ften we see this. A Business owner contemplates franchising his/her business and looks for every possible way to make a profit. We ask, “Who could blame them?” After all, they succeeded in business by applying that very principal. In lean years, they struggled to creatively discover new ways to pass through rising expenses to customers, while staying competitive, while maintaining their value proposition – not an easy juggling act! It just stands to reason that franchisors would see their franchisees as another source of income. But, we see it differently. We look for ways to improve transparency and equity between the franchisor and the franchisee.
Sure, there are a myriad of ways to assess fees or upcharge franchisees for product and/or equipment. But, remember these are the very people who chose to enlist based on absolute trust in the franchisor’s intent and promise to help them succeed. We think of each franchisee as an adopted child. In that vein, we recommend focusing efforts on making franchisees successful rather than focusing on short-term profits. Espousing honesty, trust and transparency will pay off in the long run, as evidenced in the expansion of the brand. Validations from happy, current franchisees are a powerful force for brand growth. Ultimately, the franchise system’s increasing royalty payments should offset the decision to forego lost revenue opportunities on the front-end.