The franchise system relies on both franchisors and franchisees strictly observing the franchise system, this includes the franchisee complying with the franchisors systems and policies as set out in the franchise operations manual.

This guide discusses some of the considerations, tips, and techniques about how to manage franchisees when operating as a franchisor.

Terms of the Franchise Agreement

The terms of the franchise agreement must be drafted in such a way that it protects the brand of the franchise system. Any deviation from these terms may result in damage to the overall reputation of the franchisor. Uniformity is extremely important in a franchise.  To ensure uniformity, the introduction of an operations manual can ensure consistency across the entire franchise network.

Role of the Franchisor

Communication is key in any successful franchise system.

In addition, proper training, both initial and ongoing, will help to ensure franchisee compliance. The franchisor (or a Regional Manager) should also visit the different franchised outlets to ensure that franchisees are complying with the required operations and policies. At the same time, the franchisor will assess the performance levels of the franchise business and give advice on how to improve these performance levels. Improving performance may increase the likelihood of franchisee compliance, as the franchisee will place more faith in the system and feel more supported by the franchisor. With technology today, franchisee compliance and the performance of its businesses can be monitored using accounting and other software.

Terminating the Agreement

Keep in mind that a franchisor is entitled to terminate the agreement if the franchisee is non-compliant, as long as the procedure for termination under the Franchising Code of Conduct is followed.

Conclusion

Franchisee compliance is extremely important in any franchise system. For legal advice on managing your franchisees, contact one of LegalVision’s franchise lawyers.

 

Emma Heuston

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