Want to minimise disruption to your business? Check out these five common sources of franchise conflict so you can work to prevent them before they become an issue.
Whether you’re a franchisor or a franchisee, it’s in your interests to minimise franchise conflicts across your business. Problems can arise as a result of a wide variety of reasons, but we’ve traced potential issues back to five common sources.
By reading up on these sources of conflict, you can nip issues in the bud before they get out of hand. In turn, this will help you maintain your franchisor-franchisee relationship, which is integral to the health of your business.
Common sources of franchise conflict
In the vast majority of cases, conflict arises as a result of one of the following factors:
1. Concerns about royalty, management or marketing fees
Running your own business can be extremely stressful. Being expected to pay fees in the form of royalties or contribute towards management and marketing funds only adds to the pressure felt by franchisees. As a result, some business partners might feel the fees are too steep and approach the franchisor to reassess them.
Often, lowering individual franchisees’ payments is impossible, as they are set at a fixed percentage across the entire network of franchise units. But, if franchisors want to safeguard their relationships with their business partners, they should listen to grievances and be understanding. There may be other measures they could put in place to support franchisees.
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2. Issues surrounding standard operating procedures
From time to time, franchisees may dispute the franchise’s operating processes. However, it’s likely they have formed part of the business model for years, so the franchisor will be reluctant to change them unless there is good reason to do so.
This issue may arise if the franchisee isn’t particularly suited to the franchise model. To work successfully within it, you need to be willing to follow instructions closely and stick to a strict set of pre-established guidelines.
Of course, if a franchisee has a bright idea and suggests a way of changing operating processes to boost the business’s productivity, franchisors should listen. There may be a way to implement these new ideas across the franchise network.
3. A perceived lack of support, guidance or assistance
Usually, the amount of support and guidance provided by the franchisor is reflected in the franchise fee. In theory, this payment covers the materials, tools and tutorials needed to equip franchisees with the skills and know-how to make their business a success. So, effectively, the more you pay, the more coaching and guidance you’ll get when you join.
However, if franchisees feel they are not being supported as much as they should be, there could be issues. Resolving them doesn’t necessarily involve franchisors laying on extra educational courses or splashing out on more learning materials; just being at the end of the phone and available for regular catch-ups may be all the franchisee is looking for.
4. A franchisor’s unrealistic expectations / a franchisee’s poor performance
Launching your own business can be overwhelming, especially if you haven’t done it before. Many inexperienced entrepreneurs turn to franchising as an alternative to starting a business from scratch, so they may feel lost from time to time. Dissatisfaction can turn to frustration and even panic if the franchise unit doesn’t perform as well as anticipated in the first few months.
As a result, franchisees who struggle to turn a profit in the first year or so may feel their franchisor’s expectations are unrealistic. Meanwhile, franchisors may feel exasperated at the franchisee’s poor performance. This is why clear dialogue and strong support networks are a vital part of the franchise system.
5. Lack of communication
If franchisors expect their franchisees to respectfully follow their operational strategies and uphold their reputation to the best of their abilities, they need to stay in touch. A franchisor may feel the operations manual covers all the vital information and the training scheme provides investors with all the skills they’ll need. But starting a franchise unit isn’t clear-cut for every franchisee, and franchisors must keep their doors open for business partners who have further questions or concerns.
The franchisor should set the precedent for a good working relationship. This means establishing a dialogue with the franchisee. Regular communication is key, as it will put franchisees at ease and show the franchisor truly cares about their business journey. When franchisors keep in touch, franchisees are more likely to highlight issues as soon as they arise, rather than waiting until they escalate beyond repair.
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Resolve franchise conflict before it’s too late
Although franchise conflict can arise for any reason and at any time, the five factors mentioned above are probably the most common reasons for disputes. By reading up on them now, you can put yourself in the best position when it comes to resolving them. If you can identify the root of the issue before it escalates, you’ll be able to take steps to stamp it out.
When trying to avoid conflict, most franchise partners start with a telephone call, followed by a face-to-face conversation. If neither of these options offer resolution, they’ll start filing an official written complaint. Finally, if there’s no other course to take, they’ll resort to legal action.
So, how can you stop this chain of events before it gets too far? Luckily, there’s lots you can do if you’re faced with franchise conflict – and taking steps early on will help you avoid a negative outcome. Our handy guides explain how to deal with conflict within the franchise system. Just click on the article for you.
Alice Tuffery, Point Franchise ©