The Perceived Value of a Franchise
Operating in the world of franchised business as I do you learn that many principals that are true in business are magnified by the relationships in franchising. It is fairly obvious that the franchisor “franchises” or “licenses” a franchisee to use the franchisors systems, trademarks and intellectual property of all kinds to deliver the products or services to the eventual consumer.
But this relationship is more than just a written agreement because it has been described as somewhat of a partnership. The franchisee at least envisions him/herself as a partner to the franchisor. As in partnership the partners must feel that they get value from the relationship. Some of that value is measurable in terms of revenues, profits, and supply chains but much of it is not so measureable it is “perceived”.
As we work with franchisor nationwide either to improve their systems or to help new franchisors get started, we advocate an approach to franchising that is a comprehensive system of integrating the expectations of the franchisee with the goals of the franchisor.
A franchisor should be concerned about the value that the franchisee believes (in other words “perceives”) he/she is receiving for the royalties paid. Contractual obligations are one thing, but a properly managed franchise system can put the Franchise Agreement aside, and hopefully never look at it until it’s time for renewal, because the franchisee perceives the value received is worth more than the royalties paid.
Perceived value is a matter of trust, once that trust is broken it can take years to repair. The technical vale is the effort – no concerted effort to insure that all of the contracts accurately and clearly express the expectations and obligations of each party. It is a key to marry both, perceived value, and actual value and to insure that these are congruent wit both parties expectations.
by Jack Eberenz