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How to Develop a Strong Franchisor-Supplier Relationship

Good franchisor-supplier relationships make for smoother and more efficient operations, more satisfied franchisees and, often, an edge on competitors. However, many new franchisors make the mistake of treating suppliers like they’re a distant vendor instead of a partner.

While a good supplier will treat its customers well, it also falls to the franchisor to foster a relationship that is professional and mutually beneficial. By doing this, the franchisor sidesteps potential problems and lays the groundwork for future financial perks.

Here are a few ideas franchisors should keep in mind when building strong franchisor-supplier relationships:

Be a Good Customer 

The easiest way to be a good partner is to pay on time. It seems simple, but many franchisors get on bad terms with suppliers by making payments late or attempting to negotiate after contracts are signed. If you establish yourself as a reliable customer that communicates honestly and pays promptly, you position yourself for perks and more flexible payment options down the line, as well as priority service in an emergency.

Wait to establish your status as a dependable customer before asking for additional discounts, buy-backs or special financing. The franchisor who haggles over every bill and constantly asks to shave prices is unlikely to make a good impression. Conversely, the franchisor that is a great customer and pays on time becomes an important asset and cash annuity. Future negotiations become easier since the relationship is more important to the supplier.

A handshake over the conference table

When something goes wrong, work with the supplier to find a solution. When a shipment can’t be filled on time, it’s tempting to give the supplier’s representative a piece of your mind or send an angry email. These actions don’t help. Be a team player, and the supplier will remember the next time you need a favor.

That does not mean that you go easy or let the supplier off the hook without performance penalties. It does mean that people make mistakes, and more good gets done when everyone works toward the same goal – in this case, the resolution of an issue.

Lastly, infuse your supplier relationships with a personal touch. Visit their offices, and invite them to strategy meetings or company conferences. Making time for in-person exchanges, rather than relying on email, lets you build a rapport with your representatives. We all prefer doing business with people we like, and your suppliers’ good favor and industry contacts might help you down the road.

Communicate Proactively

Clear, proactive communication is essential to healthy franchisor-supplier relationships. If you know that you will have trouble paying a bill on time, talk about it up front and find a solution. Tell the supplier your situation and let them know when you’ll be able to pay.

Stay on top of your system’s needs, and give suppliers as much lead time as possible when you place an order. Learning about your supplier’s business – such as its production methods and documentation needs – lets you plan more strategically and order at the optimal time.

Similarly, educating suppliers on your business – including sales estimations and goals – sets both parties up for success. Share information with the supplier on an ongoing basis. If anything shifts with your offerings, operations or projections, the supplier should be among the first to know.

A busy entrepreneur on her cell phone

If a supplier falls behind on orders or fails to offer competitive rates, talk to your representative before you look for a new supplier or shift orders to your secondary vendor. They might be going through a temporary crunch because of new products or training. If you stick with them, they’re more likely to stick with you through your next bump in the road. Sometimes, a stronger relationship is worth the temporary inconvenience.

Be Transparent

Talk with suppliers upfront about your expectations for the relationship and service levels, and manage them appropriately. Be sure to acknowledge when they provide good service and be timely in your communications when the service does not meet expectations.

Most importantly, be transparent about your relationships with other vendors. Having multiple supplier relationships gives you a Plan B if something goes wrong. It also keeps the pricing competitive and the relationship honest. Let your suppliers know that you have relationships with other suppliers. This should not come as a threat to a supplier, but it lets them know that you are prepared to move the business if expectations are not met to safeguard against disaster for your franchise network.

Winmark Franchise Partners

With 30 years of franchising experience and more than 800 franchise owners representing more than 1,200 locations for five brands, Winmark Franchise Partners can help you grow your brand through sound strategy and expert franchising advice and services. For more information, or for help building better supplier relations, contact us here or at (844) 452-4600.