Franchisee Relations

To be a world-class franchisor, providing a team approach to franchisee service, all employees must be knowledgeable, proactive, and very responsive to your franchisee requests.

  • Your team must be extremely consistent in their professionalism, customer-focused attitudes and high-quality work output.
  • Your franchise team must be willing to give “above and beyond” for the resolution of all requests.
  • Your team knowledge and operational experience in your respective industry are very high and always have a pleasant and helpful attitude, even late at night, which is very valuable.

Advertising Funds
Your advertising fund is arguably the most important yet controversial topic within your franchise agreement. Traditional thinking creates traditional outcomes, and often these are not pleasant to a franchisor. Each industry has its own local advertising methods on how to drive traffic into its business. Some businesses are dependent on walk-ins and location, while others are dependent on telephone inquiries and a central destination within the trade area. Initially, it is the norm to select 1% to 3% of your franchisee’s revenue. The franchisor will allocate this money to a separate account to be used for administrative, creative and placement costs of advertising campaigns and public relations programs on a regional and national level. The following are some questions to consider:

  1. What if 30% of your franchisees who contributed to your advertising fund do not support the creative direction or the placement strategy of the fund? These subjective opinions should not be ignored by standing behind your franchise agreement.
  2. How do you respond to a franchisee who is current on their royalty payment, but freezes their payment into the advertising fund? This is very common, and if not handled properly, escalates into an unnecessary confrontation.
  3. How do you manage a local market cooperative advertising agreement that exists between ten (10) franchisees in a single metropolitan trade area? Each franchisee’s opinion is to be respected, yet they all disagree with how the money should be spent. Imagine yourself at this meeting or training a middle-level executive to supervise this outcome.
  4. How do you respond when a franchisee says, “I pay into an advertising fund and there is no regional and national advertising.”
  5. How do you respond when you provide creative campaigns, which protect brand trust, and franchisees throw your campaign in the trash, request the components of the ads, and use up to five (5) different local graphic designers, offered at no charge by media representatives, to cut and paste their ideas into your proven advertising campaigns? You will never employ enough people to monitor and approve every advertising dollar spent in your franchise system.

Most franchise attorneys will encourage you to retain a reputable consulting firm to build the operational foundation of your franchise business before they produce your legal documents. In the absence of a business advisor, they may still offer to prepare your Franchise Disclosure Document, but they will clearly advise you this is not sufficient to succeed as a new franchisor.

This is a small sampling of real “operational” issues that must be prevented in advance at all costs, before you write your Franchise Disclosure Document. You will need to experience being on the receiving side of these issues before you can appreciate why we promote a deeper thought process behind your advertising fund strategy. This requires the experienced coaching of a trusted advisor who has been on these front lines. Third party coaching in this area of franchising can be lethal. To be certain that you know how to strategize the right approach to your advertising fund and prevent any situation from arising, this is an area where we encourage you to learn from somebody who has actually been there!


Four Types of Franchisees
As the founder/CEO of your new franchise company, you can choose to assess franchisee performance and operating results on three (3) levels.

Level I:

The franchising industry refers to a bell curve of:

  • 20% of your franchisees as high performers.
  • 60% of franchisees as medium performers.
  • 20% of franchisees as low performers.

Level II:

  • 33% of your franchisees are high volume performers.
  • 33% of your franchisees are medium volume performers.
  • 33% of your franchisees are low volume performers.

Level III:

In addition to these accurate statistical categories, we have developed an advanced behavioral model which defines the “relationship quality” of each franchisee system wide, regardless of their operational performance level. We maintain a standardized (52) week, “connect the dots” communications and training/support checklist on each franchisee within our web-based support management system.


This franchisee has been 100% properly serviced from the franchise agreement date. We have internally executed, in accordance with our training and support systems. This franchisee responds as a high performer, and supports the vision and culture of our franchise system.


This franchisee has been 100% properly serviced from the franchise agreement date. We internally executed, in accordance with our training and support systems. This franchisee responds as a high performer, however, over the period of 1-2 years, we allow this franchisee to “drift away” and they begin to slowly cultivate their own local vision and begin modifying the operating system. Gradually, they disconnect from all training and support programs with less attendance, less participation in corporate-sponsored events, and become obsolete to the newest methods of the business. This results in our franchisee acquiring a mindset of “I can do it all on my own because I never hear from anybody at the corporate office.” This relationship ultimately breaks apart through the business closing or non-payment of royalty. We are 100% responsible for allowing this franchise partner to drift so far away that neither party can see each other.


This franchisee has been 100% properly serviced from the franchise agreement date. We internally executed, in accordance with our training and support systems. Unfortunately, our franchisee is not “connecting the dots” in the key marketing, sales, service, and financial areas. They are losing money. Our relationship is solid in all areas of trust and chemistry. Regardless of our training and support reinforcement strategies, this franchisee either doesn’t “get it”, does and is having difficulty executing, or does not have the desire to change their current methods of operation. This relationship cycle goes round and round until there is a shocking positive breakthrough or the business is resold or closed. There are early indicators within the franchise sales and training processes that can prevent this from occurring. It is our responsibility to identify these in advance.


This franchisee has been inadequately serviced from the franchise agreement date. We internally did not execute in accordance with our training and support systems. The franchisee is frustrated and 2-way communication can become strained. It can be fairly assumed that if a franchisee does not like you, a member of your staff, or your corporate culture, there are no inviting reasons for the franchisee to embrace your vision or stay connected in any way, shape, or form to your corporate training and support team. This results in a “wall” distancing the relationship week by week. Simply signing a franchise agreement does not guarantee a healthy and connected franchise relationship. We are responsible 100% for contributing to the improper training and support service and creating an unlikeable working environment. How we speak to our franchisees is as important as what we train. Kindness is free.

As CEO, once you accept 100% responsibility to maintain the highest standard and maintain 100% healthy and connected franchisees, you will be more open to foster mutual respect and implement state of the art 2-way communication systems. When you take inventory on what number of your franchisees are “healthy and connected,” by our definition, you will have the opportunity to acknowledge there is enormous opportunity to improve. Within our support management system, we monitor and code each franchisee on a weekly basis on a dashboard for you to review.