FEAR: it’s there to protect us. It protects us from falling into an abysm, it protects us from swimming into the depth of the oceans or from walking into places we don’t know that could harm us. But the same fear that protects us also limits us.

That older lady who never stepped onto an escalator, who freezes right before the first step and doesn’t dare to step on…

• the child that doesn’t let go of his dad’s hand and doesn’t dare to pedal his bike alone. That same fear of falling, limits them in moving forward. The same fear that tells us to be careful, that we may fall, also ties us down and prevents us from exploring other possibilities. Isn’t it often the same in business?

The power of partnerships

Let’s imagine you have just developed a new F&B concept with a simple operating model that is also easily replicable and scalable. And let’s imagine you’ve been happily married for 16 years to the love of your life, whom you met at school in your teens and wed in your 20s. He or she works in the very same industry as you and you are both looking for a business breakthrough that will eventually allow you to do everything that you, as a couple, have always dreamt of. And you have that goldmine in your hands. So, naturally, you think, well, maybe my life partner can open and operate the multiple stores, while I take care of the central kitchen facilities and logistics.

Would you draft a 70-page franchise agreement between you and your partner? Most probably you wouldn’t. And you are probably smiling as you read me here, since you already know the answer to my next question: why not? Why wouldn’t you need a contract?

Taking TRUST to the next level

Because there is TRUST.

TRUST that has been built over years and love that holds that trust together.

Now, wouldn’t it be beautiful if you trusted a franchisee in the same way?

The answer to that question is kind of obvious: sure, it would be beautiful, but:

1-that franchisee is not your spouse and
2-you haven’t known the franchisee long enough to establish the level of trust you can have with them.
3-you don’t love your franchisee. But maybe you should. Not that you want to drop your spouse to marry the franchisee, but to love in the way a mother loves, protecting and caring. Now, wouldn’t THAT change the equation?

So, fine, let’s agree that we do need a contract. But does it really need to aim to take maximum advantage of your franchisee? What if we were to draft a totally new type of franchising agreement based on a win-win scenario, where the franchisee is rewarded when they open more stores, instead of penalized when they open fewer stores than projected?

Why not reduce the royalty percentages the franchisee pays as they open more stores? Why not reduce the opening and training fees as the support they need during openings lessens? What about an Airbnb-superhost-like reward that recompenses ‘super’ operators?

Rewards instead of punishments

While a franchise agreement is there to protect the brand, its image and standards, many a time, the contract looks more like a list of penalties the franchisee will incur if standards are breached. Yet there are no rewards for those that not only maintain the standards, but also offer unsurpassed service and attentiveness to guests’ every whim.

Some European municipalities have started implementing a ‘super citizen’ scheme, where citizens that go beyond the obligatory laws and ensure they always segregate all refuse, use only renewable energy to heat or chill their homes and drive sustainable cars, are rewarded. Incentives or advantages for being ‘sustainable citizens’ range from lower school fees to reduced municipality taxes.

I feel we should also take this direction in business – rewarding instead of punishing. Hold our franchisees by the hand and look at set-ups where win-win agreements would take both of us further, faster.

Carefully considered expansion

Franchise expansion has long been a major cause of arguments, since franchise principals always want to implement expansion plans that are more aggressive than what we think the market can take. And logically, the more stores you open the more money they make. I believe expansion plans have to be carefully studied, not just through measuring market size by volume, but also taking account of market size by spending-power strength.

Equally, a franchisee may be able to associate with a better-suited operator in a given sub-region, with both working together in the expansion and opening of new stores. At the end of the day, it should be a win-win agreement, with operators and franchisors alike having a vested interest in a successful expansion.

Collaborative solutions

Bringing the real estate landlord into the equation may also be a winning solution. A landlord benefitting from having a certain brand in his real estate may offer more privileged conditions to an operator who brings the given brand in. After all, brands can significantly add value to a building and landlords must recognize that fact in their own business models, when budgeting the rental value of each unit. Lower revenue from a unit versus having the desired brand in their overarching offer may not be a loss, but rather a significant contribution to their exposure and market positioning, and a saving on the overall marketing expenses.

Every brand and every region is, of course different, but I challenge franchise principals, as well as franchisees and landlords, to look at ways to work together for the joint benefit of all parties, without trying to ‘outsmart’ each other. Let’s not be the old lady in front of the escalator and allow our fears to become the limits of our capacity to expand and do business.