Creating positive franchise relations.

What is the formula for building and nurturing positive relationships between franchisor and franchisees? Franchising World asked five franchise systems that question: Mr. Handyman, Auntie Anne's, Batteries Plus, USA Baby and Budget Blinds. Their answers revealed there is no set formula. Each franchise system develops its franchise relations programs based on a number of factors, including its leadership, size, level of maturity, and the nature of its particular product or service. But on one point the franchisors agreed emphatically: happy franchisees are the key to success.

At first glance, it appears franchisor-franchisee relations programs are the same in most systems. They have newsletters, Web sites, conventions and field representatives to keep headquarters and franchisees in touch. But a closer look shows that, beyond these nearly universal methods of communication, each system has its own methods and philosophy for creating and maintaining the environment in which its franchisees operate. And, while their communication tools may vary, franchisors that know what their franchisees need and want are the ones that thrive.

Todd Recknagel can speak to the issue from the viewpoint of both franchisor and franchisee. A member of the International Franchise Association's (IFA) board of directors, Recknagel owns 10 Blimpie Subs & Salads franchises, and in May 2003, he assumed the additional role of president of Mr. Handyman, a division of Service Brands International.

Recknagel's 10 years of experience as a multi-unit franchisee have provided him with valuable insights into the franchisee-franchisor relationship. Above all, he believes the franchisor must pay careful attention to the bottom line. "The systems that succeed, in my opinion, are the ones where the franchisor puts all its focus on the franchisees' bottom line--on how they can make money."

Mr. Handyman

"We look to take obstacles out of the franchisees' way."

In just two years, Mr. Handyman has grown to 100 units, with 350 vans on the road. Following the system set by Service Brands signature brand, Molly Maid, Mr. Handyman technicians place an emphasis on experience and professionalism in their work and appearance. That, plus a wide-open opportunity in a field as yet unbranded, helps account for the chain's rapid growth, Recknagel believes. He also knows its continued success rests heavily on its franchise support system.

For new franchisees, there is the Right Start program in which a company representative leads them through the launching process one-on-one, helping them take the steps they need to get their new business up and running. "When one person is dedicated to running them through the Right Start program, we find the franchisee has a launch that is kind of a cookbook launch. The franchisee isn't just out there brand-new and facing all these things alone the first time," Recknagel explained.

A mature franchisee, on the other hand, has very different needs. "If I called a mature franchisee and said, 'I have a person here at the company dedicated just to you and I'll have him call you,' he would say, 'You know something; you guys need to find something to do!'" Recknagel said with a laugh. "A mature franchisee is looking for ways to continue to maintain efficiencies, ways to continue to contain costs."

Mr. Handyman has regional operations managers who are focused on franchisee-oriented issues. "A mature franchisee is looking for his next move, whether it be multiple store growth or sales growth in an existing location. It's all about maintaining and adding to the bottom line," Recknagel said.

Recknagel sits on the Mr. Handyman Franchise Advisory Council along with three franchisees with large operations and three smaller ones, so franchisee input is "plugged in right at the top," he said. The council's input helps the system meet its goal of knowing and responding to the needs of its franchisees. "The ideal franchisor is one that can try to remove as many burdens as possible from the franchisees so they can concentrate on their bottom line," Recknagel said. "We look to take obstacles out of the franchisees' way, so they can succeed better and faster."

Auntie Anne's

"A commitment to give more than you take."

Auntie Anne's Hand-Rolled Soft Pretzels Pres. and COO Sam Beiler defines the key to good franchisor-franchisee relations in one word: listening.

"Communication is both speaking and listening. And it is just incredibly important that the franchisor listen," he said.

Beiler believes Auntie Anne's most effective way of communicating is through its franchise council system, made up of five regions, each with officers elected by the franchisees. Representatives from the home office meet twice a year and again with the presidents from each of the five regions in January.

Franchisee involvement in the regional councils is 100 percent, Beiler said, and franchisees are represented in operational aspects of the system as well. "Our marketing efforts at this point are absolutely grassroots driven. What's coming from the franchise community is brought through that advisory council. And those ideas and those conversations develop the calendar for the following year."

Auntie Anne's reliance on franchisee input was evident in a recent initiative to upgrade its retail stores. First the proposal went through the council system for feedback, then the company was able to develop a program that would fit the needs of each operator.

"In some cases there are financial issues or there are timing issues. This program has to work for the operator, or it is really a bad program," Beiler said. "So we had a considerable amount of feedback through the council system, and now case-by-case with each operator and each location, we get to the upgrade at the right time for us and for them."

Beiler believes the best way to work out any differences that arise with franchisees is to sit down together and find a solution. "I don't divvy that out to a legal department or an operations department. I stay very involved when there are relational issues, because I truly, truly believe that is the basis of the strength of our system."

"Relationships are not easy, whether personal or professional, and for them to be strong and effective, there has to be a commitment to give more than you take," Beiler continued. "That's our commitment and that's where we will be 20 years from now."

Batteries Plus

"We are always learning."

Around Batteries Plus Wisconsin headquarters, they have a motto, said Pres. and CEO Russ Reynolds: "The fountain of knowledge has never been seen in Hartland, Wisconsin." That serves as a gentle reminder to listen to and learn from the system's franchisees. "That may sound simplistic," Reynolds said, "but we have very savvy operators and to assume we can teach them everything and can't learn from them would be naive. So we try to remind ourselves of that."

As part of that process, in the three years since Reynolds came on board, Batteries Plus has expanded the role of its franchise advisory council, which has a number of committees working on specific projects and ongoing strategies. The council was closely involved with planning and implementing Ascent Battery Supplies, the chain's recently formed captive supply and distribution operation, which replaced a fragmented group of approved suppliers and has resulted in increased efficiencies and cost savings for the franchisees.

"There were some anxious moments as we thought about how much to involve them," Reynolds recalls. "It was very different from the historical path we had followed. But in the first week we opened that warehouse, we had all but four of our franchise locations place their replenishment orders for all those product lines through this operation. We obviously couldn't have done that if our franchisees had not really bought into the strategy."

Other recent changes such as improved technology and training programs for new and established franchisees enable the system to address franchisee needs more effectively than before. National accounts and e-commerce programs are in the development stages, both to be coordinated by headquarters but driven through the stores.

With so many changes going on, it is essential to stay in constant communication with the franchisees. To that end the system supports travel and related expenses for its franchisee committees to work with them on their projects. "Our view is, if franchisees are kind enough to volunteer and spend additional time to help us see this change through the system, we should do that face to face. We have found that way we get things resolved more quickly," Reynolds said.

"There is always going to be constructive tension in a business like this. it is the nature of the system," he added. "How to leverage that for a positive outcome versus a confrontational outcome is the goal." "We wouldn't claim we have it perfect because we are always learning."

USA Baby

"Everything we do is done with consensus."

When it's time for an industry trade show, everyone at USA Baby gets into the act. "Some franchisors might send their merchandising people and let them make those decisions," said Ron Eriksen, vice president, market development and support for the franchisor of retail baby furniture stores. "We send all of our franchisees, and they break down into committees--a wood committee, a metal committee, a bedding committee and so on. They go out and make the decisions for what the chain will carry, what vendors we will drop, what products we will pick up."

That focus on franchisee empowerment carries through to every aspect of operations at USA Baby. Franchisee committees report to their advisory board on everything from audit and finance to advertising, e-commerce, product selection and other operational areas. "Everything we do is done with consensus," Eriksen said. "I have been in franchising more than 20 years and I have never seen a more seamless environment between franchisee and franchisor. It is really a collaborative effort."

He credits this franchisee-oriented approach to USA Baby founder and Pres. Alan Levine's background in retailing. Levine owned and operated 10 baby furniture stores before he franchised, so he understands the needs of the individual store owners. "He built a franchise system designed more with the operator in mind than anything else," Eriksen said.

Part of being focused on the needs of the franchisee is helping them achieve their personal goals. "Franchisees don't buy a franchise because they are looking to further the goals of the franchisor," Eriksen pointed out. "They buy a franchise because they have personal goals. The franchise becomes a set of tools to accomplish those goals."

It is important to remember that those goals change over the life of the franchisee's ownership. According to Eriksen, a franchisee's initial goal is to break even. Then the next goal is to make as much money as they can. Usually a third goal is to try and improve their quality of life and work less. Then somewhere along the line their fourth goal is to develop an exit strategy. USA Baby works with its franchisees at each stage to find the best solutions and adjust to changing needs, Eriksen said.

"I think that our being able and willing to make adjustments, based on the philosophy of making things easier for the franchisee, has made all the difference both in terms of the success of the franchisee and in the harmony of the system."

Budget Blinds

"You sell franchises because you have happy franchisees."

When Chad Hallock, president of Budget Blinds, founded the company with his twin brother and three friends in 1992, there was no doubt that franchisees' interests came first. "We live by our founding principle of setting our franchisees up for success, rather than merely selling franchises," he said of the 450-unit company.

Hallock believes the best way to have good franchise relations is to get off on the right foot, "and the right foot begins before they ever buy a franchise." Before a prospect buys a franchise, Budget Blinds pays for them to come to its California headquarters for a discovery day. "What we really want to do at that point is to make sure it is the right fit," Hallock explained. "We have to make sure the franchisee who is considering Budget Blinds agrees with the overall global vision of the company and how that vision ultimately affects them."

At Budget Blinds, franchisees pay a maximum royalty of $18,000 a year. "We should provide a value to every franchisee of more than $18,000 a year, otherwise their royalty is costing them money," Hallock said. "We do it for this reason," he continued. "Why should Franchisee A pay $5,000 a month and Franchisee B right next door pay $500, because Franchisee A is willing to work much harder than Franchisee B? Our system rewards the successful franchisee by saying once you hit the ceiling, all the money goes in yore pocket."

Budget Blinds intranet system, along with e-mail, chat lines and regional and annual conventions keep communication flowing throughout the system, but franchisees are not directly involved in day-to-day operational decisions, Hallock said. "We used to have an executive franchise committee, and they voted to stop it. They feel very confident in the leadership of the company and our decisions. They do well, and they are happy."

Based on a current average of selling 12 franchises a month, Budget Blinds expects to ultimately have 2,000 vehicles on the road. "You do not sell franchises like we are if the franchisees are not extremely happy and making money," Hallock added.

"When our prospects talk to franchisees and everything they hear is positive: 'Yes, you should buy; yes, I'm making money; yes, this is how I operate my business; yes, it only takes two employees'--you sell franchises because you have happy franchisees."

Polly Larson is a freelance writer based in Snow Hill, Maryland. She was editor of Franchising World for 14 years and now contributes frequently to the magazine.