This article was influenced by “THE E-FACTOR” written by Greg Nathan ( The hardworking franchisee who has placed his time, money and trust with the franchisor is not just another store manager and employee of the company. At the same time, the franchisor has spent years, huge sums of money and resources to create a concept that both consumers and franchisees alike want to enjoy. The concept obviously works, but it is in the nature of the hard working franchisee to eventually want to try and change things. The dynamics of the relationship between the franchisee and franchisor is complicated and in order to find the harmonious balance and team work necessary for franchised brands to succeed, we first need to understand the behavioral patterns and life cycle of the typical franchisee:

Stage 1: This is Great!

At first, the franchisee will typically feel excited about the prospects of his new business venture . While being a little nervous about his new business journey, the franchisee generally feels optimistic and cannot wait to get started.

Stage 2: Money, Money, Money!

After a few months of having paid the joining fee, paid for the construction and set up of the business, paid for the initial stocks, paid the rental deposits, paid for ongoing royalties and advertising, the franchisee starts getting a little nervous about having joined the franchise. “Did I do the right thing?”

Stage 3: I’m the Slave!

Usually after the first year, the franchisee realizes that he has worked harder than he ever would have imagined – certainly allot harder than when he was on a job. If he has managed to make money in the first year, it’s definitely due to his efforts, and if he is not doing well, then its obviously the fault of the franchisor.

Stage 4: This is not for me!

At this stage, the franchisee often sees the franchisor as the villain only interested in taking his money and that his royalties are paid on time. Tired of being told what to do, together with the belief that the franchisor can no longer give him any advice, the franchisee may often try to test his boundaries and do things his own way. He will also probably try and collect a coalition of other unhappy franchisees against the franchisor. Unfortunately, many franchisees leave the brand at this stage and go back to their old jobs.

Stage 5: Realization, Understanding and Mutual Respect!

While the franchisee may only see the negative side of things, he may often overlook the positive aspects of being part of an organized brand. He may not realize that if he were to have chosen to go on his own with his own concept, he would have to deal with many aspects which are often taken for granted in franchise systems. Such aspects include product sourcing, supply chain logistics, purchase power for product and media, retail store design, branding, marketing and advertising. In addition, what about the staff and franchise training aspects?, the writing and publishing of operation and training manuals, getting the legal aspects right, etc. All this costs a great deal of money and a major portion of the royalties he pays, is what actually funds these activities.

If the franchisor understands and identifies with the frustrations that his franchisees may be experiencing, he would also probably insure that his franchisees also see the clear advantages of belonging to the brand, and what they are probably overlooking in their anger and frustration. The key to working together in a franchise team is usually hidden in the elements of mutual respect, trust, transparency and most importantly, clear and open communication channels.

Stage 6: Cooperation and Team Work

At the end of the day, when the franchisor decided to franchise his business, his main objective was in all probability to share his success with others, and at the same time, when the franchisee decided to join, he in all probability only had the best intentions in mind. Like in most franchise organizations, the process of behavioral patterns need to play out before the parties realize that the best way forward is to rather find ways of working together rather than working against one another.


Despite the challenges that come with franchising, it has proved to be one of the most successful business models in modern retail history. Once the unusual relationship of franchising is understood, the process of creating a true franchise culture of mutual respect, cooperation and harmony between the franchisees and the franchisor, can lead to success stories that only great franchise organizations can achieve. There are tested and proven methods to achieving such harmony – even in dynamic societies such as ours in Israel.