How to deal with franchise conflicts

09/06/2018 08:00 | Start a business

Article about dealing with franchise conflict

There are many reasons a franchisee may fall out with a franchisor. Often conflict can be easily resolved with a casual conversation. Other times, it may be necessary to begin the formal complaints procedure. To a large extent, it depends on the nature of your complaint. Here, we take a look at five of the most common reasons franchisors and franchisees fall out.

1. Fees
Fees are consistently cited as one of the biggest reasons a franchisor and franchisee fall out. In most cases, disagreements over fees centre on the franchisee feeling as though they're not being given the appropriate support for the fees that they're paying. However, all costs are set out in the franchise agreement, so franchisees need to tread carefully around the issue. If they refuse to pay, they may be found in breach of their agreement and have their unit stripped from them. If they dont raise the issue in the right way, the franchisor is likely to point out the pertinent section of the franchise agreement and refuse to do anything more.

2. Lack of support
Another common complaint amongst franchisees is that they arent receiving the level of support that they had been promised. This happens, for various reasons, on a regular basis. What makes the issue of support so tricky, is the fact that it has a lot to do with franchisee expectations. Expectations are often difficult to measure and will differ drastically from one franchisee to the next. Theyre also typically unspoken. This means that the franchisee can feel let down by a lack of support at the same time as the franchisor believes theyve delivered all the support promised.

3. Inflexibility
If the franchisor is too inflexible, it can cause tension between themselves and franchisees. For instance, a franchisee may feel as though the franchises compliance standards are too strict. They may argue that being forced to adhere to strict compliance policies is damaging their business, rather than helping it. In response, the franchisor will argue that their systems have been designed to help franchisees and maintain standards across the network. Their unwillingness to allow the franchisee to adapt and change these systems may lead to claims of inflexibility and result in conflict.

4. Communication issues
The franchisor/franchisee relationship can become a close partnership that benefits both parties. However, there are some occasions when the franchisee prefers a little more independence, or the franchisor keeps their distance. In such cases, its easy for one of the partners to grow disgruntled with the lack of communication and begin to complain. This is particularly true of situations in which the franchisee feels that the franchisor is unreachable or isnt providing the necessary support and assistance.

5. Drop in earnings
If a franchise unit doesnt perform as well as expected, it can cause tension between the franchisee and franchisor. The franchisor may argue that the franchisee hasn't implemented their systems correctly, isn't committed to the business, or isn't capable of running a franchise unit. On the other hand, the franchisee may argue that the franchisor's projections were incredibly inaccurate and never achievable in the first place.

How to resolve conflicts

If youre not sure how to resolve a dispute with a franchisor, it might be a good idea to take a look at at the franchise information in your agreement. Is there a description of the complaints process? If not, we've compiled this easy, three-step guide to franchise conflict resolution.

1. Face to face meeting
The first step in the conflict resolution process is to organise a face to face meeting. This gives both parties the opportunity to air their grievances and express how they feel about the relationship. While conversations over the phone can be useful, its far better to meet in person if you want to resolve long-standing issues. Body language and non-verbal communication play such a large part in fully expressing oneself, that a face to face meeting can move you closer to a solution to your problems. Similarly, people are capable of much greater empathy when theyre talking with someone directly in front of them. This can also contribute to quicker conflict resolution and a closer working relationship in the future.

2. Put the complaint in writing
If the face to face meeting doesnt end with a satisfactory result, its time to put your complaint in writing. This is not only an efficient way of letting the franchisor know that you're escalating the issue but also begins to make the process more official. This is particularly important if it moves on to a legal battle, where you'll need evidence that you followed the formal complaints procedure. In your letter, ensure that you describe your complaints in a clear manner and that you provide proof of those measures you've taken to try and resolve the issue. Keep all correspondences for future reference.

3. Seek legal assistance
Finally, if neither a face to face meeting nor an official written complaint resolves the issue, it's time to seek legal advice. Make sure that you use a lawyer that has experience of handling franchising cases and dont forget that your franchisor will be well prepared for this eventuality. However, if you feel as though you have no choice and that all other courses of action have been exhausted, preparing legal action is the logical next step.

When deciding between the various franchise options on offer, most applicants take the franchisors personality and reputation into account. If you're not able to form a healthy working relationship with your franchisor, it's going to be difficult making a success of your business. However, even if you're franchisor seems like a great partner to have on your franchise journey, conflicts can still arise. To resolve them with as minimum fuss as possible, franchisees need to be communicative, open, and honest. Start with a face to face meeting, escalate to a written complaint and then, if necessary, begin legal proceedings.

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