Greg Nathan

Just observe how your behaviour naturally changes as you mix with different groups of people. This is the power of culture.

The secret to a healthy franchising culture

A couple of weeks ago I gave a talk at a franchise industry conference on what it takes to build a healthy franchising culture.

It’s an interesting and important topic because organisational culture influences people’s behaviour in very real and immediate ways.

This of course is a two-edged sword. While the actions of people we work with will sometimes make us feel proud, there are other times when we’re embarrassed, ashamed and perhaps even angry.

My favourite definition of organisational culture is by Massachusetts Institute of Technology psychologist Ed Schein, who says: “It is the way we do things around here.” He is referring to the things people in a business habitually do without thinking about it. The way they answer the phone, greet each other, eat their lunch, respond to emails, and the hundreds of other small rituals, habits and idiosyncrasies that define who they are as a group.

Of course culture goes beyond the workplace. It exists wherever people live, work or play together – so we find unique cultures in families, communities, sports teams and groups of friends. See how your behaviour changes with different groups of people. This is the power of culture.

As my business operates almost exclusively in the franchising sector, let’s take a look at how culture relates to franchising.

I like to describe franchise networks as communities of business people sharing a brand, information and resources to gain a competitive edge.

The franchisor is generally accepted as the leader, setting the rules of what is acceptable. And like all good citizens, most franchisees are required to pay “taxes” or royalties for the right to belong to their community and enjoy the security and benefits that their franchise network has to offer.

Of course some franchise communities function better than others. The best franchisors use the magic of culture as an effective weapon in the war for the hearts and minds of staff, franchisees and customers.

Make no mistake. A healthy franchising culture will give a franchise network a competitive edge, especially as attracting and retaining good people is the biggest challenge facing small and large businesses today.

The leaders of these healthy franchising cultures are typically capable business people, committed to the long-term prosperity of their company and their franchisees. In other words, they care. They also understand how to harness the collective intelligence in their franchise communities and bring the best out in others by treating them with respect.

The dysfunctional franchising cultures are the ones the media loves to focus on. The worst of these typically fall into one of two types.

The first are the power-hungry dictatorships run by egotistical, self-serving leaders who are only satisfied when they are in total control. These characters achieve their success through a combination of vision, drive, the clever use of PR and an overbearing personal style. This in itself is not a problem, but dictators can bring their own insecurities and personal hang-ups to the job – decisions are about them, not the community. Eventually poor business decisions and franchisee unrest or rebellion can cause their franchise communities to implode.

The second type of dysfunctional franchising culture is the anarchy, run by greedy leaders preoccupied with selling franchises to anyone with enough cash, (which they then use for their own short-term purposes). These groups attract gullible franchisees seduced by slick superficial promises of success. Over time a trail of secret deals, random decisions and questionable business practices leads to a chaotic, unstable organisation with high staff turnover and low morale.

This, combined with the lack of a credible plan to build the infrastructure needed to properly support the growing network of franchisees (many who are unsuited to running their own business) inevitably results in the franchisor being on the wrong end of multiple lawsuits.

These two dysfunctional franchise cultures have one thing in common: narcissistic leaders who don’t care about or respect other people.

This discussion of leadership and culture is particularly relevant to franchising in Australia because the founders of most of our franchise networks are entrepreneurs who are either still running their companies or are major shareholders or directors.

Fortunately the two dysfunctional types of franchise networks described above are in the minority, although all franchisor founders need to be careful that they do not unwittingly head down these paths. The first symptom is when they start believing their own PR stories that paint them as super heroes capable of achieving anything.

Leaders in healthy franchising cultures care – about customers, about their franchisees and their brands. Caring is not something you can fake. It comes from your values and what you stand for in life.

However these types of constructive values need to be nurtured. If leaders don’t take time to regularly reflect on what they stand for, the day-to-day pressures of business can wear them down and make them cynical.

If you are in a leadership role, remember people are watching when you roll your eyes on hearing that a particular franchisee is on the phone, when you criticise a team member publicly, or you keep typing an email while someone is talking to you about something that is important to them.

Leaders hope their followers listening to what they say, but actions speak louder.

Perhaps it is fitting to finish this piece with a quote from one of my favourite writers, Ralph Waldo Emerson, who wrote: “An institution is the lengthened shadow of one man.”

If you are the founder or leader of a franchise network, or any group for that matter, and find yourself unhappy with some of the attitudes or behaviours your people are displaying, perhaps you need to take a look in the mirror.


Greg Nathan is managing director of the Franchise Relationships Institute. Greg is a corporate psychologist, developer of the Franchise E-Factor model and has written three popular franchising books, Building Profitable Partnerships, The Franchise E-Factor and The Franchisors Guide to Improving Field Visits.


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