A Guide to Dealing with Difficult Franchisees

23/02/2018 17:00 | Start a business

Dealing with difficult franchisees

When you started franchising your business, chances are you were concerned about many things, and choosing the right franchisees was probably top of the list. After all, finding the right investors and achieving the perfect franchisor and franchisee relationship is key to the success of your franchised business.

Having a robust recruitment process can avoid many of the problems that may occur further down the line. Hiring only the prospective franchisees that demonstrate the attributes that youre looking for in a franchise partner, means that youre less likely to have an issue once the franchise contract is signed.

Problematic franchisees can still make an appearance, even with the most diligent of recruitment processes. Unfortunately, this can make maintaining a professional business relationship very challenging. Issues can arise for many reasons. From a personality clash to franchisees that are always looking to push the boundaries of the franchise agreement. Whatever the cause, once the franchisor and franchisee relationship has become strained it can be challenging to get things back on track.

Reasons for relationship breakdowns

There are many reasons why the relationship between franchisor and franchisee can be put under pressure. Here are just some of the catalysts that you should be mindful of:

  • Stress When a franchisee starts their new business it can be overwhelming. This can cause them to become stressed, unpredictable and challenging to deal with.
  • Insufficient support Investing in a franchise is a significant commitment for franchisees, and they expect to receive guidance from their franchisor as promised. If a franchisee deems the quality and quantity of the support and training to be inadequate, then this can be a major cause of dissatisfaction.
  • Lack of respect If franchisors treat their franchisees more like employees than the business partners that they are, it can lead to resentment. Franchisors who lack manners, emotional intelligence or people skills can turn franchisees against the franchise system, which can result in relationship breakdowns or franchise failures.

But, there is a chance that your bond can be salvaged if the situation is carefully handled. If you deal with any franchisee issues that arise by following some basic principles, then you may be able to reduce the strain and turn the relationship around.

Step 1: Be a good communicator

The reason why the relationship has probably broken down in the first place is due to lack of communication. When franchising your business, you need to prioritise open and honest communication throughout your whole franchise. This is particularly true when dealing with disputes.

A great way to avoid differences of opinion happening in the first place is to encourage feedback within your franchise. This can only be achieved by firstly establishing a culture whereby your franchisees feel confident and secure enough to give you honest feedback. By accepting the thoughts of your franchise partners and acting on their views, you should escape any negativity from damaging the business.

Step 2: Be a leader

As well as acting on the feedback of franchisees, taking a proactive approach to improving the products or services of your franchise is also important. This sends a message to your franchisees that youre dedicated to making sure that the business remains ahead of the competition.

Be mindful though, that with innovation comes change and this may cause dissatisfaction. Potentially having to adopt new systems, sell new types of products or services, and learn different ways of running their franchise, can be an issue for some. Some franchisees may resist having change imposed upon them which ultimately creates a strain on your relationship.

This is where you can demonstrate your leadership skills. You shouldnt ask your franchisees to sell anything that you havent tested, or do anything that you wouldnt be prepared to do yourself. Involving your franchisees in big decisions will build trust in your leadership, and your franchisees will have belief in your plans for the business; even if they do moan about them now and again.

Step 3: Be understanding

It can be easy to assume that problematic franchisees choose to be difficult. This isnt always the case though, and sometimes there are personal issues that may be at play which impact on the franchisees ability to perform.

If you have a franchisee that is breaching the franchise contract by missing their royalty payments, there may be more to it than meets the eye. Review their accounts to understand if its a case of cant pay or wont pay. If there is a genuine issue, then its your job as the franchisor to step in and provide the necessary support.

At this stage, you can choose to negotiate different payment terms to give the franchisee the best possible chance of getting back on their feet. Its taking an empathetic approach such as this that will undoubtedly improve your relationship with both the troubled franchisee, as well as the other franchisees in your network.

Step 4: Be strong

Unfortunately, there may be cases where a resolution to the issue is not possible. Although finding a solution should always be the first course of action, where this isnt possible, you need to stand strong.

The franchise contract will give you the legal right to terminate the agreement before the end of the fixed term in certain circumstances. Of course, this should be the last resort and only used when necessary, but it also shouldn't be something from which you shy away.

Franchising your business means that youre placing the reputation of your brand in the hands of the franchisees and you need to do what you must to protect it. This can be a tough decision to make because of the consequences to the franchisee, but sometimes tough actions need to be taken when youre a franchisor. Thankfully, disputes which justify this course of action are few and far between.

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