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Where the problems often start

Updated: May 16, 2023

Very few relationships manage to avoid occasional differences of opinion. If both the parties

recognise that they are mutually dependent, as should be the case in a franchisee-franchisor

relationship, it is usually easy to amicably agree to disagree. If there is an imbalance, or

even if one of the parties mistakenly believes that that there is an imbalance, resentment can

become established.

In most franchises the operational work of providing the goods or services is carried out by

the franchisees. This can be arduous and repetitive. It often involves direct contact with

customers who can sometimes be demanding and unreasonable. If the franchisee is

required to employ staff it is inevitable that there will be occasional problems with sickness,

absenteeism and other issues.

The franchisor obviously did all these things when originally starting the business but unless

some company owned outlets are retained the role changes and moves away from the daily

duties now carried out by the franchisees. Much of the work involved in running the franchise

goes unnoticed and all too easily the franchisee’s perception can be that the franchisor is

raking in management fees and recruitment payments and doing very little to justify them. In

this situation a disgruntled and resentful franchisee is unlikely to amicably agree to disagree.

For the franchisor this is also a dangerous and unsustainable way to run the business.

All of this can apply to well managed and ethical franchises. Sadly, there are some that are

unethical as well as being badly managed. The franchisees who are shackled to this sort of

situation by a franchise agreement will quite justifiably feel that they are doing all the work

and the franchisor is adding little or no value to the relationship.

If you operate as either a franchisee or a franchisor; does any of this sound familiar?

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