In my last article, we explored the negative impacts of a toxic culture and discussed the importance of a positive exit management process. But assuming you aren’t going to exit every troublesome franchisee that comes your way, how do you create a more harmonious environment?
Who Owns Culture?
Quite often, culture is difficult to pin down because it sits in between a variety of roles – so no one individual ‘owns’ it. Because of this, it helps to have somebody who is designated and responsible for tracking everything and asking: do our actions align with our culture? That person should be senior enough to speak up in an unfiltered way when needed!
If nobody ‘owns’ culture it can easily fall by the wayside when pressures are introduced that encourage pocket-first thinking. A change in ownership is another situation where culture suddenly seems less important, but these challenges are surmountable.
A good example would be the time around the COVID pandemic. Many franchisors were suddenly put under extreme financial pressure, but many franchisors did the right thing by their franchisees: they stood by them. They lived and breathed what was the essence of the culture that had already been created. For many of those franchisees, that support will never be forgotten. It created a strong, meaningful bond between franchisor and franchisee because the franchisor did the right thing in the face of adversity, even when a lot of them had no idea how they were going to make things work.
So there’s a humanistic perspective to culture as well. The application of culture isn’t done manipulatively, but done with compassion and a sincere desire to do the right thing. As humans when we are treated that way, we want to reciprocate. Of course, this doesn’t happen 100% of the time, but in the majority of cases, that’s what happens. You never forget when people support you – particularly when the chips are down.
At the same time, there were other franchisors who did the exact opposite. There were others who took the pocket-first route and only looked after themselves. They didn’t think about their franchise partners, and some of those businesses have now folded.
So therein lies the rub. By creating the right culture, what goes around comes around. By NOT having the right culture, or creating a toxic culture, what goes around comes around as well.
As humans, whether we’re the franchisor or franchisee, we have the choice. We can choose what culture we want to create. It’s within our gift and our power.
Leadership And Culture
Leadership and culture are inextricably linked. From a leadership perspective, it’s vital to always take care of the people around you. The old days of saying “I’m the franchisor, you just need to do what you’ve been told,” simply won’t work if you want to build a sustainable, profitable franchise business.
In terms of leadership, we’re living through a paradigm shift. The old-school command and control models of the Industrial Revolution are now less effective than a people-first approach. Most franchise businesses are nothing without people, whether that’s employees, contractors, or franchise partners.
Of course, you need to have a robust franchise model too. Your model needs to be replicable; there needs to be solid systems, processes, and procedures. But a lot of my day-to-day work is helping franchisors and franchise partners to work better together. Often we’re trying to upskill franchise partners, whether that’s leadership development, coaching with compassion, or enabling franchisees to take more value from being part of the franchise.
If all you do is sell somebody a franchise and tell them, “Here’s the manual, read it at your leisure,” your chances of success are minimal. Sooner or later franchisees are going to think, “What am I getting? What is the point of being part of this network?
Successful franchising is about person-to-person relationships and interactions. When you have the right culture, you reach a point of interdependence between the two parties. It’s not an equal relationship and never will be, but it’s an interdependent one. In this situation, both parties add new ideas to the pot. But to do this you must consciously and specifically create the culture to facilitate it.
This requires you to define it, articulate it, communicate it, live it, and breathe it in everything you do. When you do that, you will see transformative results. In transforming the culture you’re ultimately looking to transform both your results and your enjoyment from the business.
As humans, we’re hardwired to be part of something bigger than ourselves. We want to be part of a community, to feel part of something we can be proud of. Putting culture at the forefront of that is genuinely transformative in terms of the breadth and depth of relationships you can create.
Give Culture a Place at Your Board Meetings
Culture is a strategic issue that deserves a place at the boardroom table. Culture – and cultural transformation – must come from the top. This applies to both franchisor and franchisees, because the interactions and behaviours need to be in alignment. The stated culture must be aligned and delivered consistently between franchisor and franchisee, but also from the franchisee and their team. This includes how they interact with clients and customers.
As customers we all get an instant feel for the culture of any organisation. You can tell from the tone of the person on the phone, or the actions of staff in store. You can tell within seconds what culture you are dealing with and how it’s being managed. Richard Branson talks about not necessarily putting the customer first, but putting the people first. You look after people first, which creates the culture that you want. You have to then make sure this is effectively managed. You need to call out any behaviors or activities that are not aligned with the culture.
As a franchisor, I’ve always taken the view that I want my franchisees to call me out if I ever display a behavior that is incongruent with the cultural statements I’ve made. At the end of the day, we’re all human, so we can make mistakes and you can get it wrong. There is no need to shy away from that. But encouraging everybody in your ecosystem to call out incongruent behaviour helps to keep things on track. The goal is to create a culture where it’s OK for you to be called out in public if you get things wrong. Because unfortunately, things WILL go wrong! How you respond and rectify those things is how you build a foundation of trust.
Key Metrics
If culture is going to hold a strategic place at the boardroom table, you need specific metrics. For instance, this data could be gathered by franchisee surveys, or mystery shoppers. The metrics won’t mean much as a standalone reading, but over time you can see whether things are getting better. These metrics don’t need to be too complicated, but by defining and then reporting at both board and operational levels you will see real progress.
Creating the right culture is an investment. As an investment, you need to make sure your efforts are having the desired impact. When you get this right, everybody who has bought into the culture will begin to police things themselves. You as the franchisor don’t have to be the policeman; which is a direct efficiency gain to your franchisee support team! I can tell you from first-hand experience that this is a joyful experience. In effect, the culture becomes self-reinforcing as the actions back up the words. Either party can keep the other on track.
In the vast majority of franchise businesses, any new franchise partner coming into a business will want to speak to some of the existing franchisees. So as a foundation, it’s important to have happy, profitable franchisees. After that, it’s also important that your existing franchisees help to identify whether the prospective franchise partner will fit the culture or not.
Some franchise owners get nervous about letting prospective franchisees speak to existing ones because they lose control in the process. But with a robust culture in place, you don’t need to worry about the loss of control so much. If you want a culture of openness, honesty, reciprocity, and sharing, then you have to do these things. Besides, if they come on board, they’re all going to talk down the line anyway!
I’ve been in franchise businesses where we’ve brought on people we shouldn’t have due to pocket-first behaviour. Thankfully, in those businesses, we adapted and put procedures in place to reduce the risk of that happening. Of course, it’s never going to be 100%, but you certainly want to mitigate the risk by having the correct metrics to track and monitor. But the future success of any franchise business depends on having the right quality and caliber of people coming into the franchise, who share your cultural values. You want to set those expectations at the outset to minimise problems.
As the franchisor you should never be thinking, “How do I sell more franchises?” The correct thinking is: “Who do I want to award this precious gift of a franchise?” Then you do your due diligence and make sure your franchise partners are doing their due diligence as well. It’s about finding people who believe what you believe.
For the potential franchise partner, that belief starts with a shared outlook and purpose, but also an understanding of what the culture is and what they would be bringing to enhance and improve that culture. Of course, you also want to filter out anybody who is going to take your culture in the opposite direction.
Culture is to some degree an energetic state or vibration, so you want new franchise partners to come in with the right energetic states to begin with. In some cases, things will always go wrong after that, but you want to do everything you can to start on the right foot.
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The Franchology® purpose statement is ‘transforming franchising together’. I honestly believe that Franchisors who are driven by purpose, have an amazing opportunity to make Franchising the number one growth strategy globally!
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