Franchising businesses grow at an amazing speed because of great partnerships. Business owners who are considering franchising must develop a system that is effective and efficient in managing expectations and relationships, including those with large networks. This is a skill that you must learn and develop if you want to become successful in franchising expansion and development.
Franchising is strongly based on partnerships and is defined by the relationship between the franchisor and the franchisee. While the franchisor will always have a say based on a legal standpoint, they must refrain from dictating everything based on the structural arrangement. For both parties to succeed, they must work together and have a partnership based on the give-and-take principle.
Building Strategic Partnerships
As the business grows and the brand becomes more recognized, they will attract more potential partners interested in franchising the business. Interested partners usually come from an outside organization and would like to align with the company so they can also benefit from the partnership.
They could come from a marketing firm offering discounted work or free branding in exchange for an exclusive relationship with other franchisees in the system. Or, it can be a commercial real estate firm that offers discounted leases based on preferred referrals from the franchise system.
Building a partnership in franchising offers unlimited possibilities for the franchisor, franchisee and their partners. The key to developing partnerships lies in a great franchisor and its management. They have to go through careful steps when choosing which organizations to connect with and form a strategic partnership with.
Here are three important foundations when building partnerships:
- Actual Research – This involves more than just doing a Google search. The franchise development team should look into the company’s background, including their successes and failures. All essential information should be disclosed before the final contract on the partnership must be signed.
- Verification of Their Work – Part of the research work is to backtrack references of the organization to ensure that they are who they are. Doing this will also help the company determine the trustworthiness of their future partner in the business.
- Validation of the Partnership – Meeting and discussions regarding the strategic partnership being formed are important before pursuing the next move. All factors must be considered to ensure that the partnership will be beneficial to all parties involved. It will not be a partnership if only one side will have all the gains.
Some potential partners ask for exclusivity in the partnership, but as the franchisor, make sure that there are no lost opportunities when signing exclusive arrangements. This may be warranted in some cases, but not all cases require it. Weigh things carefully and make sure that the exclusive partnership is only for a specific period, say 24 months, and that both parties must review and assess the results before deciding to extend the partnership.
Lastly, once the business has signed on a partnership, it should be known by everyone involved. Most of the time partnerships bring greater value to the organization, the franchisees, customers and other potential partners who are also considering doing business with the company.