Less a parent, more a partner - business relationships between franchisors and franchisees - Franchising Special Guide - includes related article on how to start a franchisee advisory council

Nation's Business, March, 1994 by Meg Whittemore

The concept of strategic partnerships in franchising has been around a long time. Berrie Browning says he introduced it in the early 1960s when he owned General Business Services, Inc., a franchised system in Silver Spring, Md. The company offers accounting and consulting for small businesses.

"I had been a franchisee two times before I started GBS," says Browning, "so I was more sensitive to the arrogance of the franchisor towards the franchises that was often present."

After decades of practicing a leadership philosophy that he says placed General Business Services franchisees at the center of his concern, Browning sold the company and stepped down as CEO in 1986. He became a franchise marketing consultant. He still preaches a concept of strategic partnership in franchising.

"I always stressed to my people at GBS headquarters that we were partners with our franchisees," Browning says. "We were both equally important, and one would be helpless without the other."

A lawyer might cringe when franchisors refer to their franchisees as partners. "What they are talking about is the way that franchising ought to work," says Michael Garner, a New York City attorney whose clients include both franchisors and franchisees. The term partnership, he says, conjures up legal points of shared profits and losses, and joint ownership. "Franchising is a contractual relationship as defined by the franchise agreement, and nowhere in the agreement is the word partnership," he says. Instead, "I would refer to it as a spirit of cooperation, a mutual understanding, and open exchange of views."

Garner acknowledges, however, that there are changes taking place in the relationships between franchisors and franchisees that hint at a growing interest in the concept of strategic partnerships.

Most of the changes are largely a result of individual leadership styles--those of the franchisor and the franchisee. But some industry experts believe that the pressures of increased scrutiny of franchising by federal and state legislators have prompted many franchisors to reexamine their management strategies pertaining to franchisees.

In general, partnership in franchising embraces a range of management philosophies, including open lines of communication, organized franchisee forums, aggressive ongoing training, and an attitude of working together responsibly.

For many franchise systems, the existence of a franchisee advisory council remains the most important element in creating a climate of strategic partnership. Such a council is typically organized as an elected body representing the community of franchisees. The membership includes franchisees from different regions, and the terms of office are usually staggered. The sizes range m numbers, depending on the size of the franchise system.

Advisory councils of Burger King or McDonald's franchisees, for example, have thousands of members. Smaller franchise systems have proportionately smaller councils.

There are advisory councils for only 272 of the 680 franchisor members of the International Franchise Association, a trade group based in Washington, D.C.

Why are some franchisors hesitant to support franchisees in this way? "It all goes back to the old idea of control," Browning says. "They can't seem to give it up and make the franchisees part of the decision-making process."

But franchises that have such councils find they provide open lines of communication that are vital to maintaining a spirit of partnership, Browning says. And through the councils come good ideas. "The franchisees are on the front line every day," he says. "What better market researchers could you got?"

In interviews with Nation's Business, franchisors described how they are fostering a sense of being less a parent and more a strategic partner with their franchisees:

Mutual Responsibility

Charles Cocotas, president and CEO of TCBY Systems, Inc., a frozen-yogurt franchise based in Little Rock, Ark., has worked for 84 years in a variety of franchise systems, including International Dairy Queen and Boston Chicken. He took over TCBY Systems in 1989, while the founder, Frank Hickingbotham, remained president and CEO of TCBY Enterprises.

Cocotas defines himself as a champion of the franchisee and, while hesitant to use the word partnership, refers to TCBY franchisees as his customers--the engine that drives the income (monthly royalties on gross sales) of the franchise. "I think there is a built-in mutual responsibility between franchisors and franchisees to work together closely, cooperatively, and harmoniously," Cocotas says.

One of the cornerstones of Cocotas' approach to franchise management is to never lose sight of what it feels like to be a franchisee. Partnership to him means understanding what the franchisees are up against every day. His first few days as TCBY's new CEO were spent in a TCBY franchise location in Little Rock, waiting on customers. Corporate staff members are also expected to work periodically in a TCBY franchise.

"I believe if you don't know how it feels to operate the franchise, to be in the stores on the firing line, and to deal with the customers, then you don't have any business managing those who do," Cocotas says.