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Two common sources of conflict between franchisors and franchisees

On Behalf of | Jun 10, 2024 | Franchise Law |

Embarking on a joint business venture involving a franchise calls for professionalism and for franchisors and franchisees to keep conflict to a minimum. Disagreements can be costly for all parties involved as it may disrupt day to day operations and affect the bottom line.

Unfortunately, conflicts are inevitable. At some point, you and your franchisor might disagree on something involving the business. It is important to manage conflict in its initial stages before it escalates into a problem that might not have a resolution. Being aware of the common sources of conflict may help you and your franchisor avoid it in the future.

Below are two common sources of conflict between franchisors and their franchisees:

Lack of communication

Franchise models will generally have standard operating procedures, which are vital to the success of the brand. Investors usually undergo intensive training to achieve the standards and meet the expectations of the franchise. They also have a franchise agreement that both parties must adhere to. When the franchisee has questions or concerns about these standards and the procedures they need to adhere to, franchisors need to be able to respond and provide ample support. Likewise, franchisees should be transparent to their franchisors about any roadblocks and growing pains they might be experiencing.

When communication lines are open and both parties can express themselves clearly and fully, growing the franchise becomes a painless experience. A lack of communication may impact long-term profitability.

Unfair criticism

Pitting a franchisee against another franchisee is unfair, even if one performs better than the other. There are numerous factors why their one branch might be making more profit than another – but it does not necessarily mean that the other branches are underperforming. In an ideal world, each franchise will turn a substantial profit annually, but it may not be feasible in the beginning.

Franchisees who may not be making the expected profit may experience undue pressure. This may cause them to panic and lose faith in their decision. Unfair criticism may be detrimental to the business relationship.

Learning about your legal rights as a franchisee can help you get the most out of your business. You may want to reach out to your franchisor or do your research to be more knowledgeable on the topic.

If you believe that a franchisor is taking advantage of the situation and in violation of the franchise agreement, you have options. Contact the team at Zarco Einhorn Salkowski for a free consultation to discuss your case.