How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
There is a storm brewing down here and whether you consider it the great flood that will destroy franchising or inclement weather, it still means we have to make some changes to survive it. Don’t fear franchising in the U.S., take precautions.
The U.S. National Labor Relations Board (NLRB) is one of the leading government agencies that is threatening broad and sweeping action against the franchise model. There are many theories and speculations, but the fact is that no one knows what will happen, but we all agree that things will change. So, why not lead the change? The franchise community has the ability to return to its roots and demonstrate its willingness to change and still offer a significant business opportunity to thousands of people.
By going back to offering a pure business format franchise, franchisors on both sides of the border can make NLRB stand for Never Too Late to Reinforce Best Practices.
Most franchisors are expert in the execution of their business, be it food prep, home repair or personal service. In fact, they get so good at it that they lose sight of how to break it down, document and teach it. Think of driving a car and the thousands of adjustments you make every mile. Now think about teaching that to your teenager – it’s maddening because you are no longer aware of all the things you do to successfully manage that drive.
The same happens in franchising. The details and the nuance of the business operation become so familiar that they get lost in training. Franchisees don’t excel as quickly and so the franchisor wants to provide more information to make the franchisee successful. They morph from a business format overlay on another person’s independent business to crafting and directing the business itself.
Recently we have seen that most franchise manuals have little detail about the execution of the business format but volumes written on business modes, banking choices and HR matters. Developing a manual and training is labor-intensive work and there is not a bright line to profitability that is attached to it, so it is given very low priority when allotting dollars and man-hours. Therefore, it is a lot easier to through in material developed for other companies that relate to general business practices, even though that is not what you, as a franchisor, sold.
No one can predict what will happen, but I doubt that the franchise model will be allowed to fail – it is too great of an economic engine. But, it will change, and it should. So, don’t propagate what you know to be under attack, create a new, winning strategy. Focus on your business format and make your franchisees be the best they can at that. Choose only those people with acumen for business and let them use outside resources to develop those skills while you focus on developing the unique system/product that only your brand can offer. Your growth may be slower at first, but it can be more sustained, create greater value and be your best defense.
NLRB – you choose what it means – a nightmare or a new beginning.
