Fanchisors and Franchisees Must Learn to Deal with Change
by Ed Teixeira
All organizations need to make changes in order to maintain the vitality of
the business. This is true of franchise companies. When significant changes are
made, franchisors and franchisees must be equipped to deal with change.
Itís a given that franchise organizations will implement some change to the
franchise program from time to time. The inevitability that businesses change is
as sure as death and taxes. However, there are some changes that can create
turmoil. Consider the recent litigation between both KFC and Burger King and
their franchisees. Once a franchisor decides to make a significant change, it
should be communicated to the franchisees before the change is implemented. The
reasons for prior notice can include:
- Using the franchise
advisory council as a sounding board
- Simply giving franchisees
the courtesy of knowing about the change
- Providing the entire
franchisee community an opportunity to respond
- Enlisting select
franchisees to help mold the change in order to avoid a confrontation
Some changes are simply procedural in nature and can be implemented as per an
existing policy. Typically, the process involves a written revision to the
franchise operations manual followed by notice to the network.
Major changes that have a direct impact on franchisees demand special
attention. In certain cases, the change may not be that significant, but rather
the perception by franchisees is that the change is the beginning of "more to
Examples of Important Changes Include:
- Changes to franchise agreements that significantly revamp terms, renewal
terms, royalty fees and default conditions. These changes can cause particular
concern among franchisees that will soon renew their agreements.
- Changes in marketing or advertising programs which will represent a
significant departure from the current program.
- Organizational changes that involve franchisees and those individuals who
provide system support for franchisees.
- Changes in the direction of the business or company strategy that involve
applying resources to a new venture or business
For its part, franchisees should be willing to accept certain changes as the
need for the franchise organization to adapt and evolve may be a business
Some franchisees may establish various committees to interface with company
personnel. One of the most effective committees that can be utilized is the
advertising or marketing committee. Composed of franchisee representatives and
key company personnel, this group can provide the franchisor ongoing feedback
and information regarding marketing and advertising. In addition, an advertising
or marketing committee allows for ongoing dialogue between the franchisor and
representative franchisees. This "working group" can help to maintain positive
Some franchisors may create special committees or task forces to help deal
with large scale change. The franchisor, however, must clearly state the purpose
of the special committee. Some franchisors use committees to manage issues that
result from newly implemented changes.
In order to maintain a positive franchise relationship during change the
franchisor must do the following:
- Evaluate and measure how the change will affect franchisees.
- Gain feedback from the franchisee network regarding major changes. The
feedback can come from franchisor field staff, or from the franchisees
- Where the change is of significant impact to franchisees, consider a FAC
or a special committee to help franchisees understand why the change is being
- Demonstrate flexibility in introducing change. When feedback indicates a
great deal of resistance to change, the franchisor should consider the
situation, and avoid unnecessary confrontations.
Change is an important aspect of all relationships and especially in the
world of franchising. It is important that the franchisor and franchisees
conduct business within a climate of change that is positive that considers the
needs and objectives of both parties.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at