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Franchisee Advice

Disputes Can Arise In Any Relationship And Franchising Is No Exception

The relationship between a franchisor and franchisee is the corporate equivalent of a marriage.

Monisha Prem

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The challenge is to manage the disagreement in a manner that enables the ‘marriage’ to survive and flourish, or to minimise the pain for both parties if they decide to part ways.

The Most common cause of conflict between franchisor and franchisees is a divergence of expectations, and the inability to meet expectations.

By balancing expectations, through continuous dialogue, listening and seeking legal advice, countless disagreements can be avoided. 

1Balancing expectations

In their relationship with the franchisor, franchisees seek to grow profitable businesses, while franchisors seek to maximise their financial performance and market coverage in their relationship with franchisees.

To achieve success, the franchisor and franchisee need to understand the goals and expectations of the other party in the relationship.

Whether you are a franchisor or franchisee, ensuring that the franchise brand is protected will yield the best result for all parties.

The franchisor and franchisee should jointly develop clear expectations from the outset about the role of franchisees and how they are to be evaluated, and the support franchisees can expect from the franchisor. By balancing expectations, many conflicts can be avoided.

Related: Dealing With Sales Disputes

2Continuous dialogue and listening

When a franchisee’s business is under-performing, they are often quick to blame the franchisor. On the other hand, a franchisor may impose extreme fees on franchises or threaten to remove them from the brand.

If a franchisor is willing to listen, and through meaningful dialogue between both parties, they may discover new ways to help the franchisee grow the business or exit the franchise as painlessly as possible.

3Legal advice

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Practical dispute management and substantiated legal advice may prevent escalation of conflicts between a franchisor and franchisee. Attorneys can assist with defining and communicating all relevant parties’ major issues and devising a strategy to achieve desired results with minimal business interruption.

If this is not enough to resolve the dispute, attorneys can turn to dispute resolution through mediation and if necessary, litigation.

Whether it is lack of support from the franchisor or failure to comply with the franchising system, disputes are almost inevitable. So what can you do when a franchising dispute arises?

Disputes between a franchisor and franchisee can often be resolved quickly and constructively if the right approach is adopted.

Some methods of resolving franchising disputes include:

Franchise Agreement

Your franchise agreement should cover the basic terms of engagement, including rights, obligations and limitations, and contain provisions on how to resolve disputes which may arise.

Negotiation and Mediation

The first step of resolving a dispute is for parties to commit to avoiding approaching the courts. The franchise agreement should clearly state that the parties will negotiate, and if necessary appoint an independent third party, such as an expert in the field of the dispute, to mediate the negotiation.

Related: How to Settle Disputes the Humane Way

Formal Arbitration

If the negotiation and mediation is unsuccessful, the parties can approach an arbitration body such as the Arbitration Foundation of South Africa. The objective of arbitration is to offer an alternative to resolving disputes in court. However, parties must consider the rules and costs of this route.

National Consumer Commission

As a franchisee is a consumer in terms of the Consumer Protection Act 68 of 2008, it is entitled to lodge a complaint against the franchisor with the National Consumer Commission (NCC). The NCC registers and assesses complaints, investigates alleged misconduct, refers individual complaints to alternate dispute resolution agencies for resolution, and represents consumers in the Consumer Tribunal.

Franchise Ombudsman

The draft Franchise Industry Code of Conduct (the Code) was published for comments on 29 January 2016. Its purpose is to regulate the relationship between franchisees and franchisors.

The Code will provide for the establishment of a franchise ombud and appointment of an ombudsman. The ombud will create a platform where franchisees and franchisors can resolve disputes by making use of inexpensive alternative dispute resolution processes, thus avoiding costly litigation.

Although the process will be prescribed and structured, the ombudsman will be more of a mediator than an arbitrator, without the power to make binding awards against any of the parties.

He will make recommendations, to broker a consensual settlement between the parties.

Related: Why Conflict Resolution Is A Matter Of Matching Values

Litigation

The franchise agreement must allow for any party to approach the courts if alternative resolution is unsuccessful or if a matter is considered urgent, such as an application for an urgent interdict. Parties must consider the cost implications of this remedy.

Monisha is a corporate advisor, admitted attorney at M. Prem Inc, and author with over 14 years deal-making experience. Monisha litigated for several years before joining an investment banking firm specialising in mergers and acquisitions. Monisha has owned and operated several businesses, is passionate about business development, commercial and corporate law.

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Franchisee Advice

Develop Digital Marketing Competency In 3 Simple Steps

Conquering the digital revolution needn’t be daunting. Polish up your tech skills and watch your digital marketing prowess increase throughout your franchise.

Diana Albertyn

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As a franchisor, digital marketing may be proving to be a challenge due to the unique structuring of the business.

“The very nature of franchises is ‘structured’, however, when it comes to marketing, that structure often lacks,” says Marcela De Vivo, Founder and CEO of Gryffin Media.

Franchisors and franchisees often struggle to reach common ground when looking to achieve different marketing goals. While the franchisor needs to control the brand in its entirety, the franchisee wants to market their business using particular strategies suited to their location.

Research has found that smartphones are the biggest influencers of 82% of users when they make their in-store purchase decisions while. It’s for this reason that the importance of digital marketing for franchises has increased.

Here’s how to harness its power of influence, amplify foot traffic and solidify brand loyalty:

1. Recruit digital natives and early adopters

As much as you’re the leader of your franchise network, there are franchisees in your chain you could learn from. The global increase in millennial franchise owners means it is highly likely that you’ll be able to identify early digital adopters within your franchise network.

“The best people to learn from are those who have been in your shoes before,” says Matt Forman of the Franchise Centre at Griffith University.

“Encourage and support their efforts and use them as case studies to demonstrate to the rest of your franchisees the value of digital marketing, and how to do it right.”

2. Invest in training your team

“Each digital competency level requires more education and resources in order to integrate digital marketing with your physical stores,” says Forman. For this reason, regularly investing in continuous training for your team so as to ensure they keep abreast of any new and emerging trends.

Proactivity and adapting to the constantly evolving digital landscape led KFC to open a LinkedIn account for its founder and mascot Colonel Sanders. KFC’s out of the box tactic is a fresh approach to what has long been considered a B2B platform, under-utilised as a B2C platform.

3. Apply custom targeting techniques

The discovery of new and small businesses is being fuelled by Google searches, social media and online reviews, making these platforms a goldmine of invaluable tools.

Leveraging certain custom targeting techniques like easily searchable keywords and exposure on other reputable and high-traffic websites, gives your franchise’s digital marketing efforts a boost. This results in an effective campaign, favourable reviews and meaningful and lasting interactions with consumers “whether it’s a reply to a Facebook comment or a retweet,” says Entrepreneur’s Emily Conklin.

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Franchisee Advice

How To Hire Skilled Workers For Your Franchise

Your staff run your business – you just have to show them how. This is why employing the best people for the job is essential.

Diana Albertyn

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According to the Franchise Association of South Africa (FASA) 2017 Franchisor Survey, one of the main challenges facing franchisees is finding the right staff.

“Staffing your franchise can be one of the most challenging parts of running a successful business. Without a great team of employees, you cannot run your business effectively,” says Saxon Marsden-Huggins, founder of WebRover.

These three tips could help you find the best employees for your franchise outlet:

1. Don’t hire in haste

While you may be rearing to go and keen to fill gaps to speed up profitability, research your candidates thoroughly.

Related: Insights On Recruitment That Could Affect Franchise Performance

As the job applications keep flowing into your inbox, keep in mind that not all of them qualify for the positions available – it may even be a small percent who are actually viable candidates. This is why your hiring process should include:

  • Taking the time to thoroughly screen CVs to develop a short list
  • Creating a carefully crafted list of interview questions
  • Setting aside adequate time for thorough interviews
  • Getting to know the candidates through a second round of interviews to confirm your choice.

Giving the hiring process dedication and attention will ensure you get the cream of the crop, contributing to the long-term success of your franchise.

2. Demonstrate support in the workplace

While you can instil the necessary skills into new recruits, it’s difficult to train for culture. This is why choosing the right employees from the beginning will make the rest of your franchise management system will run more smoothly.

“The manner by which you run the franchise will influence employee perceptions of the brand as well,” says Hireology’s Erin Borgerson. “Your staff must become ambassadors of your franchise system to attract the target consumer market.”

The best way to do this is encouraging staff to give you their honest feedback. Your commitment to creating and upholding a positive culture will result in increased loyalty from your current staff and a superior pool of applicants.

Related: 3 Things You Should Consider Before Buying Your First Franchise

3. Offer appealing incentives

When advancement opportunities are clearly communicated, staff is keen to hear how they can get there, as they have career goals of their own. Encouraging this ambition will draw good employees to your franchise.

“Helping employees understand the steps to advancement helps them to view their current job as an important part of a career with an upward path, not just a pay cheque for this week,” say financial reporting technology experts at Qvinci.

Performance bonuses and employee benefits incentivise staff’s efforts, therefore increasing their income alongside the profit of the business. “This serves to make employees a part of the business and not merely people ‘who work there’,” they explain.

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Franchisee Advice

3 Ways Communication Helps You Run Your Franchise Better

Managing your business as an independent owner may have been challenging at the beginning, but – as you’ve come to realise – the successful operation of a franchise network requires an extended set of skills.

Diana Albertyn

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“When it comes to a multi-location business such as a franchise, effective communication is vital,” says Dani Peleva, Managing Director at online marketing agency Local Fame. “So what happens when you’re struggling to connect with the franchise network you have in place?”

It may be time to upgrade your franchise management skills, because the success of your franchise network has a direct correlation to how you integrate feedback systems into your management processes.

Have a clear comprehension of the challenges your franchise encounters, keep an open chain of communication between yourself, franchisees and managers, and maintain regular interactions between everyone in the network. These are some of the most crucial aspects of successful franchise management:

1. Understand the challenges you face

A thorough understanding of your business requires dedication to regular and consistent groundwork for first-hand experience on how the day-to-day operations of the business are conducted.

Related: 3 Core Strategies For Building Successful Franchise Organisations

“Seeing and talking to the people that make your business will help you understand the challenges that franchisees face and the systems they need to drive higher profitability and growth,” says Rosie Niblock, Marketing and Communications Manager at Proactive Marketing.

“That way you can work more effectively to make improvements to franchise management systems logically and within the financial grasp of all franchisees.”

2. Get personal through regular visits

You never want your franchises to feel neglected. It’ll demoralise them and possibly drop sales, profits and their ability to keep the business running as you intended. Maintaining regular contact and sharing as much information as possible – when you can – fosters strong relations with your franchisees.

Empowerment through information and communication makes a difference in the business and helps franchisees make decisions in favour of the business and to make sure that they all pull in the same direction in terms of customer satisfaction, says Alan van der Westhuizen, executive manager of new business sales at Fournews, a 20-year-old franchise holding company for News Café, Krispy Kreme, Moyo, Brooklyn Brothers, Smooch, Cafe Fino and Go! outlets.

Ensure your response to these concerns is swift. “If not discussed they could fester ad create undesirable rumours,” says Niblock.

Related: How To Write An Operations Manual For Your Franchise

3. Create events for network collaboration

One of the most important aspects of managing your franchise is meeting with all your franchisees, at least annually. “Franchise conventions are almost certainly the biggest tool when it comes to building profitable engagement,” says Peleva. “They’re one of the most important things to focus on when you’re considering how to lead your franchise network.” According to her, a successfully attended and executed convention will let you:

  • Boost your network-wide productivity
  • Hugely increase your profitability
  • Drive passion for your brand

Communicating with your franchisees is the best way to identify problems, work towards solving them, and building a pleasant and fruitful relationship with your owners.

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