Advisory Dec, 17 2009

Fear of smart franchisees

Every franchisor aspires to run his/her franchise business successfully. But success of a franchise largely depends on the potential and intelligence of the franchisee. A word of caution. A smart franchisee might not bring equally smarter business solutio

By Abha Garyali
Sub Editor
Fear of smart franchisees

Franchising is a safer way to develop business. It is the duty of the franchisor as well as the franchisee to handle their franchise business successfully.  This is because, on one hand, the franchisor has to be highly cautious in recruiting the right franchisee and on the other hand, it is the potential franchisee that takes up the responsibility of shaping the franchise business accordingly.

No doubt potential and passionate franchisees are the driving forces behind the successful running of the franchise but the franchisor should be careful in selecting a franchisee. In other words, the franchisees should not be clever or smarter than the franchisor. Franchise experts also share this opinion. As said by Rod Young, Executive Director, dc strategy, “Do not ever appoint a franchisee who is more intelligent and qualified than you.” Some of the franchisors as well as the franchisees must be surprised and curious to know about the base of this statement. So let’s have a look at some of the repercussions of having brighter and more intelligent franchisees:

  • Interference with the franchise agreement: Franchisees who are more qualified and intelligent than the franchisors interfere a lot with the existing franchise agreement. They want to change certain clauses according to their convenience. Such interferences might hamper the franchise business or even lead to the termination of the franchise agreement.
  • Leads to annoyance: In a few cases, if the franchisees give their piece of advice to the franchisor, then it might become a reason of annoyance to the franchisor.  
  • Overtaking the business: In some cases, the franchisors might get anxious of his business being overtaken by any intelligent franchisee. Franchisors are possessive about their business and do not like too much of intervention by the franchisees.
  • Setting a new business: The franchisee can learn all the basics of the business and can make use of the similar skills and resources to establish a new business. This is a common occurrence these days and franchisors must be aware of it.
  • Fear of getting sidelined: Franchisors are successful and confident businessmen but they might develop an inferiority complex if their franchisees prove to be more intelligent than them. They might feel that their business is being controlled by the franchisee.

Contradictory viewpoint

We cannot say that it is a universally accepted practice. There are many franchisors who want to add brighter and smarter franchisees to their network. As, Joseph Cherain, CEO GFA India and MD GFA Global Services said, “The wealth of any franchise system is having franchisees who can contribute to the over all development of the business. Having more knowledgeable partners lead to new and unique concepts. This helps in succeeding.” He further said, “The franchisors will succeed only when the franchisees are successful.”

To conclude it can be said that every franchisor may have a different criterion of selecting franchisees but at the end they all want their business to expand profitably. So selecting the right franchisees will make all the difference in making a franchise run successfully.

Related: Evaluate RoI for better returns

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