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ENABLING FRANCHISE ORGANIZATIONS TO LEARN

The previous section shows how the franchise working knowledge is conceptualized, used, renewed, stored, retrieved, transmitted, and shared through various VCR-based profiles like the one shown in Table 1 and Figure 1.  The working knowledge is developed through a learning process involving the franchisor and the franchisees.  Using the definition of Alavi and Leidner [8] mentioned above, when the knowledge is working the personal belief becomes much more strengthened, intensified, and justified.  As such, the individual’s capacity is much more increased and better results are obtained.  This spiral-up cycle of working knowledge improvement is very important in the context of franchising.

Figure 2 shows that the working knowledge learning process of the franchisor is incrementally developed through the following five stages of the spiral-up cycle: 

• Beginner – examining whether franchising is a feasible strategy for your business.  Important questions to be addressed include [11]: (1) Is my business franchisable? (2) What are legal requirements? and (3) What will it take to be a good franchise?     
• Novice – investigating what you shall do before and after franchising.  Important questions to be addressed include [1]: (1) What are my markets? (2) What’s my business plan? (3) Who are my franchisees and how to market to them? and (4) How to choose a good site?  
• Advanced – starting franchising your business in regions.  Important questions to be addressed include [1]: (1) How is my franchise support system? (2) Who are my customers? and (3) Who are my competitors?
• Master – continuing franchising your business in the country and abroad.  Important questions to be addressed include [1]: (1) How is my relationship with my franchisees? (2) How is my relationship with the communities? and (3) How to do it right in international franchising?
• Professional – becoming the best that you can be as a franchisor.  Important questions to be addressed include [12]: (1) What are my financial strategies? (2) How do I leverage the assets in the franchise network? and (3) What are other licensing alternatives besides franchising?

At a higher stage of the franchise development, most of the problems in the previous stages have been dealt with.  However more complicated and challenging questions will arise as the franchise system continues the expansion.  This is especially true when the franchise system reaches the stage of Professional, when many unforeseen and difficult problems could happen all of sudden.  Figure 2 depicts this situation with dashed line, meaning there is no boundary of the potential problems to challenge the Professional franchisor.  Bud Hadfield [13], the founder of Kwik Kopy franchise and the International Center of Entrepreneurial Development (www.iced.net), said it the best: “The more the company grows, the more it will be tested.”

To understand how the working knowledge learning process of the franchisee is developed, one needs to know the four phases of the life cycle the franchisee is in [14]:

·         The Courting Phase: Both the franchisee and the franchisor are excited with the relationship and will try very hard to maintain it.

·         The “We” Phase:  The relationship starts to deteriorate, but the franchisee still values the relationship.

·         The “Me” Phase: The franchisee starts to question the reasons for payments related issues, e.g., ongoing royal and marketing fees, with the attitude that the success so far is purely of his/her own hard work.

·         The Rebel Phase: The franchisee starts to challenge the restrictions placed upon them and demand for more independence.

A franchisee faces the biggest crisis when he/she reaches the Rebel phase.  The major challenge for the franchisor is to turn a “Rebel” franchisee into the Renewal phase by providing an environment where the franchisee can continue contributing to the growth of the franchise system.  More discussions on this topic are provided in the next section.  

Similar to the franchisor, Figure 3 shows that the working knowledge learning process of the franchisee is incrementally developed through the following five stages of the spiral-up cycle:

·         Beginner in the Courting Phase – learning how to do the operations at the franchise outlet;

·         Novice in the “We” Phase – practicing how to do the operations at the franchise outlet;

·         Advanced in the “Me” Phase – doing the operations at the franchise outlet;

·         Master in the Rebel Phase – teaching others how to do the operations at the franchise outlet; The term Rebel is used here, since the rebel ones tend to be those who know the system very well and are capable of influencing others to follow them.

·         Professional in the Renewal Phase – becoming the best that you can be;  At this stage, the franchisee is encouraged and rewarded for his/her significant contributions to the franchise system, including expanding the number of franchise outlets and creating value-added enhancements of the products or services.  Similar to Figure 2, Figure 3 depicts the franchisee situation with dashed line, meaning there is no boundary of challenges and opportunities for the Professional franchisee. 

Justis and Judd [1] examined the franchisor/franchisee relationship issues in various franchise systems at different phases of the franchisee life cycle.  They identify franchise organizational learning as the key for building the “family” relationship, i.e., helping the franchisee to progress from one stage of the learning process to the next, especially turning the franchisee from the “Rebel” stage into the Renewal stage.  Figure 3 show that there are five crucial elements of influencing others in the “family” team [6]:

·         Knowledge: proven abilities to solve business problems in the franchise environment;

·         Attitude: positive and constructive ways of presenting and sharing the working knowledge;

·         Motivation: providing incentives for learning or teaching the working knowledge;

·         Individual Behavior: understanding and leveraging the strengths of the participants to learn and enhance the working knowledge;

·         Group Behavior: finding the best collaborative way to collect, dissimilate, and manage the hard-earned working knowledge.