After accepting an award on behalf of his company for having the contract that is fairest to franchise owners, Griswold Home Care CEO Matt Murphy spoke with Blue MauMau. He talked about the role of independent franchisee associations, the competitiveness of the home care sector, and Griswold’s next steps.
The 35-year-old chain of 200 home care offices was named “Franchisor of the Year” by the American Association of Franchisees & Dealers (AAFD) for having the best franchise contract, one that protects its franchise owners to a degree that stands above the crowd. The new franchise agreement, which the AAFD called “groundbreaking,” was the result of months of negotiations between franchisor Griswold and the independent franchisee organization, Griswold Home Care Franchise Association (GHCFA).
Different from a franchisee advisory council, an independent franchisee association is run autonomously by franchisees to serve and protect their interests. In contrast, an advisory council advises its franchisor, making it more directly accountable to the franchising firm.
In this second segment of a two-part interview, Murphy shares his insights on independent franchisee associations. To his fellow franchisor CEOs, Murphy says, “Don’t get tied up in the semantics of what group your [franchisee] leaders call themselves.” He advises franchisor CEOs that collaboration with franchisees includes working with independent franchisee associations and that doing so may greatly benefit all.
SNIEGOWSKI: Franchisors have an advisory council. I believe Griswold has one too.
MURPHY: We do.
Griswold has a lot of overlap between people in our advisory council and the leadership of the franchisee association. It seemed like form over substance that I am on the phone with one person in their capacity as the franchisee advisory council member. Why couldn’t I have just as good of a conversation with them in a different capacity? This whole notion of whether we recognize the association or not — I view my job as talking to franchisees and helping them solve their problems. However they are organized or whatever name gets ascribed to it, it did not seem practical to me to not talk to somebody that I needed to have a good relationship with because of this arbitrary issue.
I was going to talk to franchisees in whatever group they chose.
I feel it is a symbiotic relationship. We need each other to be successful. It has to do with this magic word we use called collaboration. We could dream about the most exotic and elaborate plan in the world, but if it is not what our directors [franchisees] need, then we have wasted our time. If they have issues when running their office, then we need to be in touch with that. If we can help them solve those issues, then they can generate more revenue. That is where the mutual benefit comes in.
SNIEGOWSKI: For the AAFD, which for 25 years has dealt with all sorts of franchise contracts from terrible to good, to publicly say the Griswold franchise contract, which they helped write, is the best that they have seen, as they did during the award ceremony, says a lot, frankly.
MURPHY: We feel great about that agreement. We really do want to be known as an organization that has the highest degree of respect for our franchisees and for their acumen as home care experts. We wanted to have an agreement that reflected the values that they bring to the enterprise.
We worked hard at it. We had sessions filled with many negotiations. We took our time. We were not trying to rush through it. We were trying to get the contract right. I think the fact that both sides feel good about the outcome is telling.
SNIEGOWSKI: Is that going to be the standard contract that will be publicly published in your franchise disclosure document?
MURPHY: It is. Most of our franchisees are either on it now or are moving to it.
SNIEGOWSKI: Griswold has had a franchisee advisory council for years. Yet the council was not able to push for a change in the contract. It took the independent franchisee association to successfully push it. And probably push it into a quantum leap, frankly. What was it about the advisory council that kept it struggling and shying away from pushing for a fairer contract? And yet the independent franchisee association could.
MURPHY: There is a lot of overlap between the two groups with some of the very same people. If the advisory council would have come with the same request, we probably would have started the same process. I think it had more to do with the individuals that brought the idea [of a better contract and more collaboration] to Mike Magid and myself. We thought it made sense that we would deal with that group of leaders from our franchise system. The fact that they came on behalf of the association that represented so many of our owners, it just kind of made sense. You raise an interesting question because I really had not thought of it in those terms.
SNIEGOWSKI: From your perspective one group pretty much morphed into another. On the other hand, although there was an existing advisory council, that arrangement was not working for quite a few franchise owners. These franchisees organized an independent association. As an autonomous, independent group, they could liberate their thinking—what do we do to improve our lot? It was that independent group that felt free to approach outside experts, attorneys and the AAFD. The AAFD explained that they had experience in fairer contracts and empowering franchisees within franchise systems. The AAFD worked with that group of franchisees to collectively push with more vigor and effectiveness for change.
It is highly doubtful that the advisory council would have even approached changing those tough contractual issues, which they historically did not, let alone reach outside the system to look for a fresh approach to a fairer franchise structure the way the independent franchisee association did.
MURPHY: I think you have a point. We still have a very vibrant franchisee advisory council today. One way that I have thought about the different groups is that the advisory council is more to give advice to us at the home office while the association is more of an advocacy for franchisees. That is why it always seemed appropriate to me that major change would germinate from the association rather than through the advisory council. The council is more of a resource for the home office compared to the association being a resource for franchisees.
That may be too simplistic, but that was my simplistic view.
SNIEGOWSKI: Let’s go on to another topic: private equity firms are known to have a five-year span from buying to selling off their business investments, with the vast majority being sold off within six years. Pouschine Cook Capital Management and Stonehenge Partners bought controlling interests in Griswold in 2012. It’s now 2017. What do you think is next for Griswold?
MURPHY: I don’t really know what will happen. I don’t think Griswold is on a five- or even a seven-year track. On the other hand, it is a private equity group that owns a majority of Griswold. I am not really that focused on that. We are just trying to work every day to grow value for the business and keep our directors [franchisees] happy, and keep the system in the direction it is supposed to go.
SNIEGOWSKI: Is home care franchising getting a little too crowded? There seems to be more and more competition from franchisors selling home care franchises. What’s your take on what is happening to the home care sector of franchising?
MURPHY: There is a lot of competition out there, but the size of the market for care recipients is also growing at an extremely fast rate. There are a lot of statistics about the growth rate of the aging population, particularly what is known as the oldest old. These are the folks most likely to need our service.
It is probably the right amount of service providers needed for this vastly growing market. More of an interesting trend is going to be folks from outside our traditional industry that will be moving into our space. As health care is more and more focused on delivering care in the home there will be a lot more dynamism in our industry than anything else.
SNIEGOWSKI: So you think there is plenty enough of a growing market for all?
MURPHY: I think so.
At the end of the day we are really in the relationship business. It is that beautiful relationship that is developed in the home between the recipient and the caregiver. It is the relationship of the people running those businesses, our franchisees, in their own communities and with their referral sources. There is an infinite number of those relationship possibilities.
I am not worried that there is too much competition.
SNIEGOWSKI: Is Griswold Home Care being pushed in any way to differentiate its services?
MURPHY: I don’t know about being pushed. When you reflect on 35 years in the business, and what makes something a great experience with a Griswold caregiver, it is compassion and it is empathy and it is the quality of that relationship that gets formed in the home. That in and of itself is beautiful in its simplicity.
There are certain things that we can do to enhance that—the technologies that we can use to better bring that into the home—but really when most people think of caring for their own loved one, they think of the compassionate, empathetic relationship that is created between the care recipient and giver. It boils down to the simple things.
SNIEGOWSKI: There is considerable national debate nowadays on health care, whether it is the existing Affordable Care Act (ACA), also known as Obamacare, or an attempt to replace it with the American Health Care Act (AHCA), also known as Trumpcare. How have these changes or possible future changes in health care affected Griswold?
MURPHY: It is interesting because what we provide is actually defined as nonmedical. Our services are everything up to what is reimbursed by Medicare. A lot of the changes that are legislated in the ACA will not have a direct impact on our reimbursement or a direct impact on our utilization. Because we are adjacent to healthcare, we are affected by trends inside of health care, but as it relates to reimbursement it will not affect us directly.
SNIEGOWSKI: You mentioned that Griswold plans to resume selling franchises in the next few weeks. Where do you go from here?
MURPHY: Almost three years ago we made the decision to not sell [franchises] because we knew we had work to do to repair our relationships internally and to right the boat. I’m excited now. I feel like we have a responsibility to make more franchises available to more people. That is going to keep us really busy for the next couple of years. I could not be more excited to make this opportunity available to those who want to come join us.
SNIEGOWSKI: What would you advise other franchisors on how they should deal with their independent franchisee associations?
MURPHY: Don’t get caught up in the form over the substance. The substance is that when you have a great collaborative culture with the people that you are in business with, more good things will happen than if you do not. Don’t get tied up in the semantics of what group your leaders call themselves, just find those leaders and work to make real progress.