Franchisees are the customer-facing representatives of your brand. Their success is your success. Having unhappy franchisees can cause your brand and franchise network to suffer. It is important to deal with any issues quickly and appropriately. If a franchisee fails to maintain the required standards or breaches a clause in the franchise agreement, the results could be poor customer satisfaction and a negative opinion of the brand as a whole.

8 Tips to Minimise and Resolve Franchise Issues

  1. Minimise risks from arising in the first place: Quality recruitment and realistic expectations on the part of both parties and a culture of openness and honesty are often the key determinants of a successful and dispute-free franchise network.
  2. Don’t oversell the opportunity: Disputes often arise from feelings of betrayal or misunderstandings relating to expectations. The easy way to avoid these issues is not to over-sell the opportunity.
  3. Be very selective on the franchisees you take on: The temptation to grow the network quickly is a strong one, but must be resisted if it means recruiting the wrong kind of person. You should remember that discipling and breaching a franchisee takes a lot of time and effort and it is much easier to take on a franchisee than exiting a franchisee.
  4. Ongoing training and support: Once a franchisee is in the network, ongoing training and support can reduce the risk of underperformance and ill-discipline in the network.
  5. Meet with franchisee at first instance: It is surprising how many franchisors issue breach notices or even attempt to terminate a franchise without meeting with the franchisee. Talking to the franchisee will give you a basis on which to determine whether the problem is one that can be resolved with additional support.
  6. Carefully consider breach notices or termination: The franchisee may simply be going through a temporary difficulty or crisis. Family issues may have arisen, or a new competitor has opened up nearby. Issuing a breach notice or attempting to terminate this kind of franchise may waste substantial resources and cause poor morale in the network even if there is a legal basis for breach and/or termination.
  7. Develop a plan of action: Where issues escalate, develop (and have the franchisee sign off) a plan of action to recover the operation. This may involve some temporary financial support or suspending levies. If you do provide financial assistance, make sure it is strictly confidential, to avoid setting a bad precedent for other franchisees. The arrangement should be in writing and should state clearly the nature of the arrangement and the support you will provide.
  8. Issue a breach notice: A franchisor can issue a breach notice where the franchisee’s behaviour has been contrary to an express term of the franchise agreement or operations manual. A breach notice must comply with the Code. If the franchisee remedies the breach within the period specified, this will resolve the immediate issue and bring the franchisee into compliance with the prescribed system.

If you are experiencing any issues with your franchise or have any questions about resolving issues you have with a franchise, get in touch with LegalVision’s franchise team today on 1300 544 755 or fill out the form on this page.

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This article was an extract from LegalVision’s Franchisor Toolkit. Download the free 32-page toolkit featuring case studies from leading Australian franchisors.

Tim Mak
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