A sad man once said, “I can’t get no satisfaction.” Of course, that man was Mick Jagger of the Rolling Stones, and he was singing about… things that can’t be published in a restaurant trade. But you’d be forgiven if you thought it was a limited-service restaurant executive who muttered those words, lamenting on the troubled relationship he has with his franchisees.
For many companies, the franchisee/franchisor relationship is tenuous at best, and franchisee satisfaction is in the dumps. Whether it’s poor sales, misguided company initiatives, or the absence of franchisor support, any number of conflicts can sour the relationship between franchisee and franchisor and, in turn, sink the company’s growth potential.
But it doesn’t have to be that way. Countless companies in the limited-service industry have proved that through a strong relationship with franchisees, brands can jumpstart growth momentum and develop a positive organizational attitude that trickles down to customers.
Eric Stites, CEO of Franchise Business Review—which releases an annual report on franchisee satisfaction—says a good relationship with franchisees isn’t rocket science, but he adds that it does require hard work from each company’s top executive. He says CEOs typically fall into two camps: those who are in the trenches with their franchisees working hard for their benefit, and those who are “my way or the highway.”
“When [franchisees’] satisfaction is high, they’re operating at a higher level and they’re more successful, and it just sort of flows from there,” Stites says. “It really does come down to that culture of inclusion, and I think that’s almost impossible to have if it doesn’t flow from the CEO.”
We talked with four top executives at companies that perform well in Franchise Business Review’s franchisee satisfaction survey every year about the best ways a franchisor can invest in the relationship with the franchisee base.
CEO, Firehouse Subs
You are only successful if your franchisees are successful. Period. If you’re going to take a long-term approach to building your brand, then you have to be invested in the long-term success of your franchisees, as well. Even though that’s common sense, the history of the restaurant industry and of franchising is dotted with examples of franchisors who lost sight of that.
At the very foundation of it, you have to have a commitment as a franchisor to enforce your brand standards. If you’ve got a system of excellent franchisees, they expect and even demand that. Many franchises have gone sideways because they’ve failed to do it. I think we’ve been extremely consistent and fair in the way we apply our brand standards, by doing it evenly and in a disciplined fashion. It also leads us to having great report cards from the consumers, because of the consistency we have across the board.
There’s a need for us as the franchisor to really carry the burden for inspiring the franchisee to excellent levels of performance. Just enforcing the brand standards isn’t enough. We try to do that a number of ways. The one thing that I’m most proud of that we’ve been doing now for almost two years is something we call the “Awesome Awards.” Every week, we are reviewing every bit of customer feedback that comes across our doorstep. What we’re looking for are examples of employees of franchisees doing things that are above and beyond what it says to do in the book. When we see that, we’ll surprise that restaurant. We’ll go visit it; the franchisee doesn’t know why we’re coming, just that we’re going to be in town and would like to meet the crewmembers. When we get there, we recognize not only the employee who did the great deed, but we also recognize the entire team, believing that employee would not have performed that excellent deed unless the culture of the restaurant endorsed or encouraged it. The way we recognize them is to give everybody on the team a thank-you card with a $50 bill in it.
According to the Franchise Business Review, these are the top five brands for franchisee satisfaction in 2015:
3. Firehouse Subs
4. Penn Station East Coast Subs
5. Hungry Howie’s Pizza & Subs
When I go out to visit, it needs to be inspirational in nature. The last thing that the brand needs is a CEO going out and playing “gotcha.” I never lose sight of the fact that, when the founders or the CEO of a brand go to visit a restaurant, it’s a big deal. More often than not my visits will be announced, because I want to set them up for success. And frankly, if I go in to a restaurant and things aren’t as they should be on an announced visit, that’s all the more of an indication that there are some things that need to be worked on. As a CEO, I’ve got to encourage optimism and let it cascade down throughout the organization, because it goes without saying that an optimistic organization is going to perform better than a pessimistic organization. If you’ve got pessimism coming down from the top, it doesn’t stand a chance to well up from the bottom.
I inherited a system where every DMA had its own incorporated co-op. When we were still relatively small, I was able to persuade the franchise community to collapse all of those entities into one national marketing co-op. The key was to empower the franchisees by increasing the size of the board that controls that co-op. At the time, we expanded it from what would normally be just a three-person board to a nine-person board, the majority of the seats going to franchisees—they had five seats, and those franchisees were elected by fellow franchisees. We had three area representatives, because we franchise on a two-tier network. And then there was one person that I appointed, and I originally filled that seat to get it off the launching pad.
At the same time I did that, I empowered them to form whatever committees they wanted on any topics. In effect, I was allowing them to create a franchise association, because in my experience in looking at what so many other brands had done over the years, I would venture to say a very large number of associations that are out there in the industry have been formed out of adversity and have been formed by the franchisees not with the franchisor’s support, but in opposition.