Franchising With Representation: System change without buy-in is a recipe for resistance

In today’s world, many customers expect businesses to adapt to them. In a franchise system, this dynamic is reflected in system change. Franchisors that don’t embrace new possibilities or design a culture where franchisees embrace change will fall behind their competition. With that reality, a franchisor can no longer lead with a primarily command-and-control style. Instead, they should embrace collaborative leadership where a franchisor retains decision-making authority but listens closely to franchisees and all other brand stakeholders.

Franchisees want a voice rather than a vote. They want meaningful input and a franchisor who truly listens. They don’t want to have expensive system changes imposed on them at the last minute even if Section 8.C of the FDD says the franchisor has the right to do it.

System change has increasingly become a point of friction in many franchise brands. How franchisors and their franchisees embrace system change will continue to be a difference maker in 2025 and beyond for every system. The key to an effective process overhaul is a franchisor driving change through collaboration with its franchisees. Success requires unwavering focus on how to effectively design, implement, and communicate new directions that will drive customer brand loyalty and unit-level profitability.

Protecting franchising from within is as important to franchisees as it is to franchisors. After all, a franchisee’s equity is significantly impacted if their franchisor is unable to enforce system standards. If a rogue operator is damaging the brand, it impacts a franchisee’s value. The value of the franchisee’s business decreases if the franchisor can’t effectively protect the brand and make necessary adjustments.

Culture of collaboration

Franchisor and franchisee leaders are responsible for instilling a passion and attitude throughout the system. Successful leaders don’t blame others for system shortcomings, and they don’t try to dictate attitude or culture. If a franchisor leader can’t instill that passion in their team and franchisees, then franchisees won’t have the tools, drive, and commitment to instill that passion and commitment in their employees. It simply won’t happen on a sustainable, system-wide basis without shared alignment. If a franchisor wants motivated, engaged, and aligned franchisees, give them a meaningful voice in matters of system-wide importance.

As a foundational point, franchisors must have a franchise agreement that allows them to effectively and efficiently grow, maintain, protect, and evolve the brand and system. A strong franchise agreement allows a franchisor to protect the brand from free-riding franchisees. Franchisors, however, must take into account the franchisee’s perspective as they consider new directions. A franchisor that does not obtain franchisee input on system change before announcing its plans is asking for trouble at some point, especially if franchisees resist or if those changes do not produce the desired outcome.

Collaboration does not require a franchisor to give up decision-making authority on system change. That is the franchisor’s role and responsibility. Collaboration is about leadership and how franchisees can provide input to their franchisors through advisory councils and franchisee associations. Franchisees should be encouraged to offer feedback to field consultants. There can also be discussions with leadership at the home office or at franchise events.

Franchisees will recognize franchisors who invest training time, effort, and money in creating a culture of respect within their team and system, setting clear expectations with franchisees from the beginning regarding the roles and responsibilities of both the franchisee and the franchisor. There should be agreement on how franchisees provide feedback, and franchisors need to have a solid understanding of the day-to-day concerns and needs franchisees face.

Best practices

A franchisor’s collaborative approach to system change often includes the following difference-making best practices:  

• Foster and protect a system-wide culture where the efforts of franchisees are appreciated and celebrated.
• Embrace the belief that new ideas can help drive system-wide growth and are often found in the field with franchisees, but do so in an organized manner rather than every franchisee doing what they want.
• Treat franchisees with respect and recognize their investment in their business and their stakeholders’ role in the brand.
• Promote the importance of the franchisees’ daily interactions with the brand’s customers at the local level.

With the proper approach, new systems and processes can be to everyone’s benefit because long-term sustainability for all brand stakeholders, including the franchisor and franchisees, can only happen when the unit-level economics of the business are healthy.

Brian Schnell is the chair of Faegre Drinker’s franchise practice. He is passionate about franchising and has more than 35 years of experience focusing on finding solutions to challenges and opportunities for clients. He is also the chair of IFA’s Franchise Relations Committee.