Why Franchisees Seem to Behave Badly

Over the past 35 years I’ve worked with hundreds of franchise networks of all shapes and sizes across 16 countries. One of the most common questions I get asked by franchisor executives is, “Why are these franchisees being so difficult, or acting so unreasonably, when we are just trying to help them?”

In life, there are basically two types of relationships. Transactional relationships are where we give something, and we get something. If we're not happy with what we're giving or getting, we can go off and deal with somebody else. Think customer relationships.

Interdependent relationships are where we’re stuck together because of a significant legal, commercial or emotional commitment. Think marriage, business partnerships, and of course, the franchise relationship.

While interdependent relationships may at times feel a little crazy, they do follow a certain logic with predictable patterns.

Through my personal experience as a franchisee and a franchisor executive, and FRI’s years of psychological research, I developed The Franchise E-Factor model to help make sense of the franchisee’s emotional journey as a semi-independent business owner.

The GLEE stage is where franchisees and franchisors are full of mutual admiration and are in a sense in a honeymoon stage.

After a few months, the franchisee becomes more commercially savvy, and when studying their expenses they are likely to ask, “What am I getting for my franchise fees?” So I call this the FEE stage.

In one of our franchisee satisfaction surveys, a franchisee wrote “When I started in this business my franchisor treated me like royalty, now I feel I’m treated like royalties!”

Then something called the self-serving bias kicks in.  It works like this: When things go well, we attribute this to ourselves; but when things do not go well, we blame others. You can see how this might play out in a franchise relationship. For instance, franchisees and franchisors want to each take the credit when sales go up, but of course, it's the other party's fault when sales decline! This is the ME stage.

As a franchisee's sense of confidence and accomplishment grows, some will want to experiment with new ideas or make changes to processes so these work more efficiently for their particular business. Sometimes if they're frustrated, they may sever communication. So I call this the FREE stage. Conflict is most likely to arise here.

One way to resolve this relationship tension is through genuine listening and seeing things from each other's perspective, which is why the next stage is called the SEE stage.

Finally, if both parties behave responsibly and maturely, and the business model is sound, the relationship moves to a state of mutual acceptance with a desire to make the most of each other’s strengths and collaborate for greater success. We call this the WE stage.

We have conducted several robust studies to validate the Franchise E-Factor model and it’s real.

By the way, you can buy Greg’s book The Franchise E-Factor from Amazon or directly from our website.