Episode#68

It goes without saying that Greg Nathan, on a global scale, has arguably had the most significant impact on the relationship and therefore, success, between franchisees and franchisors than any other.

In this EXPLAINER, we asked Greg to talk us through in detail the stages of his famous Franchise E-Factor model that is the framework for the franchisee - franchisor relationship.

In Episode#68 - With well over 300,000 combined copies sold of Greg’s publications on franchising he is the thought-leader on strategies and approaches to getting the most out of the franchisee franchisor relationship.

The Franchise E-Factor Model was initially a single chapter in the best-selling book, Profitable Partnerships. However, seeing the impact that the model was having, it was clear that delving deeper into the model and strategies around it was called for.

The ‘E-Factor’ is a psychological model that outlines the stages of a franchisee's relationship with their franchisor, framed around emotional stages that both parties experience. In the discussion it becomes clear that the model is applicable to any interdependent relationship (e.g., marriage, business partnerships) where both parties are bound by mutual commitment, emotional investment, or legal obligations. 

The stages of the Franchise E-Factor:

Glee Stage: This stage is marked by excitement and optimism. It's when the franchisee first joins the system, filled with hope and enthusiasm, believing the relationship will be beneficial.

Fee Stage: Over time, franchisees become more commercially aware and start questioning the value they get in exchange for the fees they pay to the franchisor. They often scrutinise what the franchisor provides in return.

Me Stage: Franchisees begin attributing their successes to their hard work and skills rather than the system. Frustrations arise, leading to potential resentment if they feel undervalued or unappreciated.

Free Stage: At this point, franchisees may feel the desire to break free and become more independent. They might try to change aspects of the franchise model or run things their own way, which can create conflict with the franchisor.

See Stage: If issues are addressed respectfully and openly, franchisees start understanding the larger picture. They begin to see the value of the franchise system again and recognise their own role within it.

We Stage: Finally, the relationship becomes collaborative, where both franchisor and franchisee work together toward shared success, with mutual respect and trust.

0:00 Introduction of the podcast and the live stream from the Melbourne Franchising and Business Opportunities Expo.

00:33 Introduction to The Franchise E-Factor: Greg explains the concept of interdependent relationships and how this applies to franchising and any interdependent relationship in life

01:47 Coming up with the concept in 1992 and the E-Factor being one chapter in Greg’s book, Profitable Partnerships 

2:22 How the E-Factor gets used now with franchise brands and franchisees

2:48 The model has applications outside of franchising - any interdependent relationship

3:52 A customer relationship on the other hand is not an independent relationship, which is why we say the customer is always right 

4:30 Is the customer always right?

5:19  The Stages of the E-Factor: Greg begins outlining the stages of the E-Factor, starting with the Glee stage. 

06:24 Fee Stage: Franchisees begin questioning the value of the fees they pay 

07:13 Me Stage: Franchisees start attributing successes to themselves and frustrations to the franchisor

08:38 How Greg coaches field support teams in franchising to approach the ‘Me’ stage

09:28 Free Stage: Franchisees start feeling the urge for independence and may rebel or disengage

11:01 See Stage: With effective communication and respect, the franchisee starts understanding the broader picture

11:54 We Stage: The relationship becomes collaborative, marked by mutual trust and cooperation

12:56 Breakthrough or exit: The critical juncture at the Free stage, where relationships either move forward or dissolve 

14:14 Role of Lawyers in franchise conflicts and encouraging lawyers to reach for a commercial settlement as quickly as possible for all to move on 

14:34 The satisfaction of having such an impact in the marketplace

15:08 Where to get copies of The Franchise E-Factor

15:24 Closing remarks on the resource of The Franchise E-Factor

Podcast Produced by: magnetic business media

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