Franchise Relationships: What Happens When The Love Is Lost?

14/02/2018 08:00 | Start a business

Franchise relationships - when it goes wrong

Itís natural to compare a franchise to a marriage. Franchisor and franchisee work closely together and have a relationship built on trust and mutual respect. But, just as some marriages end in divorce, some franchise relationships also breakdown when the love has been lost.

There are many reasons why franchisor and franchisee may not see eye to eye during the term of the franchise agreement. The franchisor could be blamed for not providing the training and support that was promised at the outset. On the other hand, the franchisee may struggle to adapt to the obligations that come hand in hand with the franchise model, and as a result are underperforming.

Whatever, the reason for things taking a turn for the worse, hereís some tips on how to break up amicably.

Itís not you; itís me

When you commit to owning a franchise, there isnít really an easy way out.

The franchise agreement will be for a fixed period and are rarely terminated during the term by either party. So, if things arenít working out as youíd expected, you canít simply walk away without being liable in damages to the franchisor for breach of contract.

You must accept that youíre obliged by the terms of the contract and start to consider what options there are available to you. Just as with any break up, your first response may be to scream, shout and blame the franchisor for everything. But, to move forward you should consider if thereís anything you could have done, or can do, to improve the situation.

Try your best to be unbiased and honest: have you adhered to the franchisorís business model? Can you put your finger on whatís not working? Did you have enough training to get you ready to become a franchisee? if not, did you inform the franchisor that you felt inadequately prepared?

If you genuinely feel like you need more support and training then you should confide in the franchisor. After all, thatís what youíre paying your royalty fees for. In fact, most franchisors will be grateful that youíve opened up to them about your additional training needs and be happy to help. Itís in their interests to give you all the support you need so that youíre successful; which ultimately results in increased profitability for them.

From bad to worse

So, youíve plucked up the courage to tell the franchisor that you need more support, but what if the franchisor ignores your requests?

Unfortunately, the franchise agreement is pretty one sided when it comes to obligations; and it doesnít favour the franchisee. You may remember from when you signed the contract that any reference to the franchisorsí responsibilities tend to be very vague compared to those expected of the franchisee.

There is good reason for this, as the franchisor must protect their brand and is standard practice in franchise agreements. Although, this doesnít help when you feel like youíre being let down and discover that the franchisor isnít in breach of any contractual obligations.

There is a silver lining though. You can look to the franchising Code of Conduct which includes a mandatory obligation on both franchisor and franchisee to act in good faith and deliver on promises. So, if you raise an issue with the franchisor you can expect them to act in a practical and timely manner.

Donít let emotions get the better of you

Owning a franchise can be tough, and when you feel disappointed and frustrated with the franchisor it can be easy to let emotions take over. But remember, this is a business and so you should act professionally and follow the necessary steps to ensure the right outcome.

  1. Ask for help: Donít be embarrassed. If youíre new to franchising itís perfectly natural that you may need additional support. A good franchisor should be on hand to offer all the help you need.

  2. Be clear about whatís gone wrong: Take an objective view and clearly and professionally relay to the franchisor where the issues lie.
  3. Send an email: After your conversion with the franchisor, confirm everything in writing.
  4. Work together: Itís in both partiesí interests to get the relationship back on track, so if youíre both in agreement with what needs fixing, try your best to put it right. If an agreement and remedial actions cannot be agreed on, then it may mean the end of the franchise relationship.
  5. If ignored, take it further: Seek legal advice from an experienced franchise solicitor so that you can make an informed decision about your next steps and what the financial implications will be.

Due diligence is the only answer

Although the thought of going through a rough patch with the franchisor is worrying, the truth is that the dispute level in franchising is much lower than the divorce rate.

There are only a small number of franchise disputes that take place every year in the UK and an even lower number of these result in a serious relationship breakdown. Most disagreements are resolved relatively quickly and love and harmony are soon restored.

But, thereís only one way to minimise the chances of the love being lost when owning a franchise, and thatís through proper due diligence before entering an agreement.

Itís not enough to invest in a franchise opportunity because you got on well with the franchisor during the recruitment process. You wouldnít agree to marry someone after the first date (well, you might, but itís not advised!) so, why would you commit to buying a franchise without finding out more about the business first.

Speak to existing franchisees to find out what itís really like to be part of the franchise. Ask them about their expectations of support, training and financial returns, compared to the reality. If the franchise is full of well-trained, satisfied and profitable franchisees, then the chances are youíll be a success too.

Just remember, choose the right franchise with your head, not your heart.

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