Up until the mid-20th century, individual vocations were largely determined by birth, training or education. However, with the advent of franchising, people were empowered for the first time to be in business “for themselves, but not by themselves” in virtually any field.

By design, franchising is the quintessential mutually beneficial relationship. But in practice, particularly in the Gulf, there’s clearly room for improvement and more equitability, especially in the grey areas on the fringes of franchise agreements.

Recent years have witnessed a significant increase in the proliferation of franchising wisdom via multiple online and real-world forums. As a result, regional investors are vastly better informed and savvier than they used to be. Proactively recognising and addressing their specific needs — and apprehensions — is the only way franchisers can ensure success and long-term sustainability.

Some of the commonly voiced concerns by franchisees are:

* Invest in homework

Development schedules mandating a minimum number of retail units should strictly be research based. This takes time and money, and is a good indicator of the franchiser’s commitment. Numbers emanating from anything less are not a strategy, but merely a wishlist.

* Factor in the time difference

With a majority of franchisers being based in North America, the time of day between the two regions is virtually reversed. Moreover, weekends here are Friday-Saturday, as opposed to Saturday-Sunday in the West. This collective three-day weekend, exacerbated by a day-night difference severely strains communication, and is particularly hard on the franchisee. It is critical therefore, that barriers like these be proactively tackled and negated before the agreement is signed and fee is paid.

* Adopt a realistic approach to the marketing contribution

In paying a franchise fee, a franchisee is essentially buying into two things, i.e., a proven operating system and a brand equity. Except for a handful of top-tier franchises, most international franchised brands tend to have limited recognition outside their domestic base and need considerable investment to raise awareness in new territories.

International franchisers insisting on charging 2 or 3 per cent of sales for generic marketing funds are essentially amortising costs that were incurred for their home territory. However, they must acknowledge that the franchisee’s priority is a targeted local marketing spend that foremost benefits its own operations.

* Have better structured field visits

Even though they are a crucial component of ongoing support provided by the franchiser, field visits are often reduced to a formality. Support staff end up just ticking a box on their hectic travel schedules instead of having a specific, value-based agenda to share ahead of time. International franchisees in particular cannot afford such oversights, as they don’t have ready access to support personnel throughout the year.

* Need for financial transparency

Franchising regulations do not mandate declaration of earnings by the franchiser, but don’t explicitly prohibit them either. A brand investment is predicated on the fair assumption that it is already successful, and that this success can be replicated in the franchised territory. So, unless franchisers are afraid to shatter any illusions, there isn’t much preventing them from lifting investor confidence through a deeper insight into current financial performance.

* Be reasonable in making location demands

Franchisers need to understand that with the expansion of regional cities, retail is becoming more localised. So rather than urging franchisees to take risks on prohibitively expensive real estate, multiple location-relevant retail format options need to be provided, and special ones developed if needed.

* Dare to look beyond the big boys

Desirable brands tend to choose high-profile regional franchise partners. Whereas this remains their prerogative, they would do well to remember that there are many lesser-known, but extremely competent, well-capitalised groups here, who would likely do greater justice to their brand.

Moreover, these groups would appreciate the opportunity, and the brand would be more than just another feather in their cap. Collateral benefits would include fairer competition and an overall elevation in regional retail quality.

* Know that nice isn’t naive

People in this part of the world tend to be non-confrontational. However, this niceness is occasionally misunderstood for naiveties, which is sometimes reflected in the high-handed negotiations and extortionist terms that franchisers try to impose. Fact is that an open-minded, empathetic approach remains the only path to a successful franchise relationship.

Ultimately, franchisers need to acknowledge that the seller’s market that once existed has had its day. In today’s economic climate, the need for fairness in the franchising equation is more pressing than ever. And that means fairness for both sides.

— The writer is Vice-President of the Middle East & North Africa Franchise Association.