Franchise loyalty is the glue which sticks franchise systems together, argues Christy Wilson Delk
I opened my Kids ‘R’ Kids Academy franchise in 1998 in a very culturally diverse area of Orlando, Florida. Although many friends reacted as if I had planted my franchise flag in a different country, this was an aspect of opening my business that I had not given much thought to. The area was booming, my franchisor approved my site plan, and I was eager and anxious to get this dream started.
This business was going to work. No matter where it was. It had to. Everything was on the line. A year earlier, I had sold my house and cashed out my retirement plan for the down payment on the $1.67 million loan needed to finance the franchise construction and get the doors open.
Thankfully, with the help of many loyal clients, staff and others, I did succeed and after 15 years of very profitable ownership, I sold my franchise. Now, as a business professor teaching management and organizational behavior, I know that things could have turned out even better and probably sooner had I planned my franchise ownership adventure more strategically.
Why cultural intelligence matters
Your adventure, as a prospective or current global franchise will be different from mine. And so, with my professor spectacles wiped clean and entrepreneur hat on straight, I have some strategic and cautionary advice for you. Omnipotent thinking and a lack of cultural intelligence have left a lot of smart people and successful organizations scratching their heads. Let that not be you or your franchisor.
Howard Schultz, CEO of Starbucks, had to re-think his European expansion when he learned that the British drink their coffee take-away (to-go) style and so prefer drive-through service over going inside. The company also learned that classic coffee-sipping cities like Paris and Vienna actually desired the “Starbucks experience” rather than having the company adapting to the host country’s traditional coffee houses. Having learned from previous mistakes, Schultz did his homework before making cultural assumptions. Good on him.
Walmart was not so lucky. Years ago, the largest retailer in the United States failed miserably when it expanded into Germany. Assumptions were made about German consumers and workforce that were flat wrong. This oversight of cultural differences cost Walmart billions of dollars. Franchisors and franchisees cannot afford to make these kinds of mistakes. That’s why, as a franchisee considering ownership of a multi-national franchise, it is vitally important that you quickly build a strong ‘loyalty pillar’.
The Four Pillars Approach
A ‘loyalty pillar’ is one part of the Four Pillars Approach which I relied on as a franchise owner. I developed this approach over the first few years of ownership when I realized that my job was more challenging than I initially thought it would be. This approach simplifies your planning, leadership and management tasks while keeping you fully aligned to your franchisor’s brand and processes. I’ve been told that the Four Pillars Approach represents everything a franchisee needs to know and do that is probably not found in the Owner’s Manual. The approach also helps you maintain a healthy work/life balance and done correctly, enables you to grow your revenue and profits every year. It definitely did for me.
If you own a multi-national franchise or are considering buying one, I strongly encourage you to start building your Loyalty Pillar. I believe it’s even more important for you than for domestic franchises. This is why:
How building loyalty will strengthen your business
Owning a franchise is hard. For me, it was the unforeseen challenges that I struggled with the most. Recessions and competitors are two examples. But like me, you will learn from them as your business becomes stronger and your revenue and margins grow. I slept very well at night during the 2008 U.S. recession and ensuing global economic slowdown. Even with several competitors opening in my local market.
I attribute that in large part to the loyalty-building strategies and programs I had in place. I believe it will be even more important for you because of your unique global franchise structure, regardless of the strength of the franchise brand in the home country. If you need convincing, consider what loyalty can do.
Why building loyalty is the foundational pillar
Think about it this way: It’s your loyal clients and customers who keep your cash flowing while you work on bringing in new ones in order to grow your revenue or even open a second unit. It’s your loyal supervisors and staff that helps you attract and retain great employees thereby keeping your expenses down and your level of service high. It’s community loyalty you earn over time through your solid reputation, good acts and local engagement that protects and strengthens your business that will carry you through the unexpected challenges. And for you, it will be Franchisor Loyalty that will help you best navigate cultural differences that may arise between your business, your brand and your local market.
Franchisor loyalty is crucial for your success
Loyalty is defined as your feelings of support or duty towards someone or something. Like communication, it is a two-way street. My loyalty towards my franchisor was expressed by my words; such as objecting to negative comments expressed by other franchisees and by telephoning periodically just to ‘check-in’. My loyalty was also expressed by my behaviors. I mentored new franchisees, hosted area training sessions and paid close attention when quality issues were pointed out.
Being a loyal franchisee pays off with big dividends. My financial success is proof of that. Without franchisor loyalty, I probably would not have had the opportunity to expand twice; both of which were not standard franchise models. Nor would I have been granted the ‘forgiveness’ when I ended up on the local news (not in a good way) or when I occasionally veered from the manual to try something new.
As a loyal global franchise owner, there will be many opportunities over the years to connect with your franchisor. No doubt, you will need to discuss big and small cultural differences, work through potential divides that impact your business and share your ideas for service or product enhancements that make sense for your local market. As a loyal global franchise owner, you will have earned the right for that type of trust and meaningful communication. It’s never too soon - or too late- to build your loyalty pillar today.ABOUT THE AUTHOR
Christy Wilson Delk is a business professor at Rollins College in Winter Park, Florida, as well as a contributing franchise industry writer. With over 15 years of successful franchise ownership, Christy uses her cumulative business and franchise experience, as well as her new book, Adventures in Franchise Ownership, to consult, lead workshops and speaking engagements to teach others how to implement their own 4 Pillars approach to motivate and lead them to higher performance and success. You can learn more at christywilsondelk.com.
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