The River
Anyone who has spent time inside a franchise system has seen franchisees and franchisors at odds with one another. In my experience leading four franchise companies as CEO—and having been a franchisee myself—the core issue is often a perception of misaligned interests.
An analogy I call “The River” has helped me demonstrate at Häagen-Dazs Shoppes, HoneyBaked Ham, Pure Barre and The Lash Lounge that neither party can achieve lasting success alone.
The Model
A healthy franchise system can be pictured as a river, with the franchisor standing on one bank and the franchisees on the other.
The water flowing between them represents the brand: customers purchasing its products or services, sales growing, units becoming more profitable, and customers becoming enthusiastic advocates.
The two banks are different, but both are essential to directing and sustaining the river.
When franchisees and franchisors work together, they can guide the brand toward profitable growth. When they work against one another, the river can become obstructed. Growth slows, the brand suffers, and profitability declines for both sides.
Different Roles, Shared Success
The river is a reminder that franchisors and franchisees play different roles but desire the same outcome: healthy, profitable franchise locations serving delighted customers.
Franchisors succeed financially only when franchisees succeed. Initial franchise fees provide some revenue, but the long-term health of a franchisor depends on royalties generated by a growing base of 50-100+ successful franchisees.
In return, the franchisor provides access to a developed concept, an established brand, operating systems, pricing guidance, supplier relationships, training, coaching, and ongoing support—all intended to improve the franchisee’s probability of success.
Franchisees choose to operate within an established system rather than build a brand, business model, and operating platform from scratch. They execute the playbook while contributing local knowledge, relationships, energy, and leadership that no corporate office can provide.
Execution risk remains. Franchisees must choose the right location, hire and develop good people, manage cash carefully, follow the operating model, and delight the customer. A proven franchise system does not eliminate these risks, but it should reduce them.
Franchisors become frustrated when franchisees fail to follow brand standards, allow quality to decline, hire poorly, misuse trademarks, resist required programs, or sell unapproved products and services.
Franchisees become frustrated when they receive inadequate support, believe their territories are being infringed upon, feel that fees are undermining profitability, or see important information being withheld. Tensions also arise when new products or pricing strategies do not work at the unit level—or when the franchisor appears to prosper while individual franchisees struggle.
These concerns are not imaginary. They are legitimate sources of conflict that must be addressed honestly.
The Letter
On my second day as CEO of an emerging franchise company, I received an 11-page letter from a majority of its franchisees. It detailed a long and growing list of concerns in a year we grew from 19 to over 60 open units.
The situation had been made worse by the prior leadership team, who had shut down a communication board used by the franchisees. The franchisees did not believe they were being heard, and their unresolved concerns were compounding.
We used the River analogy to remind everyone that, despite the conflict, the franchisees and franchisor remained deeply dependent on one another. The only productive way forward was to work on solutions together.
We responded quickly and assumed positive intent. We acknowledged the franchisees’ concerns, validated the legitimate issues, and created a clear plan of action. We reopened lines of communication, provided weekly progress updates, and invited franchisees to participate in task forces focused on prioritizing problems and developing solutions.
Over time, we rebuilt trust and addressed the most important issues. Today, the brand is thriving and growing.
The Lesson on Purpose
Franchisors and franchisees will not always agree. They occupy different banks, see the business from different vantage points, and sometimes have competing short-term priorities.
But they share the same river.
When both sides listen, communicate openly, assume positive intent, and remain focused on profitable franchise locations and delighted customers, the river flows. When either side forgets its dependence on the other, the river begins to narrow.
The strongest franchise systems are not those without conflict. They are the ones that know how to bridge across the river, work through conflict, and keep the brand moving forward—together.