In this episode, Rick Mayo and Matt Helland discuss Greg Nathan’s six stages of building successful franchise partnerships. Franchise relationships are really a partnership between the franchise brand and the investing franchisee. It can be a rewarding business partnership for both franchisor and franchisee, but it requires a deep understanding of the unique relationship between them.

In his book The Franchise E Factor, Greg Nathan, an Australian author, outlines how a franchisee’s satisfaction level and needs change as the franchisee/franchisor relationship moves through six stages.  Nathan helps franchisees better understand how to resolve the inevitable tensions in the franchise relationship through listening, empathy and collaboration. 

While not all franchisees may experience these stages in a linear fashion, both franchisor and franchisee need to understand what they entail.

Understanding these stages can help both franchisor and franchisee set realistic expectations and navigate challenges that may arise. By acknowledging that these stages are a normal part of the process, both parties can work together to overcome obstacles and achieve success.

6 Stages of Building Successful Franchise Partnership

  • The Glee Stage 
  • The Fee Stage 
  • The Me Stage 
  • The Free Stage 
  • The See Stage 
  • The We Stage 

1. The Glee Stage

The first stage is when the franchisee first signs the franchise agreement and is excited about their new business. It can last anywhere from three to maybe 12 months, and it’s the time when you are starting the business with a lot of learning and details. Everything is as a four letter word and the word is work. Work to learn the systems from all the franchise training opportunities. As you continue to run and follow the system, to more quickly they should realize a return on investment. The franchisor is there to support you the whole way.

2. Fee stage

After franchisees start making money and royalty payments, it’s a natural progression for them to wonder what they’re getting for their money. They have become comfortable following the systems and now their business is operating smoothly.

They start asking, what am I getting for my money? This stage needs open, non-defensive communication from the franchisor.

3. Me Stage

In the third stage, the franchisee feels that they could be just as successful without their franchisor. It’s a natural tendency to take credit for the good things and it’s not surprising. The franchisee feels like they are doing all the work and wondering why they have to be regulated by franchise rules. Franchisees  start wanting to branch out with their own ideas and do their own thing .

The franchisor may start to receive some criticism, which they must respond to in a positive, patient, mature way. It is important that the franchisee doesn’t get bogged down with resentment to make the quantum leap to the next stage. Franchisors should sit down and address franchisee concerns and clarify the obligations of both parties.

4. Free Stage

Because we’re in a partnership and partnerships aren’t easy, it helps if everyone understands the expectations of running a franchise business. Again, it is important to sit down with the franchisee to discuss the real value and do a benefit analysis of what they actually receive from the franchise fees, services, and support. For example, what benefits do they actually realize from the franchise’s buying power, advertising and marketing fees, brand value, etc.

5. See Stage

This stage is a maturing of the relationship where the franchisee is cooking with oil. As the franchisee reviews the value and benefits of the system, a renewed conviction will often emerge that the franchise system is good and works. They may become more open-minded, inquisitive, and empathetic. The franchisor and franchisee work together to increase their profitability.

6. We Stage

This is when the real power of a franchise brand kicks into gear. To reach the “We Stage,” the franchisee must be mature, objective, and most of all profitable. The franchisor must be patient, fair and consistent in their dealings with franchisees.

As a franchisor, it’s our job to get people through these stages as smoothly as possible to get them to the “We Stage” as quickly as possible. Quiet achievers who keep one eye on profit and one eye on cultivating healthy business relationships are our greatest asset.

The six stages of franchise relationship are similar to a parent child relationship, in that both are trying to put some controls in place and have people who want to spread their wings and do their own thing. When you’re two or three years old, you need to supervise them so they don’t touch the hot stove. Then they evolve into teenagers, and that is the time you really need to work together to help them learn and grow with boundaries.

The “We Stage” is like when your kid’s grow into their late 20s and early 30s, and start having kids of their own. They totally understand what the parents were trying to teach and why they did the things they did. They appreciate it more, and you’re grateful that both of you are on the same path.

In the early growth stage, people don’t understand why they have to follow operating systems and procedures, but once they get into it, the franchise model really starts to click.

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Key Takeaways

  • The Glee Stage (05:58)
  • The Fee Stage (07:41)
  • The Me Stage (10:50)
  • The Free Stage (12:03)
  • The See Stage (13:19)
  • The We Stage (15:28)

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