Leadership in Franchising

I would like to start this topic with quotes from Harry Gordon Selfridge which compare ‘the boss’ and ‘the leader’. I saw these quotes posted in Facebook some time ago and was very attracted to the trueness of the statements.

“The boss drives people; the leader coaches them.
The boss depends on authority; the leader on good will.
The boss inspires fear; the leader inspires enthusiasm.
The boss says I; the leader says WE.
The boss fixes the blame for the breakdown; the leader fixes the breakdown.
The boss knows how it is done; the leader shows how.
The boss says, GO; the leader says Lets GO!“

I did some searches on the web for the meaning of ‘boss’ and ‘leader’ and I feel that these two have spot-on definition:

Boss: a person who exercises control or authority; specifically: one who directs or supervises workers (Merriam-Webster.com);
Leader: a person who rules, guides, or inspires others; head (TheFreeDictionary.com)

Generally, the keyword that is attached to ‘boss’, in many online dictionaries, is authority and the keyword for the word ‘leader’, is simply lead.

This writing will be very much in the context of SME franchisor. From my observations, many SME has a ‘boss’ – the principal business owner. In another word, the organisation is controlled by a ‘boss’. The principal business owner will most of the time act in a very authoritarian way. You can’t blame them as this is the way they do things since the very beginning when they first started the business and for them, they know the best in the organisation and everyone must listen to them.

But this is where things go wrong when it comes to franchising. In franchise, the ‘boss’ attitude does not work most of the time. You cannot afford a bossy franchisor business owner in the franchise relationship because the franchisees are also business owners as well, “standing head and shoulder on par” with the franchisor business owner. Both parties are business owners.

Coach

Why do some people go into a franchise and become a franchisee? Basically, one of the reasons why some people become a franchisee of another party is due to the system. They expect that the system from the franchisor works for them. They probably have the drive to do the business but do not want to spend the time doing the trial and error. All they need is guidance and someone to coach them to do things the right way and more effectively and efficiently. And for that, they are willing to spend on the franchise fee and pay the royalty. So, the franchisor’s role is not to push the franchisees further but to lead them to develop further.

Good Will

There is no doubt that almost all if not all, franchise agreements will give the franchisor a lot of protection and benefits. This, at times are called, a one-sided sided agreement. This is a fact that one cannot run away in a franchise relationship. And this in fact has given the franchisor a lot of authority or power over the franchisees. However, if the franchisor needs to use the franchise agreement to exercise its authority every now and then to settle issues in the franchise relationship, then it is bad. A franchisor should build a good will that is respected by the franchisees so that the franchisees look at them as a role model that do the right thing and not a police officer that has the power to summon the people when people break the rule.

Enthusiasm

As mentioned above, the franchise agreement has given the franchisor a lot of power in the franchise relationship. However, a good franchisor will not instil fear upon the franchisees to impose penalty or terminate the franchise agreement should there be a default even though this is provided in the franchise agreement. A good franchisor will on the other hand make the franchisees excited and enthusiastic in executing what is required. Franchisor need not be an iron fist dictator that rules the network but rather a charismatic leader that get the franchisees rally behind them.

We

Many franchisor business owners are very proud of their achievements that most of the words they use to refer to their success is ‘I’. In franchising, one has to remember that the future success or failure depends very much on both parties – franchisor and franchisee. Therefore, if the franchisor emphasises so much on the ‘I’, then the perception is that the franchisor should also take as much blame for the failure as it takes the credit for the success. A leader will say, ‘we’ achieve the success together and when times are difficult, more likely than ever the franchisee will say ‘we’ are into this together and we will face it as one. This is where the togetherness in network shows the unity and solidarity of the brand.

Fix the Breakdown

It is the nature of many people that when something goes wrong, they will look for excuses and put the blame onto the others. An act that irritates many other people as well. A ‘boss’ character will normally look for a scapegoat to take the blame because they believe that, the boss knows it all and could not have done any mistakes. A true leader will not be waste time on these but instead will quickly get the act together and focus on fixing the breakdown. There is no point crying over spilled milk. What needs to be done is to fix the problem, learn from the mistake, move forward and not to repeat the same mistake again. And this is the characteristic that is required to build a good and sustainable franchise system.

Shows How

A franchisor normally knows how things are done. This is because they are in the trade for long and had ample knowledge and experience to face the situations. A franchisor with good leadership quality has the ability to take it further. Not only do they know what and how things are done, but they can also show how things are done and guide the franchisees. This is what franchising is all about – duplication.

Let’s Go

A bossy franchisor will tell the franchisees to ‘go’. Franchisees should do this and should do that, and should not do this and should not do that. This is regardless of whether they do it themselves or did not do it themselves. They give instructions and order to do things that sometimes these instructions and orders are not implemented at all at their own backyard. A good franchisor says ‘let’s go’. They will walk the path together with the franchisees. What the franchisees experience, the franchisor will have full understanding of it.

Solution

A franchisor has to be a leader. If the principal business owner does not have that quality, it does not mean that he or she cannot be a franchisor. Hire a manager, a director, a vice president, or even a chief executive officer who has that quality. The franchisor needs someone who can lead not someone who can only instruct. Many people with the position and title can give instruction easily but how many times those instructions are adhere to with the sense of ownership? How many times instructions are followed wholeheartedly? How many times people complaint while still following instructions? Franchisors need leaders who can lead the franchisees, who know how to handle them without much conflict and provocation. Who can get things done even without the need to use the authority? Who can inspire franchisees. Who is visionary. Who is a human.

All the leader characteristics mentioned above when apply in the franchise relationship are interrelated. They form a chain of qualities that make a strong and sustainable franchisor. And to summarise all the above, a good leader is the one that shows leadership by example.

Happy Deepavali, Merry Christmas & Happy New Year!


This article was first published in Business for Sale Magazine Issue No. 29 Dec/Jan 2013

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