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It is not uncommon for disagreements and misunderstandings to arise between a franchisor and one or more of their franchisees, but by putting in place appropriate internal escalation processes and maintaining a culture of honesty and transparency, a large proportion can be resolved before the relationship is damaged.
Restoring a damaged relationship is hard because once trust is eroded, it can be hard to regain it. Here is a look at the proactive measures that all franchisors should put in place to enable effective communication, and the options that are available to those whose disputes cannot be amicably resolved.
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Proactive communication
Franchisors must accept that even though the brand is of their making, when they invite others to join it, they will come with their own ideas, opinions and preferences. They must welcome and nurture all new franchisees, initiating them into the business and continually reinforcing the brand message.
A good franchisor will have training or induction programs in place to help new franchisees achieve their personal goals while delivering on the needs of the business. They will also have a defined escalation route for any disagreements that arise so that both parties clearly understand their obligations and have a specific process to follow to help them reach a positive outcome.
A franchise cannot work unless both the franchisor and their franchisees are aligned to a common goal: the success of their business venture. After all, they are generating income from the intellectual property, policies, systems and customers of that shared brand.
The escalation procedure should allow for disputing parties to meet on neutral ground and in the presence of an impartial third party, if necessary, so that mediation can occur, helping both parties to understand each other's issues and arrive at a suitable resolution.
The ultimate goal of proactive communication is to ensure that all franchisees are following the defined processes that make the franchise brand unique and that the franchisor is providing enough support to their franchisees to enable them to succeed.
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Restoring a broken relationship
In cases where the trust has been eroded and the parties are unable to achieve an acceptable resolution, there are a few options available to maintain a professional business relationship.
Potentially, the franchisee can continue to operate as long as they comply with the systems and constraints imposed on them by the franchisor, keeping in mind that these are likely necessary to maintain consistency across the brand. In this case, all communications between the parties should be written. When face-to-face contact is required, an impartial third party should be present to help maintain a productive working environment.
If it is impossible to salvage an effective working relationship, the termination clause in the franchising agreement should be enacted, so the franchisee can leave the business in a way that fulfills their contractual responsibilities and that both parties meet their respective legal and financial obligations.
