::this post ID is 22899::::in categories of ..Features..::

How franchisors and franchisees can work together and avoid litigation

Successful franchise systems are built on trust and solid relationships.
Successful franchise systems are built on trust and solid relationships.

By Frank Zaid

This is a simple question with a fairly detailed answer. A key principle to keep in mind is it is up to both parties—the franchisor and franchisee—to work together to establish and maintain good relations. However, the franchisor must take the lead in setting up programs to accomplish this result.

Communication is key

Another key principle is good communications. Successful franchise systems are built on trust and solid relationships. However, there will always be variations in individual franchisee performance and expectations among franchisees. Lack of trust between a franchisor and franchisee can arise at times of stress or change.

Types of communication

So, how can both parties communicate and solidify their relationships? Communications can take many forms, which should be initiated at the outset and on an ongoing basis by a proactive franchisor. This can be in the form of:

  • newsletters;
  • email blasts;
  • password-controlled intranet;
  • peer-review boards;
  • franchise advisory councils;
  • town hall meetings;
  • webinars;
  • Zoom meetings;
  • conferences and conventions;
  • independent ombudsman programs;
  • CEO private hotline;
  • controlled social media;
  • field visits;
  • performance reviews;
  • training sessions; and
  • an online operations manual.

The importance of listening

Progressive franchisors should know the importance of listening to their franchisees, especially in times of financial and operational stress recently brought on by COVID-19. They should encourage suggestions and respond quickly and respectfully. Franchisees appreciate learning of improvements to the franchise system resulting from their suggestions. Many franchisors have reward programs for suggestions that are adopted as part of the franchise system, and others establish incentive programs, such as paid vacations or financial concessions, for franchisees who reach performance targets established by
both parties.

Communications can take many forms, such as webinars and Zoom meetings, which should be initiated at the outset and on an ongoing basis by a proactive franchisor.
Communications can take many forms, such as webinars and Zoom meetings, which should be initiated at the outset and on an ongoing basis by a proactive franchisor.

Timely information builds trust

Similarly, franchisors should react professionally and timely to franchisee complaints. Franchisees should be encouraged to voice their concerns but, if possible, suggest practical and reasonable remedies.

Timely and informative communications from a franchisor help to allay rumours and build trust.  Keeping franchisees informed of important changes and milestone events can prevent suspicion and rumours among franchisees.

Some important franchise system developments that should be communicated early and often include:

  • management changes;
  • succession;
  • new competition;
  • franchise openings;
  • consumer research or preferences;
  • technology enhancements;
  • industry regulations;
  • system standards and changes;
  • individual franchisee milestones and successes;
  • graphic standards; and
  • social media and crisis management programs.
Leave a Comment

Comments

Your email address will not be published. Required fields are marked *