 in the business of franchising globally, and his aid of specialization is franchise relationships, which is one of the key factors of the franchise system. And I have Mr. Garmariah, Chairman of the Franchise India Group, and my other brother, who will be joining me for this broadcast this afternoon. Some of the house rules will be displayed on the screen, so we would be taking a lot of Q&A in the end of the session, and we also would be encouraging a lot of interactions through chat option, which is available. What we want to achieve in almost one hour is an opportunity to sort of understand from a global point of view how franchising is operating in present times, and we also want to look at understanding from Greg and Gaurav as to how the relationships during these times have been affected. Without much due, I would request Greg to sort of make a quick introduction about yourself, and you also have a small presentation which you can start. Thank you, Sachin, and I'll be sharing my slides, so I need to have the slide share option, please, as a co-host, which to be able to show my slides to everyone. So if you could arrange for that, please. Thank you. You could die now. For calming, may need to do that. Thank you. You could die now. Still not there. Apologies to everyone on the call. Here we go. There it is. Tremendous. Thank you. So I love the way that you published my picture, by the way, with a guitar plectrum background, because I'm actually a guitar fanatic, and I've got 40 guitars, and sometimes I weave the music into my presentations. But I've been running the Franchise Relationships Institute now for 32 years, and we are passionate about the importance of healthy franchise relations between franchisors and franchisees. Guru, before I just start on the presentation, the formal presentation, is there anything that you wanted to say or set up to get us on the right direction? Sure. Thank you, Greg. I think today we would like to be more on the listening side, because we have the greatest minds in the room, and I've always maintained Greg over my 23 years of experience, and I'm a little straight on that. You are the greatest minds in franchising I've seen, because you have been able to articulate the most important part of the franchise ecosystem, which is relationships, and the way you have defined what we all, I mean, all our human lives are all about relationships. But just to define, and you know, micro-defined rather, I would use it, this relationship, and how you build abilities in organizations, companies, their team members to understand the importance of relationship, and how they can build that within franchise systems has been remarkable. Thank you for that. I appreciate that. Now, look, I do have a hope for this session, and I'm talking to everybody who's listening in at the moment. I'd like to make this interactive and to have you engage. So I've got a question to put to everyone in a moment, and it's going to involve you opening up your chat box, the chat where you can type in, and my question is this. I'd like to know what is your physical energy at the moment? Now, if you are one, it means you want to go to bed, you're feeling horrible, your energy is low, you can't concentrate. If you're a 10, you are feeling fantastic at the moment, and you could be anywhere in between that, and Sashi's jumped in, fantastic, Sanjay's jumped in with a 10. So I'd like everybody on the call to jump in and tell me what your energy number is, and I've got a reason for doing this too. So everyone's jumping in, oh, Rajiv, I'm so sorry, Rajiv is a one, but I love your energy, and I'd like you to observe Rajiv what happens to your energy as we do this exercise. So I'm seeing, oh, they're flooding in, and I think from the numbers that are flooding in now, I think our average is 8.3 at the moment, which is extremely high. It's about three o'clock in the afternoon for you there at the moment, is it? That's right. Well, it's 7.30 in the evening for me. My energy is pretty good. I'm about a nine, but my question for everybody is this. I want you to think about whether you found that the process of thinking about and naming your energy number caused the energy number to go up a little bit. So I'd like people just to think about this because this is actually a technique. And when we reflect inward and we think about what's going on for us at the moment, what are we thinking? What are we feeling? And we give it a name, we call, I call this name, name it to tame it if you're feeling a little bit unwell. It actually causes your brain to focus and your functioning level goes up to a higher level, which is particularly useful if you're under a lot of stress at a present time to sit back, reflect, stop and ask yourself, what is my energy level at the moment or what's distracting me or what's on my brain? So that's a little technique that I'm sharing with you. We use it all the time and in our business. And it's very important if you're going into a very important meeting, like this is a very important meeting for me in talking to you at the moment. Now, in terms of the content that we're going to cover around relationships are likely to feel strained at the moment, both Gurav and Sushen, you were both mentioning about personal relationships and business relationships are both important in life. And the thing I love about franchising is that it's very personal because for the franchisees, they're often investing their life's savings in a business opportunity and they can be extremely passionate about it for that reason. But that can also cause relationship tensions because people do get very emotional at times if they're stressed. We'll talk about the three characteristics of sustainably great franchise networks. I'll share some research on how franchisee attributes and how a culture that develops in a franchise organisation affects the performance of the franchisees as well as the franchisor and the experience of the customers. And I've been asked to share a little bit about what's been going on strategically in the Australian franchising sector at the moment. It's a very interesting, quite a mature market here. And I think there are some lessons that you may want to take on board in the Indian market. And for those Indian companies that are coming to Australia, I understand there's quite an interest. I think it's important that you are across some of these trends and things that are going on in Australia. And of course, we'll take some questions as well from everybody. So I want everyone just to reflect for a moment and just to imagine that you were sailing this boat across a lovely calm bay. There's a gentle breeze blowing. The hull in the boat has got a little bit of rot. And maybe there's some tears in the sails, but they haven't caused any major problems to date. And then along comes COVID-19 and along comes the shutdown and the stress and the uncertainty. And now we're in rough seas and there's strong winds and our boats getting bashed around and our sails are stretched to the limit. And the rot in the hull perhaps might be, you know, giving way and water starts to come in. And we're pretty soon going to be in trouble. And relationships are like this. So in calm, predictable times, any underlying tensions are going to remain there. They're not going to cause any major problems like the rot that's sitting in a boat. But as the stress of change and uncertainty hits and stretches our coping resources, our existing relationship weaknesses are going to be exposed. Now, some of you may have experienced an increase in relationship tensions in recent times, particularly if there's been some unresolved issues. And I don't know whether the two brothers on the call here have had any relationship issues, but you two guys seem to get on extremely well together. But it's normal during periods of intense change, not just at work, but also on the family and the home front that, you know, like families have been locked in lockdown together and in Australia. And I'm sure in many countries the governments have said, we don't want you going out. And so children are at home and people are trying to run their businesses at home. And it can really bring out some ugly aspects of relationships if there have been some underlying tensions there. However, there are things we can do to strengthen our relationships and to repair relationships that may be a little strained. And I want to now give you eight tips, tips will just jump into these that we've found are useful. So through our research, we have found that even in calm times, when you're in a franchise network together, and you're sharing a brand, and everyone's reputation is affected by the actions of everybody else, there is often a certain level of tension and such and we were talking about this earlier, you were saying you'd like me to cover the interdependence of a franchise relationship and how we can get this operating at a really nice high level. So here's eight tips to resolve any issues that you may find in your relationships. And this relates to not just work, but it could be at home, could be with your colleagues, it could be with your staff, or if you're a franchisee with your franchise or if you're a franchise or with your franchisees. And the first one is to genuinely listen to what the other person is saying with an open mind. And I'm referring here to really listening for understanding, not just the words that people are saying and it helps if you can paraphrase back to someone what you understand they just said and why it's important to them. This is extremely powerful and franchise or executives on the call, if there's one thing I want you to take away from this session, is the importance of showing empathy and empathy is demonstrating that you understand someone else's point of view and that you're showing a certain level of respect and compassion from their perspective. Now the second point is to focus on what you have in common. Now in the case of franchisees and franchisors there's two things that are connecting you and that is your brand that you're sharing and your love and commitment to your customers. So this is often a good thing to come back to and say what is the right thing to do here that's going to be right for the brand and right for the customers if there's some disagreements. The third thing is that it's very helpful to show up express your appreciation even for small positive gestures that people make. A thank you or an expression of appreciation costs nothing but it actually stimulates good feelings in other people and those feelings are very powerful. So don't underestimate the importance of being grateful. The next point is about forgiveness and it's one of those words it's easy to say oh yes forgive and forget but I often see situations where people feel resentful they feel their franchise or their franchises have done the wrong thing and they hang on to that and it uses up a tremendous amount of emotional energy and it leads to distraction and it actually can lead to a corruption in the culture. So you know and it physically can create ill health if people are holding on to resentment and anger so genuinely letting things go is extremely important. The fifth point is about we call it nipping things in the bud so what that is is if something is niggling you or bothering you don't let it build up conflict never just appears out of nowhere it's often a build up over time until someone says something and then the other person explodes because there's been this build up of frustration so it's good to just be able to express yourself take responsibility for your emotions and say look I am feeling a little bit frustrated by this and here's why and I've even got a suggestion of what might help here and the next point is about valuing differences so my wife I love my wife dearly which is extremely the opposite to me in personality and why would I want to marry someone who is exactly the same as me because it's the differences that make up the whole in life and if we look at high performing teams they've always got a diversity of personalities and a diversity of experience but sometimes we get frustrated by the differences because people don't think the same way as we do so I think there's a lot of value in reminding ourselves that we can understand the point of view of the other person and that creates the whole now here's the rub in franchising franchisors are often tied up strategically they're planning they're in their head offices it's very easy to lose connection with the the real world of what's going on in customer land whereas the franchisees are experiencing customers and what customers are looking for day in day out so smart franchisors listen very carefully to the franchisees perspective on things number seven is my favorite and that is about having a growth mindset so what is a growth mindset I would define it simply is that I am focused on improving myself rather than proving myself so when we're trying to prove ourselves we justify and when we try and justify and prove that we're right what does that do to the other person it makes them wrong right and nobody feels good about being wrong so it takes a lot of courage and humility to hold strong opinions loosely and I find it's very useful if you can have a curious mindset and really try and understand almost like a journalist try and understand the other person's point of view sometimes it lowers your defensiveness and it builds a much more strong not only do you learn something about how the other person's feeling but it also builds that respect and I'm going to come back to the importance of respect in a few minutes and finally don't feel too proud if you've got attention in the franchise relationship to seek help from a trusted advisor a colleague or a professional if you need it I have often bought in a facilitator in my own business from time to time to help us resolve any sticky issues so I'm just going to pause for a moment because we've been talking about the importance of relationships and I've got a question for everybody on the call I think you'll enjoy reflecting on this and then I want you to type in your thoughts into the chat box and the question is this what is something that you've done recently to help maintain a healthy relationship at work or home can be the smallest thing but I'd like everyone to just type in something into the feed something that you've done recently that you think has helped to strengthen or repair a relationship with anyone but let's see who's going to jump in first thank you Prem so Prem is I love that Prem Prem is a listening and just sometimes we need to zip up our mouth and listen and we've got some Cheyenne is saying he feeds around 20,000 people so he must have a big network of stores again we've got giving and taking valuing other people showing that you truly care giving other people space we've got someone is saying giving job opportunities that's terrific Prachi to 100 people sharing the burden with my wife I'm sure your wife would appreciate that hurrying hard yes Prachi saying he donates to an orphanage that's terrific we've got Prince saying that he gives his services for free and that builds trust so there's a terrific list there and and my guess is as you're typing these you're feeling pretty good because it reminds you it doesn't take a lot of effort to to strengthen a relationship but it's those little things that can often make the difference Prachi saying that she's doing counselling for domestic violence victims wonderful so Guruv I'm going to move on now and I'm going to talk a little bit about the franchise relationships institute and why we do what we do and then I'm going to share some research with the group is that good absolutely good and then he sent ice cream to all his franchises and I love the last one there Rajiv is just saying listening in again I think that's terrific and Janak saying they loved it right so let's just talk about franchise relationships institute for a moment look before I founded this organization 32 years ago I was a psychologist and I was doing research on the brain at Monash University in Melbourne and Frank but but while I was studying to be a psychologist I had worked in company owned stores for a bakery group and I became pretty good at the baking work and serving customers and making bread and so on and a multi-unit franchisee called me and he asked me Greg would you like to come into business with me I'm about to open my third store and you can you could be my operations manager and my business partner and I thought that would be a great idea so I took out a loan and I became a multi-unit franchisee and I was particularly interested during my time as a franchisee about my relationship with the franchisee and then I was asked to join the franchisee so I experienced life as a franchisee or executive heading up the marketing department and the operations department but what I in reflection what I was finding is that when I was a franchisee I often seemed to be at loggerheads with the franchise or team and arguing with them and saying telling them to stop bossing me around because I owned the business but when I joined the franchise or team I seem to often be at loggerheads with my franchisees because I was wanting them to do things and they were telling me to stop bossing them around because they were their own independent business owners now and I did seek out some help to try and understand the nature of the relationship because very interesting and because not an employee employer relationship and it's not a business partnership strictly but I couldn't find any books I couldn't find any training programs to be how to be a successful franchisee or how to be a successful franchisor so I founded the Franchise Relationships Institute to find answers to these franchise relationship challenges that I was seeing everywhere all my colleagues in other franchise groups were experiencing the same thing and I wanted to share our research and our insights with the rest of the world like we're doing right now so as specialists in the psychology of the franchise relationships we're passionate about our mission which is to foster the creation of profitable partnerships in the global franchising sector and over the past 32 years we've conducted research and education programs with over 500 different brands across 16 countries and we're continually identifying what does best practice look like and creating tools and models and books and education programs and we're extremely passionate about what we do and this is I want people to pay particular attention to what I'm about to say because I don't want you to make the same mistake that I see so many people making when they get into the franchising business now I thought that because I knew everything about baking and selling bread right that I could effectively lead and motivate my franchisees now the reality is that all franchisees and franchisors on the planet are in two businesses you're in the business of selling your product or service your ice cream your pizzas whatever it might be whatever service you're delivering and you've got to be excellent at that but you are also in the business of franchising and to be in the business of franchising whether you're a franchise or all franchisee you need to understand the nature of the relationship and how to effectively collaborate and Gurav I'm sure you've seen this where people are amazing at their product or service but they don't know how to lead effectively and how to influence and collaborate I can see you not in there yeah absolutely yeah so over the past 32 years we've worked with hundreds of brands like these and lots of others and we've learnt that all franchisors have similar challenges all franchisees have similar challenges in this challenge of collaboration but the best franchisors in particular I want to just talk from the franchise or perspective for a moment draw on the same best practices so whether you're in dog washing or cleaning or making bread or selling clothes there are similar practices in franchising that translate across industries now what I found that there's only about 20% of the hundreds of franchise networks that we've worked with that I would classify as being sustainably great in terms of how they operate their businesses and the reason these people are in the top 20 20% is they consistently do certain things now we would put these people in the top 20% because they're growing consistently their franchisees are profitable the franchise or is profitable they've got low levels of disputation and their market share is also growing so let's look at the three characteristics of these sustainably great networks and the first one is that they do understand that they're in the business of franchising now it starts with ongoing well managed innovation and understanding that a franchisor's capacity to innovate is always going to outstrip the franchisee's ability to accommodate so in other words the franchise or is often going to be pushing franchisees to do things and the franchisees are going to be resisting all right now this is particularly important at the moment also because all franchise networks have had to innovate very quickly to adapt to the pandemic and the challenges that this is is thrown to all of us now to innovate well you're always going to go through the sigmoid curve so you can see the curve you've all seen this curve before I call it the curve of life it applies to every living thing on the planet people plants animals careers products services and of course businesses now the sigmoid curve predicts that when something new is initiated in a business like your your launching a new product or I've got one client who in 10 days they transitioned 10 000 franchisees from operating live in terms of their links with their customers to delivering their products and services remotely it was amazing but that's an example of quick and rapid change now you're always going to experience an initial dip in performance when you introduce something new like the changes that we're experienced like working from home most people when they were forced to start working from home were struggling with how to use zoom or whatever platform they're using how to connect to the office how to communicate with their with their teams and so on but over time we start to get better and and we start to our performance goes up now we can do our best to accommodate and grow and often we will but nothing is forever and so even when things start to go well if we don't innovate again we're going to see a maturation and a drop in performance so it's important that franchisors are innovating constantly and we find the best franchisors innovate they they they get the new innovation through and then they'll start innovating again and again and again now this curve also applies to every franchisee who's listening on the call today as well your individual business will also go through this curve and in five years even when your business is going really well you are going to need to reinvent yourself you may bring in a partner you may renovate your premises you may move to a new location you may become a multi-unit franchisee to keep yourself motivated and growing all right so this is absolutely critical and the next thing that I want to talk about when we talk about excellent franchisors is clarity of purpose so if you're in the franchising business yes but it's absolutely essential that you are clearer about your values as an organization what do you stand for and why do you exist now our best clients are constantly talking about the difference they make to the local community the difference they make to employing people the difference that they make to the health of the economy and so on and I think you can't talk about this stuff enough this is what creates a healthy culture and the other thing they do is they put all major decisions through a filter so like it's like a coffee filter I've got here and the question is is this going to be right not just for our brand and for our culture but for the various stakeholder groups all right now one question I want everybody on the call to think about for a moment is who are the most important stakeholders in your franchise network and I'd like everybody please to pick like if I was to ask you to prioritize when we look at customers shareholders franchises members of the franchise or team staff who who work for the franchise company who's the most important and I'd like you to pop in now I'm not saying there's a right or wrong answer here because people have different perspectives but I'm just interested in your perspective so some people are saying the staff who deliver some people are saying the customers some people are saying the franchisees some people are saying customers and franchisees that's Sarnil you're cheating there because I only want you to give me one Sachin you and Gaurav might like to put in so most people are saying the customers now and Janik saying it's absolutely the staff now this is very interesting now Richard Branson would say it's the staff if you have happy staff they will deliver excellent service to the customers Sarnil says Gandhi says customers are God now I want to introduce you to somebody so this is Cheryl Bachelder now I interviewed Cheryl Bachelder a few years ago when she was the CEO of Popeyes Chicken very successful franchise network in North America 2600 stores so this is a group you'd want to pay attention to and she'd previously led Popeyes through five years of consistent sales and profit growth they had a 400 increase in their share price from when she came in a CEO to five years later and they had a cure franchisees wanting more stores and she told me that the first question that she tackled with her executive team when she became the CEO was this question who is our most important stakeholder which is the question we're all wrestling with now she took them all the way on a retreat and they locked themselves up the days and after discussion and debate you know the marketing person said it's the customers and the finance person saying it's the shareholders and the operations managers saying it's the franchisees and the HR managers saying no no it's the staff right so they're debating and everyone's got a point of view but they did come to a conclusion and they decided the franchisee is the most important stakeholder and they figured that if the franchisee's doing a great job in running their business and and motivating their staff and leading their staff the customers are going to receive great service sales are going to go up the company shareholders are going to get a great return on their investment investment and everyone's going to be happy and she said from that point when they decided the franchisee was the key stakeholder everything changed and they put every decision through this filter how is this going to impact on our franchisees they ran regular satisfaction surveys for the franchisees they set up franchise advisory committees to listen to the franchisees whenever even when they they rolled out a new store design at the convention and that spent you know hundreds of thousands of dollars developing and setting up these prototypes of store designs the franchisees came to the convention and they asked what do you think and they said we don't like it it's too expensive and they were pointing out all the flaws now the store design team got very defensive and they're saying well you know we've researched this and Cheryl said no we're going back to the drawing board and for the next 18 months they had to redesign the whole thing and she said but that delay was a win in the update it's you know lose the battle win the war because when they did roll out the store designed that the franchisees had had input to into 90 percent of franchisees signed up for it immediately and sales started to grow as a result of this because everybody was on board so you understand what i'm saying here we need to get the franchisees on board we need to treat them seriously as a strategic partner now i've always argued this that if the franchisees are doing a great job everything else is going to fall into place now let's look at the third characteristic now of best practice franchise networks and that's where we come into this issue of collaboration a collaboration means working together to maintain a competitive edge and that means that the the franchisees are focusing on the things that they need to focus on the franchise always focusing on the things they need to focus on there is a middle overlapping area which is the collaboration area but collaboration also means we're not doubling up and this is how we create a nice healthy high performance culture now there's a word accountability which is different to responsibility so we can all be responsible for working together as a team and creating the culture but accountability you can't share the buck has to stop with somebody so the franchisee is accountable for three things let's look at them the first is to turn every customer into an advocate for the business and for the brand by delivering exceptional customer service and an exceptional experience franchise all can't do that franchisee is leading the team at the at the pointy end of the business the second thing is the franchisee must focus on maximising their profit by growing revenue and controlling costs and the third thing is they must participate constructively in the franchise network by engaging in activities and supporting important brand initiatives if you aren't prepared to get behind the initiatives and do the right thing by the brand you should not become a franchisee now the franchise or also has three accountabilities from the first one is leadership to lead with credibility now that means that you make good research based or evidence based decisions you are trustworthy and transparent with the information and you are caring about the personal and business success of your franchisees the second thing is you need to provide relevant support that matches the evolving need of each franchisee and the third thing is you need to protect the brand and not allow anyone to do anything that could embarrass or damage the reputation of everyone else right now I'm going to show you something very interesting this is in one of the books I wrote called profitable partnerships and it's a case study now these are sales figures of four stores that when I was operating a region in the Brumbies network and I was very interested that the sales changed significantly at a certain point in all these particular stores and this sale increased suddenly it was not driven by marketing it was not driven by product innovation it was not driven by any change to the store location or design what changed these points is the franchisee who was running the stores so in that top one the blue one there a company manager for the store became a franchisee and suddenly the sales started to increase so never underestimate the significant role a franchisee plays in driving the performance of the business and for all the franchisors on the call your royalty revenue will come from the performance of the franchisee so you have a vested interest in making sure your franchisees are performing at a high level I have a question for everybody on the call and if you like you can put your response in the chat box I'm interested in what percentage of a store's performance do you think is driven by the franchisee the person as opposed to the brand the location the processes all the support that they're receiving so you might like to so I've got some percentages coming in some people are saying 60 percent 70 percent when I asked this question to a group of 60 franchisor CEOs once there was a guy sitting there and he said a hundred percent franchisee and I said oh that means that your brand is worthless and your systems are worthless he said 50 50 but look I can tell you from our research so we've got some interesting figures coming in there it is about 40 percent now don't underestimate 40 percent this is on average because the brand should be very powerful the location of the business your business systems can make a huge difference to the performance of the business but 40 percent is huge and I want to now talk about how the attributes of a franchisee interact with the attributes of the franchisee or team to drive performance and you'll find grab you'll find this particularly interesting because I know that you're you're a very thinking sort of a guy and interested in the latest research now we did a study looking at the relationship between people and performance because as a psychologist this absolutely fascinates me and I love researching this stuff and we've done a lot of research in this and this is a study it's been published in a very prestigious journal called the Journal of Business and Psychology now two attributes in particular that we know drive sales and profitability are what's called proactivity and brand passion now proactivity is where a person makes things happen they take accountability they say if it is to be it is up to me that's a proactive person's philosophy brand passion is I love my brand and I am going to talk about the difference we make and how fantastic our products and services are to anyone who will listen to me if you've got a franchisee with that attitude they create a very vibrant culture around them which drives performance so we can prove through research that brand passion and proactivity drive profitability and drive a great customer experience that what about the franchise or a team what influence might they have on a franchisee's performance so we looked at this we asked nearly 1800 franchisees from 74 franchise networks how the level of love and support they were feeling from their franchise or team so in other words do they feel there's a supportive franchising culture and there's a couple of questions there we asked the franchisees to respond to in the survey do you feel that you're treated with respect and do you feel the franchise or team genuinely cares about your success and what we discovered is when the franchisee disagrees with these statements and they don't feel the love and respect their proactivity drops their brand passion drops and that has a dampening effect on their performance all right however the good news is when the franchisee's agree with the statement and they feel that they are part of a supportive culture and that the franchise or does care about them and so on their proactivity goes up they get more motivated they get more energy and that drives the customer experience and that drives performance and we get this beautiful virtual cycle royalties go up the franchise or has better revenue and everybody's happy so you understand that this care this culture of caring is so important to the financial performance and to the experience that customers are going to ultimately have now i'm going to say a few more things and then we're going to open it up to to q&a that earlier i introduced you to a concept called the sigmoid curve and we discussed this in terms of the franchise or network but i want to look at this from the impact of a franchisee for the moment now every franchisee goes through this journey there are stages so the first stage is we call this investigation should i or do i want to join this franchise network is this something that matches with my aspirations and my values once the franchisee signs the franchise agreement they then move into initiation now initiation is where they're going to be trained by the franchise department and they're going to learn all about how to run the business and so on and then the rubber hits the road and they open their business and we call this the perspiration stage now my point is this i said earlier that the level of service and the nature of the support that you provide to your franchisee has to change as the franchisee goes through this journey so franchisees in the perspiration stage are very stressed out they need a lot of hand-holding a lot of reassurance and a lot of practical support but gradually their confidence grows their sales grow they reach make even they start to make money and this is beautiful we call this the consolidation stage i am now all across my business and i've now got staff who know what they're doing i've got regular customers coming back i've got regular cash flow and i'm in a really nice place however as we learned before nothing is forever and if we do not reinvent ourselves as franchisees our sales are going to start to decline so we call this the maturation stage and it's up to the franchise or sometimes to give us a little push or a poke to remind us that we need to perhaps reinvent ourselves and reinvest in our business and we call this the reformation stage so six stages six different types of support franchisees need and everybody in the world at the moment is going through the reformation stage because all our businesses have been turned upside down now gurav you asked me to talk a little bit about australia and what's been going on in australia and i've got a photo of someone when i put this up a few weeks ago someone and i said who is this they said i was at jk rolling you know who wrote that harry potter books no this lady is an investigative journalist called adel ferguson and adel ferguson has written a series of articles she's a very good journalist a very thorough on the franchising sector all right and now we're all moving through volatile and uncertain times at the moment but the franchising sector is also been moving through volatile times particularly in australia now in 2015 adel ferguson targeted the 7-11 brand all right in australia because that there was systemic underpayment of staff by franchisees within the system and as a result of a series of articles and television documentaries that appeared on a current affair and so on it led to a change in the laws in australia and it all happened very quickly to make franchisors legally responsible for the conduct of their franchisees particularly where the franchisees are paying and managing their staff correctly now this sent a massive shockwave through the franchising sector not only in australia but globally particularly in in america because in america there's been a debate raging now for over six years on whether franchisors should be held accountable if franchisees are not doing the right thing by their franchise if the franchisees aren't doing the right thing by the staff this is a legal debate going on with the national labour relations board and it's called joint employer liability but this is actually coming to australia as a law now so um that's been one thing that that has occurred because some franchisees were doing the wrong thing and we don't you don't want this because it puts enormous um compliance costs on everybody and now the franchisors are spending time and money checking up on payroll of franchisees when they should be focusing on other things now Adele Ferguson then went after a company called RFG and RFG were a multi-brand franchisor they've got seven or eight different brands and she exposed poor conduct by the franchisor at the time in how franchisees were being supported and treated and um but then she started writing articles about the whole franchising sector accusing the whole sector of being greedy and taking advantage of franchisees and so this led to a number of bad newspaper articles and the franchising brand suffered and as a result of that the federal government in australia did an inquiry and they had a parliamentary inquiry and last year the parliamentary inquiries report was handed down and this is significant the report was called fairness in franchising and it focuses particularly on franchisors being transparent in how they deal with their franchisees and being fair and respectful in how they deal with the franchisees now we've been arguing for 30 years that this is is absolutely vital that franchisors are fair and respectful and transparent in terms of how they lead but now in australia this is becoming a legal responsibility of franchisors to do this and it's a pity because i think this is just a basic thing that everybody should be doing now because of covid the the the implications of this report haven't yet been set in stone in terms of changes to the law but my prediction is in the in the next six months the government are going to come out with some changes to franchising laws in australia that are going to force franchisors to be more transparent about how they're running their businesses how they're pricing their supplying products and services to franchisees the level of any rebates that are being passed back to franchisors how they're spending their marketing funds and so on now to complete before i we open it up to questions we've just completed a major study on franchisee satisfaction with over 7 000 franchisees looking at what drives franchises to have what we call an ace mindset now an ace mindset is where franchisees are advocates for the franchise network so in other words if someone asked one of your existing franchisees what's it like and would you recommend this business the existing franchisee says i love this business and you're crazy if you don't you know buy one of these businesses that's an advocate the second thing is whether the franchisees want to reinvest and expand into multiple units and invest in their own unit and the third one is being fully engaged in supporting the initiatives that's that constructive participation i talked about earlier now the biggest predictor of whether or not franchisees are going to have an ace mindset is whether or not their expectations are being met now i'm not just talking about how much money they're going to be making but also how they feel they're being treated do they feel they're being treated respectfully do they feel that the franchise or is being fair with them in terms of not doing special deals for some franchisees but not with them so i would argue that expectations and the management of expectations particularly in the early stages of the relationship is probably one of the most important things that a franchisor and a franchisee need to align on now i'm going to pause at that point and i'll stop sharing my screen and i'll just pass back to you gaurav and sachin thank you very much it was really full of learning then i think it was very very helpful for all the audience there sachin over to you you have a lot of questions for greg and let's get going on your mute thank you great that was wonderful you know franchise relationship surely is the is the key to any system success my first question is that how do you prioritize you know you usually speak about this personal journey and business journey so so how do you differentiate and how do you prioritize great question now the two journeys often there's a paradox here and they often cause confusion so i said earlier that when a franchisee starts the business and they're struggling and then the group the business starts to grow and develop sales start going up and they start to make money all right and you would think that at this point people get happy right because my business is succeeding and you know what happens the opposite so as the franchisee gets more experience and starts to understand how much profit they're making their satisfaction starts to drop would you believe that so we have another we have another curve one curve the the satisfaction starts high and it goes down and and we have names for these stages so we say the franchisee is in glee initially and then they start to look at how many fees there's they're paying to the franchise also they go on the fee stage and their satisfaction drops and then they look at how hard they're working and they're saying i'm putting in so much hard work and the business is all about me and what are you doing for me and so we call that the me stage and then they want to break they want to push the franchise all back and say stop telling me what to do and i went through all this as a franchisee right and i call that the free stage and at that point conflict is most likely to occur however sales may be going up while satisfaction is dropping and this is where sitting down together and having these conversations and this is why i opened the session today with those eight tips on how to resolve conflict this is so important for franchisee and franchisor so the two journeys sales are going up profit going up satisfaction is going down but then satisfaction will come back up and then we'll get aligned again normally about two to four years in and also just to add i mean there's a very interesting story i like to share there's a company which we we advised from the start and it was just a startup and and they went to about 200 franchises and the founder invited me to speak to all their franchises and i was sitting in the group and waiting for him to first speak and then i was supposed to speak and he went up and he said look we have done this and we have done that and and we are now successful 200 franchises and we are now bringing a new logo for a brand and we want you to change the boards and new signages you want to do right and somebody sitting behind me said why didn't he pay for us to change the board why should we put money for the board and i was then called to speak and i said look what is this what is all happened when he was he was just a startup he had nothing you bought into his idea you went and put thousands and thousands of dollars into the business you trusted him you trusted the business now the business is built very big you know and everybody is making money but now you don't want to put a thousand dollar more and you want him to pay for this just because what has happened is that there is no excitement left and this all has gone this whole structure is fatigue and that fatigue actually causes a lot of problems and you rightly said unless and until you are able to discover that it gets into very me time and gets even more difficult and most people start placing egos too well you need to do this for me and you know i know better than you yeah most of the competition for great franchises has actually come from the most successful franchises of theirs who actually went on and open up their own brand just because they were very successful and they were not recognized and because they were not recognized they became the biggest competition for the franchise that themselves you know so so that's happens you know this is very important to assess that if somebody is really become well at both sides they bring in active dialogue and start doing it what we call in india we are doing a lot of programs in what we call err how do you encourage recognize and reward continuously your franchises and their belongingness would increase and your belongingness increase then obviously they would stay committed to the network and appreciate the changes excellent and if i could just add something to this guru just from a psychologist perspective that the brain at your brain and my brain and sachin's brain and everybody's brain on the call today is the product of evolution of millions of years all right so all our brains have evolved in a similar way and the the brain is very sensitive to status all right now there's a reason for this because the higher your status if you were a wolf or an ant or a bee or a dolphin or a monkey or a human being the higher you are in the hierarchy the better life you have just a fact right and we subconsciously know this we're born with this knowledge so when people are respected and given that that sense of respect and reward it it it's very the brain loves it and it releases positive chemicals in the brain and people feel good if you treat someone with disrespect and don't give them that sense of importance they get very angry and they can feel very distressed and that can drive people to make decisions that are commercially even not sensible but they're so sort of they feel so strongly about this they'll go and they'll say no i'm going to do this to prove to other people that i can do this because i don't feel that i've been respected i've lost face so that's the first thing so this is from a psychology point of view from a genetic point of view we must recognize and give people respect now the the other part of this is fairness and gurav that case study you gave where people where the franchise or says to the franchisees i want you to spend money the question in the franchisee's mind is is this fair all right and fairness is also programmed into us even my dog if i don't take my dog for his walk at five thirty every day he gets very angry because he feels that's unfair because he's he's expecting that all right so fairness is in the eye of the beholder largely however you need you need to be able to explain to your franchisees why that decision is fair all right so the reason why i'm asking you to spend a thousand dollars is we've spent a hundred thousand dollars on the research to come up with the signage now we're going to share the cost of implementation with you and you are going to get a return on your investment for spending that that's why we feel it's fair it's not because we're telling you to do this absolutely yeah so so thank that's a brilliant case study thank you what else have we got yeah my next question is to gurav you know we speak about relationships and you also run rematch which is one of the largest franchisee scene so so one of the things that normally speaks about the brand passion so what do you want to sort of make this brand passion with a great large one one one twenty five thousand franchisees of rematch and how this is kind of translates how this passion translates into these very large franchisee network he wants to know how to translate passion yeah in the large groups okay so it's very simple that we have a virus going around at the moment all right it's amazingly contagious we should learn from the virus because brand passion is contagious and if you are passionate as a leader that will infect everybody you touch and the higher we talked about hierarchy the higher you go up in the hierarchy the more power you have to infect other people this is how culture is created so if you are in a leadership role you have to look in the mirror every morning and say how do I honestly feel about going to work today how do I honestly feel about my business and if you've lost your sense of purpose you need to dig deep and find it now a few weeks ago I was it was raining and it was winter in Melbourne at the moment and I was tired I'd worked very hard and the following morning I was to deliver a virtual forum we run we run these virtual forums for field managers all right and so I had 50 field managers who I was going to be talking to for 90 minutes and it was nine o'clock at night and I had to go home and prepare for this talk and I started to think oh poor me why I'm gonna have a late night and I'm tired and I suddenly stopped myself and I said Greg what are you doing you started this business to help field managers and to make a difference and tomorrow morning you have the opportunity to touch the lives of 50 field managers and help them and when I reconnected with my sense of purpose I got this surge of energy suddenly my passion came back and I got home I prepared my talk and the following morning I had a ball you know delivering this session so we need to make sure we stay connected this was the second point that I made about high performing franchisors sense of purpose what why do we do what we do and constantly reminding yourself and your team that would be my answer and for a real estate agent to give people the opportunity to own their own home their dream home changes people's lives and that's what they're in the business of doing giving people a better life absolutely and just to add on that I think all great organizations have two very strong things which I've seen and remax is one and and there are all other networks also there's a network which is all over the world called BNI and there is a there is a sense of what to call power of giving you know so unless and until we build this is a culture within and then create a nucleus within the franchise organizations and they should be given only one culture and say power of giving if you are able to continue to sport and give an an honest sport to your franchisees you will sign sooner or later this would start reflecting on them and they were they would start recognizing the importance of the that you were around at that time helping them and if these two things are very clearly defined and we become champions on that and then no conflict between them then the relationship lasts much better absolutely BNI are a client of ours they're a global network they're in 70 countries they've got thousands of franchisees and they have a mantra givers game and I love this so it's the idea that when you give it will come back to you and it's it's very much embedded in their culture and I think this is what you're saying that when we have this attitude of giving and being helpful it's very it's actually physically very good for the brain as well these chemicals released when you are helpful it's called the helpers high so we don't need marijuana and other things we get high on just being helpful and giving and this is a very healthy attitude and philosophy to having business and life absolutely have we got time for any more questions one last one I've been wanting to ask this and this is exciting so one is you know about royalty and royalty you know so you say that the relationship of franchise and franchisee is around royalty which they get but soon it kind of grows into franchisee become the most important part of the network so so and particularly from Australia you have a lot of international franchises so you know how how's it spending out there yes so look it's very important that people get value for money and this comes back to fairness from their royalties and the litmus test there's a couple of litmus tests here so the first thing is could the franchisee make more money and be more successful if they weren't paying royalties and were out inventing their own system and trading under their own brand name right and if that's the case there's something wrong because the competitive edge that comes from being part of a franchise network means that you should be able to charge higher higher prices for your product because the value of the brand people say oh this is wonderful this jacket that I'm wearing actually I bought it in Delhi when I was I came over to talk at your conference and I went to a shop and I could have bought the jacket cheaper at another store but I loved the brand this particular brand was a chain and I was happy to pay more money for this right and happy to because of the value of the brand and I felt a sense of trust in the quality right but also there should be productivity improvements and and buying benefits that enable you to get your cost of goods down that also allow you to make more money this is why people join a franchise network so that's the first thing that are you able to make more money money the second thing is the franchisor should not be making more money from royalty than the franchisee is making from profit all right so if the landlord is making more percentage on revenue than the franchisee is making there's something wrong and if the franchisee is making more money from royalty than the franchisee is making from profit there's something wrong with the model so that there would be a a few thoughts and I'll leave you with this saying and it comes from a franchisee who filled out one of our franchisee satisfaction surveys he said quote when I started in this business I was treated like royalty and now my franchisor treats me like royalties that sums it up and he wasn't very happy that's right it's very valuable and I think it was a learning always meeting you is refreshing our our thoughts and what they are contribution to the industry and franchising we are also looking forward and working closely with Greg's team and trying to see that if we can have a full session and invite him for for having especially CXOs and there are a lot of companies in India we have about 4,500 franchisee systems active in India and I think a lot of top CXOs also need a bit of a learning understand how how franchising is evolved over the times and how they can better their management systems and we would love to do that and get the the CEOs and the executives together from the franchise or team and share our research and knowledge and my CEO Anthony Cannells on the call and Anthony will be nodding his head vigorously because he's passionate also about our products and service you're on mute there Anthony I don't know whether you wanted to say something hello everybody I've been listening to you Greg and you've been in fine form tonight and I think we would love to run some sessions and and and spread the word of positiveness around the franchise industry the franchise sector in in India I think there's a lot of learnings that they can they can come to absolutely absolutely thank you very much thank you very much and thank you everybody. Namaste from India. Namaste.