Consumer Discretionary

The General Interest And The Particular Interest In The Management Of A Franchise Network

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<p style="text-align: left;">As soon as I wrote the title of this article, I hit the first hurdle of this delicate subject because I was about to write: "The general interest VERSUS the particular interest".</p><p style="text-align: left;"><br />The whole paradox of this problem, which is of course not exclusive to the world of franchising, is that not only can the individual interest of one of the members of the network diverge from the general interest at any given time, but sometimes the sum of the individual interests does not coincide with the general interest!</p><p style="text-align: left;"><br />However, the franchisor, who can and should only be the guarantor of the general interest, cannot ignore the particular interests of its franchisees.</p><p style="text-align: left;"><br />Let's take a concrete example (a lived one when I was managing Subway in France, although here I am caricaturing a bit to illustrate the point):</p><p style="text-align: left;"><br />The franchisor concludes a terms and conditions agreement with a supplier who will supply all the outlets in the country. This agreement includes, of course, the respect of several conditions, one of the most important being the achievement of a certain volume.</p><p style="text-align: left;"><br />Some franchisees tell the head office that they have found the same product cheaper at a large Cash&amp;Carry and that, therefore, the national agreement is bad because a simple Franchisee "without the buying power of the brand" can find better conditions!</p><p style="text-align: left;"><br />Therefore, the franchisees in question decide not to adhere to the national agreement.</p><p style="text-align: left;"><br />When the review period foreseen with the supplier arrives, the supplier indicates that the announced volumes have not been reached and that it must increase its prices.</p><p style="text-align: left;"><br />All the franchisees are unhappy with the increase, even those who did not agree to it in the first place!</p><p style="text-align: left;">So, how to make the general and the particular interest converge?</p><p style="text-align: left;">First key: Transparency!</p><p style="text-align: left;"><br />One of the reasons why some franchisees do not want to get into the game, even if it is to then complicate their lives by going "shopping" themselves, is because they think that the Franchisor "Is taking advantage of it to make money!" Well, if this is the case, you have to be able to explain it to the Franchisees and show them that the added value that the Franchisor brings when negotiating centrally is superior to the possible drawbacks and/or price differences. Too many times in the corridors of the Franchisors' offices one hears things like "And don't let the Franchisees know about that!&rdquo;</p><p style="text-align: left;"><br />Second key: Accept that certain decisions made by the head office will not please everyone.</p><p style="text-align: left;"><br />However, they will have to be assumed and defended because as Steve Jobs said, "If you want to make everyone happy, don't be a leader, sell ice cream! ".</p><p style="text-align: left;"><br />Finally, the franchisor must also help his franchisees to take a step back and coldly analyze the elements they are comparing. In our example, the franchisor might ask the franchisee if he has taken into account the value of his time spent going to the Cash&amp;Carry. Couldn't he have used it more efficiently for something else? What about fuel, etc.?</p><p style="text-align: left;"><br />Of course, the franchisor/franchisee relationship is not an exact science (some compare it to a marriage!), so it is always necessary to try to understand the true motivation of the "dissenting" franchisee because it often hides another problem that needs to be identified and solved</p><p style="text-align: left;">But that would be the subject of another article. . . .</p>
KR Expert - Thierry Rousset