The current Parliamentary Inquiry has put a spotlight on unethical business models and practices run by franchise sector giants in Australia, accusing 7-Eleven, Caltex and Dominos (among others) of wrongdoing. This has put the franchisor-franchisee relationship under a fairly significant microscope and despite the turmoil, it has highlighted the franchisors who are doing the right thing by their franchisees.

One of these, is McDonald’s. Andrew Gregory, McDonald’s Australia CEO, while addressing Senator Deborah O’Neill, explained the way McDonald’s – as a franchisor – approaches the relationship between franchisor and franchisee by using an interesting analogy.

Our way of doing franchising is best summed up by what we call the three-legged stool. McDonald’s is one leg, the suppliers and franchisees are the other legs. If one leg of the stool is not strong or not growing at the same pace or breaking, then of course the stool falls over and it fails.”

This approach essentially places equal importance on the stability and quality of the supply chain, the success and prosperity of the franchisee and the success and performance of the franchisor – something that the inquiry has evidenced isn’t done frequently enough.

McDonald’s operates 970 stores across the country and while it owns 150, it has 260 franchisees. It has opened 20 new stores over the past three years (while only losing 8) and 80% of the new stores have exceeded expected sales in the first year, so it is clear that their approach works. And there’s a reason behind it.

They place incredible importance on the support provided to franchisees – and understand the obstacles faced by them through the 150 stores they own. Unlike other franchises, their focus is on helping franchisees maintain brand integrity and growing their businesses so their franchisee can take the profit and they can take the royalty.

It’s a focus that has science to back it up, too. A study published in the Journal of Business and Psychology presented the findings of a major academic study into franchising across Australia and concluded that Franchisees’ perception that they receive genuine organizational support from their franchisor has a positive impact on their financial performance and franchise citizenship (their reliability, compliance and active participation within the network). Conversely, a Franchisees’ perception that there is a lack of support from their franchisor can do the opposite.

If positive financial performance means more opportunities for sustainable growth – for both the franchisee and the franchisor – then shouldn’t it be something every franchisor across the industry aims to support their franchisee’s in achieving?

While Andrew Gregory was speaking about McDonald’s operations as a franchisor, he took the opportunity to be honest and said, “We are not always successful; no way do we make every business decision to be the right one.  No business person can claim that, but over a long period of time we have made more right decisions than wrong.”

This leads us to one very important conclusion; caring about and supporting your franchisees should be your strategy, because it has proven to be an effective one.