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Franchising Disputes

Posted by Carolyn Dufton on 1 March 2011
Franchising Disputes

A Blame Game

The chances are that you're reading this article with a preconception about Franchising.

The very word Franchising can inflict pain upon failed ex-franchisees who are still harbouring grudges against a Franchisor. and for some Franchisors, blaming franchisees for the network's failure is standard conduct. Whilst for some entrepreneurs, franchising conjures up a cash cow concept. Franchising is the goose that will lay golden eggs.

The truth is, that for franchising to work effectively, each party, that is The Franchisee and The Franchisor must firstly understand and secondly follow through with their obligations.

Best franchise practice provides a transparent and clearly documented system. Obligations are stated in the franchise agreement and are legally binding.

In my experience many "injured" ex franchisees were, to varying degrees, responsible for their own demise despite the fact that Franchisors are often blamed for their failure.

As for Franchisors who consider franchising to be a cash cow, I would suggest that a responsible Franchisor would be investing substantial time, money and effort into growing and supporting their Franchisees. There's no such thing as a free ride.

For all parties involved in franchising there are some common rules for success.

Most of the Franchisees I see with problems in their franchise did not have specialist pre purchase franchise advice at the outset.

Franchisors should develop a system and legal documentation with specialist assistance.

  • Understand the nature of franchising

Research the franchise industry extensively before getting involved as a Franchisee or Franchisor. Make informed decisions.

  • There must be acknowledgement that a Franchisee is a self employed person who is responsible for their own business success.
  • Address potential issues in the franchise pro-actively using honest communication and dialogue before they become unmanageable.

Mediation is an attractive and cost effective practice to resolve Franchisor Franchisee differences. The franchising code of conduct states that if one party requests mediation the other party must agree and that mediation costs are shared.

When blaming is replaced by acknowledged responsibility, Franchising really can provide a win win situation for both Franchisor and Franchisee.

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Carolyn DuftonAuthor: Carolyn Dufton
About: Carolyn Dufton Dip. Bus (Franchising) heads the team as the owner and manager of franchisingplus. Carolyn has a wealth of small business experience, and many years of hands on franchising experience.
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Tags: Franchisee Franchisor Franchising

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