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Franchisee or Franchisor Centric?

Although there may be differences in the way franchisors operate their franchise systems, we can assume with confidence that franchisors intend to develop a franchise network with profitable franchisees and strong brand recognition. If there is an operational difference among franchise systems, an indicator can be found in the balance found within a franchise system. I would describe this in terms of how a franchisor interacts with their franchisees. This is not to say that all franchisors aren’t concerned about their franchisees but rather what is the operating philosophy that certain franchisors utilize. In order to more clearly define this phenomenon, I believe that franchisors usually fall into one of the following two categories or somewhere in the middle: franchisee centric or franchisor centric. Problems can arise when there is a pattern of overly emphasizing one approach over another.

The following table provides some examples of the differences among the two approaches:

Franchisee Centric Franchisor Centric
Introduces new products or programs using franchisee input Excludes franchisee input and attempts to sell this to franchisees
Has a process to obtain franchisee feedback to avoid major issues from arising Tends to take a more passive approach. No news is good news.
Has a procedure for dispute resolution There is no formal procedure in place
Regularly monitors and measures franchisee financial performance Obtains franchisee financials but fails to fully analyze results
Reluctant to strictly enforce systems standards Aggressively enforces franchise system standards

Franchisors that employ a balanced approach when working with their franchisees rather than emphasizing one approach over the other can be on the most effective path to follow.There are other examples that one could add to the above, however, the important point is that many franchisors tend to emphasize one approach over the other. The problem with a franchisor centric approach is that the most important franchisor constituencies are their franchisees and the end users. By excluding the emphasis and involvement of its franchisees from important operational activities, a franchisor risks weakening their franchise system.  On the other hand there may be instances when the franchisor needs to be assertive when addressing a particular issue that can impact the franchise network in a negative way. In this case a conciliatory approach from the franchisor may not be the best way to address this problem.

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About Ed Teixeira

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Public Profile

Ed Teixeira is the founder and owner of FranchiseKnowHow, which publishes articles and provides advice for prospective and existing franchisees and franchisors. He is also COO of  FranchiseGrade.com. Ed's most recent book is The Franchise Buyers Manual, a comprehensive guide for prospective franchisees. He has also published the Home Care Franchise Industry Update for the past 3 years. Ed has worked in the franchise industry for over thirty five years. He was a franchisee and has served as a corporate executive for firms in the retail, manufacturing, healthcare and technology industries. Over the course of his career Ed has been involved with over 1,000 franchise locations and has transacted international licensing in Europe, Asia and South America. His articles and interviews have appeared in numerous publications and media. Ed has spoken before various groups including: the International Franchise Association, the International Franchise Expo, European Healthcare Conference in Luxumbourg and the Chinese Franchise Association in Shanghai, China. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country. 

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Franchise Consultant