do.
And even when all parties including the franchisor are agreed that it is time to sell; the franchisor is commonly held responsible because Murphy’s Law and common sense suggests that buyers won’t be available for an inflated price for a dilapidated business. Human nature tells us when the world is falling apart, in franchising, the franchisor is responsible whether it is or not.
Quality franchisors do not have a history of these business breakdowns so cherished by bad franchisors. But that doesn’t mean they don’t suffer from the inefficiency caused by near misses and the under-performance of strained relationships. Successful partnerships are often amongst the highest performers in a franchise network so there is an opportunity for quality franchisors to further elicit greater performance from franchisee partnerships with a little effort.
Typically you find that successful operators, whether they be in a partnership or not, enjoy a balanced approach to the health of their business and the health of their personal life.
Franchisors can actively diminish the chances of relationships intruding on the success of the brand. This is not rocket science. Anyone with enough experience to effectively design a quality induction program can create a 2-3 hour section for ‘partnership planning’ and then demand that both partners participate in confronting the potential causes for this type of failure and what practices can be utilized to avoid them.
Franchisor support people that typically witness the slide of married partnerships tend to sidestep their responsibility to the brand, the rest of the franchisee network and the troubled franchisees involved on the grounds that people should be allowed to sort out their own personal problems. Investors in the brand should consider that excuse as unacceptable.
Support people should get in early before partnership conflict gets to the point where franchisor representatives almost have to be armed to visit the franchise. That means acknowledging to all parties that a problem exists and no matter what the perceived causes, there is professional advice that can assist to circumvent a catastrophe before the franchisor is forced to intervene.
Enthusiasm and drive are prerequisites to success but burnout is real. Inductees, and especially married couples and business partners, would be particularly surprised at 2 sections of sophisticated induction programs when they exist;
One; inductees are advised at the beginning of the induction that at the end they will be required to set a date for when and how they will manage their first holiday.
Two; inductees are involved in an ugly introduction as to how partnerships can fail, what to expect should failure occur and what methods best avoid partnership collapse.
Due consideration and planning for partnership success would typically involve an investigation of the investment worthiness of a franchise offering and both require professional, expert advice.
Get Over It BMM