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THE CHALLENGE OF CHANGE

by Greg Nathan, Managing Director of the Franchise Relationships Institute,
last updated 23/07/2009

Greg Nathan discusses how to get franchisee buy-in and commitment to change

A young man wanted to study philosophy and sought out a well known professor. After listening to his request the professor said, ‘I am going to pose you a problem and if you get the answer right I will teach you everything I know about philosophy.'

The young man eagerly agreed so the professor continued. ‘Let's say we have two men, one dirty and one clean, but just one bath of water. Who do I give the bath to, the dirty man or the clean man, and why?'

The young man couldn't believe his luck. ‘That's easy. You give it to the dirty man because this would be the most efficient use of resources.'

‘An obvious response, but that's not philosophy, that's economics,' replied the professor. ‘Why don't you think about it some more?'

The young man scratched his head. ‘Okay, I've got it! The dirty man is dirty for a reason. He obviously does not value cleanliness. Why give him a bath when he will probably not use it or if he does he will just get dirty again? So you should give the bath to the clean man.'

The professor smiled kindly. ‘A fascinating conclusion, but I'm sorry - that is psychology, not philosophy.' 

The professor then suggested the young man go away and think about the problem. A few days later the young man returned unshaven, eyes bloodshot and clothes dishevelled.
‘I haven't been able to sleep for three nights!' he burst out. ‘I am tired, frustrated and completely confused.'

‘Ah,' beamed the professor. ‘Now that's philosophy!'

The Paradox

This article will address one of the hottest issues in franchising today: how to get franchisee buy-in and commitment to change. One of the myths about introducing change into a franchise system is that if you are well-organised and spell out what needs to be done, the franchisees will just get on with it. The reality is that, like the story above, introducing change can be tiring, frustrating and confusing. Often the questions, let alone the answers, are not clear-cut and franchisees may have different perceptions from their franchisor about what is important, what is right and what is appropriate.

Indeed, franchising is full of paradoxes. One that always makes me smile is when I hear a franchisor say something like, ‘I wish our franchisees would be more entrepreneurial and take more initiative,' followed by, ‘And if they would also just comply with our system it would save them and us a lot of headaches!'

The dictionary defines a paradox as a statement or proposition that seems to contradict itself or be absurd, and yet to express a truth. As we saw with our philosophy student, the human mind doesn't like paradoxes. The mind likes certainty and consistency. Paradoxes push us out of our comfort zones and force us to hold two apparently contradictory ideas at once.

Commercial And Emotional Costs

One of the most challenging paradoxes for both franchisors and franchisees is the need to balance stability and consistency with constant innovation and change.

All businesses today face the challenge of keeping up with new technology, greater competition from globalisation and a more finicky customer who wants things faster, better and cheaper.

Franchise networks are not immune to these pressures. To be successful they need to continuously update and change their franchise operating and marketing systems. This is a message that most franchisees do not want to hear as it inevitably means additional cost, as well as additional risk should the changes not deliver the desired results.

As well as these commercial considerations there is a less understood, but very real, emotional cost of change. For instance, it may mean that the business a franchisee bought into is different to the one they will be running in the future. Understandably this will raise concerns in some cases, especially if a revised business model requires a franchisee to engage in new types of work or activities.

Two Types Of Change

Most people find change a drain, especially if they feel they have little control over decisions that impact on them.

This brings us to an important distinction, as there are actually two types of change. The first is the change we choose, the change we feel we have some control over. For instance, taking a holiday, buying a business, deciding what clothes to wear or looking for a new place to live. Most people find this type of change to be interesting, motivating and exciting.

The second type of change is the change that chooses us. This is where we find ourselves being told to do something different or where we feel we have no choice because of forces outside our control. This type of change is, at best, challenging but is more often experienced as scary, demotivating, frustrating and, in some situations, depressing. Indeed, when people on the receiving end of change are asked to express how they feel, they usually describe it as an intensely unpleasant experience.

Recognising The Difference

Because franchisors are usually the people driving the changes to a franchise system they are more often experiencing the first type of change. In other words they are choosing the change. On the other hand, franchisees are typically on the receiving end and will thus be experiencing the second type of change where the change is choosing them.

It is not surprising to find that during a change programme the franchisor team are excited, enthusiastic and motivated while the franchisees are simultaneously suspicious, fearful and resentful. Franchisors who don't recognise the difference between the two types of change find this reaction by franchisees difficult to understand.

There are a number of practical things that franchisors can do to encourage their franchisees to support a change programme. For instance, if they fail to recognise and accommodate the legitimate needs and concerns of their franchisees the change will at best achieve little and at worst cause a backlash that will undermine all the hard work that has been put in to date.

Common Mistakes And How To Avoid Them

Here are the most common mistakes we see franchisors make when introducing changes to their franchise systems.

1. Not being able to justify the change and explain the benefits to franchisees in terms they understand. These benefits should include savings in time and money, improvements in profits and customer service and a stronger competitive position in their local market.

2. Not being sensitive to how a change could undermine the organisation's culture or the franchisees' sense of identity. Changes that touch a cultural nerve will often be described by franchisees in terms of the company losing its heart or soul.

3. Failing to test or pilot initiatives to ensure they work before releasing them into the network. Impatience or a false sense of urgency is often the reason why initiatives are not adequately tested.

4. Mistaking silence for agreement: ie, thinking that because franchisees do not question the change that they agree with it. They may just initially be too stunned to say anything!

5. Failing to communicate clearly and simply. Franchisees do not like wading through long-winded documents that fail to address their concerns. Face-to-face is always the best way to communicate change. Any written materials should be relevant and to the point.

6. Not consulting with the people who have to implement the change and asking them what they need in order to make it work.

7. Not considering other stakeholder groups who could either help to make the change work or block it. These groups might include suppliers, competitors or the families of franchisees.

8. Running open forums on hot issues without a structured facilitation process to guide how people communicate. While it's important to have open discussion, this can turn negative if not competently facilitated.

9. Assuming that emotions are not important in business and you can talk a franchisee out of their feelings by using logical arguments. If people do not feel heard, they will not listen to you.

10. Treating the change process as a sales exercise instead of a two-way communication process. Franchisees will respond far better to relevant facts and information than razzle-dazzle and clichés.

11. Trying to gloss over or cover up mistakes in the implementation instead of being transparent. Franchisees will inevitably find out and, when they do, the long term damage to trust will be far worse than any short term damage in credibility from an honest mistake.

12. Treating legitimate franchisee concerns and questions as negativity. A franchisee who asks a question is giving you an opportunity to explain the benefits of the change - and if you can't answer the question then you have learned something that you will need to work on.

13. Forgetting that all new initiatives need to operate within an existing system. Franchisors often fail to consider the ripple effect of decisions on other people or parts of the organisation.

14. Giving up when faced with resistance. If franchisee resists an initiative this does not mean it is wrong or flawed. It may just mean that you need to do more work in your communications or that people are still getting used to the idea.

Is Everyone On Board?

Given the fundamental shifts occurring at many levels of our society, it would be difficult for a business to stay relevant to customers without introducing ongoing changes to its products, services or operating systems.

The big question facing franchisors and franchisees would thus appear to be not ‘Should we change?" but "How can we best change so that everyone that has to make it work is on board?

Good luck.

Greg Nathan is Managing Director of the Franchise Relationship Institute, author of the popular book, Profitable Partnerships, and a regular contributor to New Zealand's franchising sector. More discussion on this topic can be found on the web site at www.franchiserelationships.com .

This article first appeared in Franchise New Zealand magazine Volume 16 Issue 4 

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