The Franchise Trust Playbook: Eric Stites on How Top Brands Listen, Communicate, and Grow

Hey everybody. Welcome to today's webinar. Very special guest with us today. We have Eric Stites, who's the founder of FBR, which is the Franchise Business Review, who has, what, 20 plus years focused on franchisee satisfaction, understanding that from the franchisor and the franchisee side, and he is really built. This pretty phenomenal research platform that understands what makes a brand great, what makes top performing brands in the way that they build trust, alignment, interface with their franchisees. It's a really fascinating subject, which is why we asked 'em to come on to talk about exactly that. How do great franchise brands build trust at the massive scale that some of these brands achieve?

But before we get into that, we'd love to turn it over to you, Eric. First of all, thanks so much for being here. Would love to have you just give a bit of an intro for the folks that don't know you yet.

Yeah. Thanks. Thanks to, thanks for the invite. Glad to be here. And, I love talking all things, franchise operations. I got started in franchising, a long time ago. And, it basically, started FBR, about 20, 21 years ago actually. And, back then, nothing really existed as far as.

Actually asking franchisees about their experience within franchise system. And, really what we do, I, the easiest way I explain it is, we're the consumer reports of the franchise world or we're the JD Power, and so we're serving franchisees, thousands of franchisees across, the country.

All the time. And asking them about their experience with their franchise. And it's, really critical to, understand that experience and help franchisors better understand how they're serving their franchisees and, vice versa. And, it's, it, we still think of ourselves as a startup, which is funny.

It's been a, it's been a very fast 21 years. But franchising is, it's such an amazing sector, of the business world. And, I just, I've always loved small business and, franchising is essentially small business with guardrails, and support, from a, large brand behind you.

And I think it's just a great vehicle for helping so many people get into business ownership, when it's done right. And, yeah, love, it, it's great, to love your job and, makes, getting up and going to work every day. Really easy.

Yeah, it's incredible what you've built. So maybe we can start in that franchising space. 'cause we all know, I think different from a corporate structure where, decisions move down and information moves up. This is more of a complex web where decisions will go both ways. Action runs both ways, between franchise or franchisee. And a big part of that is trust. Now

Yeah.

For me to understand like, what. Does trust look like or how do you define trust in the business relationship that's so uniquely franchisor, franchisee.

Yeah. No, it's Fabulous question. When we're talking about trust in the context of the franchise relationship, it really boils down to what I consider a mutual commitment to success. A franchisor is, selling a business opportunity or licensing a business opportunity, to an individual franchisee, someone that wants to be a business owner.

And that comes with a lot of responsibility, from both. From both sides. And it's really, setting up clear expectations, and clear roles between the franchisor and the franchisee and, and what their, focuses are. And it really boils down to, when you think about trust, even, trust is such a human attribute, right?

And it's all those things as far as, caring and empathy, accountability and community. And I think a lot of, especially in franchising, that community aspect is so important. People, get into franchising because they want to be. Part of something larger than themselves.

Otherwise they would've gone off and started their own business. And I think that's really where, the best brands, foster that incredible community of, sharing and best practices and all those things. And. It all comes back to, again, that commitment to success.

The franchisors committed to their franchisees succeeding. Franchisees are, buying in and committing to be successful in the brand and, delivering that experience to their employees and ultimately the end customer. And it's beautiful when it works.

It's interesting. I'm hearing these words you're saying, and they're also human, right? The community buy-in. With trust and you just called out that it's pretty hard to measure the immeasurable, which is just wrapped up in, in everything. Are doing. The best the work there is to try to quantify that or try to bring that in. So in what you measure and what you bring in for each brand, what are the biggest signals between robust relationships versus fragile ones between those

Right.

And franchisees?

Yeah, so we, like I said, we survey tens of thousands of franchisees every year. And, part of our benchmark survey, there's 33 questions, in that survey. And one of the questions we specifically ask is, do you trust your franchisor? So we have a very, single metric, to measure trust.

That being said. Like you said, trust, it touches everything. Obviously that single question gives you some insights. But it goes all across, the organization, and all those pieces, like I said, as far as the accountability and the community and, the expectations.

And I think that's really where, A lot of brands, they don't intentionally necessarily do this, but getting extremely clear on expectations in those roles of, you as the franchisee and you as the franchisor. What are those roles and expectations that you each have? It, people get excited when they come into a franchise business and, they want to, they wanna be a business owner and do all these things, but really understanding their role in that.

And, having the franchisor understand what their role is, and making sure that everybody's on the same page. 'cause that's, really, when we, we're measuring satisfaction across the industry and all satisfaction is how well the experience of something measures up to the expectations that you, had for whatever that is.

Whether it's going out to dinner at a restaurant, buying a new car, buying into a franchise system. When your expectations are met or exceeded, things are great and obviously when expectations aren't met, that's when, trust starts to break down,

And I guess what you're saying is that it could be one of few tracks, right? I'm imagining as a franchisee, I could trust that somebody's gonna. Look out for my interests and be nice to me, but maybe I don't have trust that the brand is positioning well against, changing market forces. Or maybe they're doing that well, but

Right?

And I, and forgive me if I'm in on the trust piece in, in particular, I think it might just be a proxy in my language for just an overwhelmingly good relationship. But how do you help brands how do you think brands should. Find ways to zero into where that trust is breaking down because it could exist in five and be missing in two, and that could be different for every brand and maybe different across franchisees.

Yeah. It's the simple things, right? It's all, It, trust lives in the behaviors of all humans within, a franchise system. It starts obviously with the leaders of the company and boils down and it's, it's ingrained in the culture. And that consistency of, delivery of services, doing, the follow through and doing what you say.

That clear communication and transparency, all those little pieces, in impact trust, obviously. And, I have this conversation a lot with franchise CEOs of, various brands about, they, they can't help but take that very personally, right? When trust has been broken down and then, they.

Think of it as, a score of themselves. And what I tell them is, yes, obviously, you're, accountable as the CEO for, that, but you know that, that trust gets broken down throughout the whole organization.

A

From the field coaches to, the marketing team and the tech team and the operations team and all the, all those people have an impact, on that.

And then. To your point, outside forces as well. The economy changing or, industries changing, AI coming in and, changing things. And and what I often tell people that are thinking about getting in, to franchising, franchising is just business ownership and, business changes constantly.

And I think that. One of the, one of the mistakes, a lot of candidates coming in to become franchise owners, one of the mistakes they often make is that, they see a brand that they're excited about, and they, latch on to that brand or invest in that brand, and, they think that, it's, gonna stay the same forever.

Business changes rapidly. And so if you're not, good at change and change management and, trying new things and, and not necessarily, the franchise system has things figured out, and has been doing this obviously for a period of time. But. Things are gonna change.

And so if you're not, on board with how that change could happen, that you won't, you won't have a good experience. And that's really where, we see a lot of, again. And that, and it flows both ways, right? Because, the franchisor might be, oh, we've got this great system and this great product, or whatever it might be, and the franchisees are out in the field, experiencing something completely different.

And you know that, and this is real, it really comes back to that relationship, in those roles because. The franchisee is the front line and they, they're, delivering, that brand experience to the employees, their employees and the customers ultimately. And, having that feedback get back to corporate and understand what's going on.

'cause it changes every day. And, for better or for worse.

It's interesting. It, sounds like there's the cultural and decision making of the leadership, right? How are they steering the ship? How are they? Building the culture more broadly. And then I guess there's the second part, which I'm curious of how big you think it is. And if you can give me a percentage, that'd be great.

If you can't, that's fine. But I'm curious, the process, right? Is there a case where a brand has good decision making, good culture, but the process with the franchisee just isn't right? And that's the thing that's gatekeeping trust, or the wrong direction here? That it does, that does happen.

Yeah, no, obviously, and especially when you're talking about franchising, it's all about systems and processes, right? And when you have a small brand, maybe a small community of franchisees, it's a lot easier. If, you don't have those systems refined and in place yet.

But as you grow, those systems become that much more important over time. And so really understanding, again, as the CEO, your heart might be in the right place, it, it doesn't get delivered to the franchisees without those systems and processes in place. You really have to have both.

And it's just about. Consistency. And again, things are gonna change and that's gonna change your, whatever programs you're talking about, your support, your operations, your marketing, on and on. But that consistency of communication, it. Being transparent with your franchise owners.

Another big one is just, admitting that you don't know, as the franchisor. I think, I think there's a lot of pressure on franchisors to be like, we, we're the franchisor. We have to, say that we know, franchisors make mistakes every day. That's.

Business. And so you try things, they don't work, you gotta do 'em again. And, so admitting that to your franchisees as opposed to just being like, just do this and trust me. That doesn't necessarily work, especially in a franchise system. Yeah, it's definitely having those systems and processes in place and refining them constantly as, the team grows to have that consistent delivery of support, for their franchise owners becomes more and more important.

I love that. I love that, that it's the idea of, it's not just drones taking orders, but a course of voices that is building the system. But then the question begs is, let's say a, does this well, right? They have a strong course of voices, they have amazing engaged franchisees that are helping them solve problems.

They're gonna succeed. And then you go from. 50 voices to 500 or a hundred to a thousand and, how do you start to think about doing the same motion at

Scales

At massive scale.

Yeah.

Yeah,

Yeah. No, it certainly gets harder and harder, with scale. There's a couple of things going on there. One, again. Trust boils back to all the humans in the organization. And so a bigger scale, you've got a lot more humans and a lot more places where things can break down and go wrong.

You can scale those processes over time, but. They may not be getting delivered. Consistency consistently, and communication obviously just gets harder and harder. I run a small company. We've got, 14 people here in my home office and. It's always amazing to me when I walk out of a meeting and I thought I heard a certain thing and somebody else is saying something completely different.

I was like, were we in the same meeting? And I think it's, that's where that consistency comes in. And we've all heard, about communication and people are, when people are just getting your message, you're, you've been saying it for so long, beating that drum for so long that.

It, it, seems like annoying to you, but people are just starting to get it and so

Yeah.

Having that clear communication, out to the field. And then again, it's the responsibility of the franchisees to communicate back up, to corporate because that's where, when you think about, A s a startup franchise brand.

Usually often the founder started the company and ran units themselves and, and it grew from there. And they were very close to, the front lines, if you will, that customer experience. And as, a system grows, it gets farther and farther from that. And the franchisees and their employees are now the experts.

In that customer experience and you know how products and services are received by customers. And so if the franchisor is still operating on, what they knew 10, 15, 20 years ago, and that may have changed and the franchisees are experiencing something different, that can obviously be very problematic.

So it's important for the franchisor to lean on their franchisees to, understand that. Experience. And again, that's where, franchising is all about community. And, that's what makes franchising great is you've got a couple of hundred, or in some cases a couple of thousand business owners all operating by the same playbook and it's delivering the same products and services and, you can share best practices across the system.

Again, if those, things aren't shared, and, people are operating in their own little silos and the culture is very closed, that's where brands can get into trouble.

It's interesting, it's really about, sounds like it's about keeping dialogue running bidirectionally as you scale from founder to almost frontline staff and having that line of communication that runs through. Maybe to start, it's a direct, line between the founder and the frontline staff.

And then as the system grows, it goes to a COO and a VP of ops and a coach who then talks to an a franchisee who talks to a manager who, just and that

Is the systems need to adapt. It's interesting. Are

Yeah. And,

Oh, go ahead.

I was gonna say, one of the things I often see, with, with the best brands is they get those. People that are in the home office, out and working in actual, franchise locations. And so even at the C-level, get the C-suite out and working in a unit, and delivering services to a customer to really understand, not only the customer experience and how that may change over time, how they view the company and the brand and all their services, but how easy it is to operate.

Those things and, that it business is complex these days and there's lots of technology and lots of other, things that happen in a, any small business. And, we can't all be experts at everything, but it's really under important to understand that experience of the franchisee and how to make that more unified and easier to deliver.

And there's the classic example. It was like Hamburger, Adam and all those. The Question for you. Are there any classic ex, examples of pitfalls or missteps that you've seen brands do as they go through scaling or where they start to lose their franchisees and maybe need help seeing it and pulling it back?

Are there some common ones there?

Yeah, the common things that we see are, again, it's well intended, programs that just get poorly executed. And examples are, simple things like, a new POS system, point of sale system, new technology, rollout for a system. And again, the, idea starts with, how do we help our franchisees deliver, be more successful and deliver, a, better wow experience to customers? And, so the idea is great, that everyone's aligned. It just gets rolled out in a poor way. And, in franchising.

Again, you've got hundreds or thousands of locations and it's so important. Whatever the idea is, whether it's new technology, a new marketing strategy, whatever it is let's test it, make sure that it works. First, first and foremost. Some franchise organizations have corporate.

Location so they can test it there first. If you don't have corporate locations, you can get a group of franchisees together and prove that it works. And. And not only that, but does this make the business better? Because like I said, business is complicated.

There's, we all have 50 different technology apps or tools or whatever, and, trying to, trying to run any small business is, challenging. And so if it, doesn't have one, a return on the investment. And it doesn't make the business, either simpler to operate or better for, delivering a better experience to the customer, then, it's probably not worth doing.

And getting that buy-in from the franchise owners first on whatever the program is. Getting there, there might need some tweaking, before it gets rolled out. Or maybe, there are cases where things work in certain markets, but not in other markets. So again, it's important to understand all those things and.

Good franchise systems know that and, they go, fairly slow whenever they're rolling out new things. And again, engage their franchisees in that as opposed to just being like, we're doing this and get on board. You got six months. And that's the advantage, corporate.

Organizations have, is they can make a decision and they can just push it down through the organization immediately. A franchise system can do that. But I, it's not recommended because you've got all these individual business owners that, certainly have an opinion on, how it, impacts their business.

Of

It's, just about going, going a little bit slower at first so you can go faster ultimately.

Yeah.

I, thanks again. I, have one final question for you and then we'll wrap it up. But I'm curious for any leader that's listening in who wants to take the trust or, that dialogue, that community building piece from, bad to good or good to great, wherever they are in their journey, where do you think is typically the best way to start improving that?

Yeah, it's, it, starts with listening and I don't know, again, every, organization thinks they're, good at listening, but, we've seen very successful turnarounds, with brands that, were, great at one time and then, went downhill for whatever reason, and, but then, had this great successful turnaround.

And they typically begin with, the C level, either the CEO or the whole team going out and, visiting sites. Visiting locations, having regional meetings and just listen, a listening tour and listening to what the franchisees are experiencing. 'cause like I said, as you get bigger and get farther away from that customer experience, you aren't, the expert there anymore.

And so it's important to really understand what, what's happening with your franchisees and, and how. Asking those questions like, how can we make your business better? How can we make your life easier? And, obviously this is business. It's not just about growing, it's about being profitable.

And so I think a lot of franchise systems often forget that over time, that. These people, you know when someone joins a franchise system as a franchise owner or franchisee, oftentimes they've put their life savings on the line to start this business, whatever it might be, and the person at corporate.

That runs the marketing department or runs the technology department or, whoever they don't, they may not fully understand what that's like. And so having that culture of, really listening to franchisees and, walking in their shoes and understanding, they, they got a lot on the line.

And so when that franchisee calls corporate and is complaining about whatever they're complaining about you having that empathy to understand, I get it, they've got a lot of money that, they, their family is all bought in on this franchise system.

So there's a lot of pressure to be successful. And so having that empathy and understanding that the importance of that is, is really, critical. And it's just about listening. And collecting all that feedback and then ultimately executing, on that feedback and just involving franchisees in that loop constantly.

It's just a constant feedback loop of, how we do and how can we get better and, understanding, like I said, you're gonna make mistakes. The franchise order's gonna make mistakes. Franchisees are gonna make mistakes and you apologize for those mistakes and you move on.

And, you try things, and, you, try different things if it doesn't work and, and you keep going, but, yeah, not, not involving those franchisees and doing that constant listening, is a big mistake.

Fascinating. You really, it's so cool that you've, really identified this need to shed some light on this intricate web of priorities and community building and dialogue and empathy and this thing that's in many ways to human and unquantifiable. And you as a service have found. This is unique to each brand and needs to be addressed on a per brand level and a unique solution and a unique ear.

Super fascinating.

Yeah, I appreciate you.

Last question always is if folks have more or want to get some insight from you.

What's the best way to get in touch?

Yeah, so you can find me, on LinkedIn or email me at eric@franchisebusinessreview.com. Check out our site. We've got resources for franchisors, for franchisees. Like I said, I'm passionate about small business and franchising, I think is a great. Vehicle four that, for individuals and, franchising done right is, just fantastic.

So the more we can help franchisors be, go from good to great, the, more opportunity there is for individuals to get involved and so appreciate the opportunity to share my gospel.

No, I love it. Super insightful. Eric, Thanks. So much for the time and until next time.

Thanks.