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Common sources of conflict in franchise arrangements

On Behalf of | Jan 14, 2022 | Franchise Law |

When embarking on a joint business venture such as a franchise, it is in the best interests of all parties to keep conflict to a minimum. At the end of the day, disagreements can cost both parties money.

Unfortunately, conflicts do occur, and they have the potential to cause serious disruption. The good news is that conflicts can be managed and even prevented in some instances. Identifying some of the more common causes of conflict could help you to address them swiftly should they arise.

A breakdown in communication

While franchisors may have numerous branches to oversee, communication between each franchisee is still important. Generally, franchise models will have standard operating procedures, which is key to the success of the brand. Those who have invested will need to be trained in order to achieve the expected standards.

As with any business operation, there can be roadblocks and growing pain in the beginning. Effective communication among all parties means that these can be overcome efficiently. Not only can a lack of communication impact profitability, but it may also lead to lengthy litigation when no resolution is apparent.

Unfair criticism

Of course, in an ideal world, each outlet will turn a substantial profit each year. However, this may simply not be feasible in the beginning. Being placed under undue pressure can cause a franchisee to panic and lose faith in their decision. While constructive criticism and motivation are important, unfair criticism can be detrimental to the business relationship. It is important to set realistic expectations and carefully consider how to get the best out of each franchised outlet.

Recognizing your legal rights as a franchisees will help you to get the most out of your business. If you are caught up in a legal dispute, remember that there are protections available to you.