Franchisor Leadership

by Greg Nathan, Managing Director,
Franchise Relationships Institute

The Single Most Important Factor

There have been hundreds of theories and books written on what constitutes effective leadership. My work with many franchise companies, both good and not so good, has led me to the conclusion that effective leadership is the single most important factor in the long-term success of a franchise network. When you strip away the apparent cause of every significant achievement or problem there is always one driving force — effective leadership or a lack of it.

Unique Challenges

Yet our franchise leaders face significant and unique challenges. They must first and foremost fulfil the traditional corporate leadership role, ensuring their organisation delivers on its promise to its customers, behaves in a responsible manner and makes money. But they must also play another role that is far less defined in its responsibilities — the franchisor role.

This requires them to diplomatically coordinate the talents and ambitions of their franchisees — people who are “mini-franchise leaders” in their own right. As one CEO said to me, “I don’t manage franchisees, I coordinate the energy of 120 Managing Directors!”

Defining Effective Franchisor Leadership

In coming to grips with the skills of franchisor leadership, perhaps we should start with a simple definition.

“Leadership is about getting people involved and committed to turning a worthy vision or an idea into reality.”

Six Elements of Effective Leadership

In thinking about some of the good and not so good franchise leaders I have known I have concluded that, in our current economic and social environment, there are essentially six elements to good franchise leadership. These elements are not meant to be a formula for success, or to be definitive traits that you either have or have not. Rather they are guidelines and principles which all of us in leadership roles should aspire.

  1. Having a clear vision: This is not just a glib one sentence mission or vision statement about being the best or delivery great service. It requires a precise mental picture of how you want all aspects of your franchise system to evolve.
  2. Maintaining believability: Sustained success is only possible if the people on whom your business depends, especially franchisees, feel they can trust and respect you. On this point it was interesting to note that at the Australian Franchisee of the Year Awards earlier this month, three of the five finalists mentioned that the main reason why they valued their franchisor so highly was because of their franchisor’s integrity.
  3. Ensuring intelligent strategy: We could define this as ensuring your organisation’s goals remain in fit with the needs of its customers, franchisees and the broader market in which it operates. Because the answers to important strategic questions are not always clear, intelligent strategy includes being able to make sound decisions when the available information seem to be conflicting or ambiguous, (which is most of the time).
  4. Building commitment to change: Social and economic changes mean that franchise systems must be increasingly adaptable in the way they do business. Also as a franchise system grows and develops, structural changes will be needed to maintain adequate levels of support to its franchisees. The franchisor has to not only be able to identify important shifts in direction, but also to get others to come along — easier said than done!
  5. Managing conflict: While people have a natural inclination to cooperate and help each other, they also have their own individual needs, expectations and approaches. This is particularly so in a franchise network where there can be several agendas operating at once. So another element of good franchise leadership is the ability to identify and manage conflict.
  6. Developing personal mastery: The final element of franchise leadership involves the sensitive and responsible use of power. A franchise leader’s power comes from a combination of the strength of their personal character and the formal authority that comes with their role. However this tends to pose a problem because power has a corrupting influence on the human psyche. The greatest weapon a franchise leader has in controlling the corrupting influence of power is personal maturity — knowing oneself. Personal mastery is about doing what needs to be done in the interests of the business and its people rather being driven by egotistical impulses.

A final thought. The role of the franchisor leader in creating the culture of a whole franchise network cannot be underestimated. Culture is more caught than taught, caught from the people who have the most power. Ralph Waldo Emerson wrote “An institution is the lengthened shadow of one man.” With this in mind, if you are a franchisor leader and find yourself unhappy with what is happening in your network, you may want to take a look in the mirror!

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