#
3rd
April

SHOULD I WORK WITH OTHER FRANCHISEES TO RESOLVE FRANCHISOR ISSUES?

As a franchisee, there may be times when some issues or disputes with the franchisor crop up.

At times such as these, you might wonder what the best approach would be to resolve them. Getting the franchisor to address them just for you might not work as well as you would think it would.

Sometimes, the better approach is to work with other franchisees to resolve franchisor issues. Reach out to them, and you will likely find that they too have been facing similar problems. If you approach the franchisor as one, you might get a better response from them.

Engaging with other franchisees within the network can help you:

  • Share ideas
  • Discuss any issues you may be having
  • Learn from each other
  • Mutually support each other

When you reach out to other franchises, you might notice that there are some common issues. As mentioned, it may be easier and more effective to get the franchisor to address them together. It also tells the franchisor that you are working as a team and will not take things lying down.

The Benefits of Getting Franchisor Issues Resolved as a Team

You can speak with other franchisees, via informal connection or an advocacy group. Both of these methods have certain benefits as it would help you:

  • Offer guidance and suggestions
  • Learn from everyone’s experiences
  • Think up new ideas that will help support your business as well as the network as a whole.

 
You can decide what level of interaction you want to maintain with the rest of the franchisees. Your decision will depend on aspects such as:

  • Whether you have existing business relationships with the other franchisees
  • Whether there are other franchisee competitors within your territory

 
If you are in direct competition with other franchisees within the network, you mustn’t discuss any sensitive issues like pricing, etc. While it’s always beneficial to share positive experiences, you must maintain caution while raising any complaints or discussing matters with the franchisees.

What Aspects Distinguish You From the Other Franchisors?

It’s crucial to keep in view that while you are one part of the broader network, you have a legal relationship with the master franchisee or franchisor and not the rest of the franchises. Your agreement will have details of your obligations and rights (which may be different from the contracts of other franchisees), and you need to follow those. Some of the differences that could exist:

  • The time when you launched your franchise
  • The negotiations and discussions that occurred
  • The information outlined in the disclosure document

 
How you operate your franchise could be different from other franchisees due to factors like:

  • Location
  • The suppliers you choose to work with
  • Your business operation methods

 
In simple words, if and when a dispute surfaces with the franchisor, the problem you face may be entirely different from the issues the rest of the franchisees may be facing. Even if everyone wants to work as one, it might not be practically possible to pursue cumulative action if different franchises have different issues or complaints with or against the franchisor.

Similarities Between You And The Rest Of The Franchisees

Despite all the differences you may have individually, there might be some issues that are common across all the franchisees such as:

  • Inadequate support
  • Insufficient marketing services based on the fees you pay towards the network’s marketing fund
  • Inadequate training
  • Failure to provide the promised support
  • Inferior quality products from the mandatory suppliers recommended by the franchisor
  • Erratic supply of products
  • Far lower ROI compared to what the franchisor projected during the application process

 
When you identify common issues, it gives you the chance to urge for a change. While doing so, you must keep in view all the key differences you have with the other franchisees.

Working Collectively With the Rest of the Franchisees

Once you have had discussions with other franchisees, you will notice the common issues which you need to address. Resolving these issues could involve various approaches, such as:

  • Negotiating with the franchisor to make the necessary changes
  • Seeking a reduction in fees
  • Seeking compensation
  • Selling or exiting the franchise

 
Since every situation will be different, there is no thumb rule as to how you should approach the issue. In some cases, group action works better than individual action, while at others, it might be wiser to work alone.

Advantages and Disadvantages of Collaborating With Other Franchisees While Resolving Disputes:

Advantages

  • Common issues help strengthen your case, which can help bring a notable change in the network.
  • The franchisor will be more apt to listen to your specific concerns and take them more seriously.
  • Widespread issues within the network can be solved in a better way via a class action lawsuit. Some franchisees may get a better outcome from this.
  • The costs of the initial, general advice could be shared with the other affected franchisees.
  • One person might be able to represent multiple franchisees.

 

Disadvantages

  • Any specific issues that you are facing may be overlooked.
  • The franchisor might get defensive, which could damage your relationship with them.
  • A lawsuit can be quite expensive, and not every franchisee may be willing to fork out that kind of money.
  • You might still have to get some additional advice to resolve your specific situation, which would mean an added expense to you.
  • The designated representative might give more importance to their concerns more rather than those of the entire group.

 

Collective Actions – Developments in the Industry

The Parliament recently conducted an inquiry into the Australian Franchise Industry. During this inquiry, they discussed how effective collaboration could be between franchisees in a franchisor. The highlights of the investigation included:

  • Collective bargaining by all franchisees in the negotiation stage
  • Mediation or a similar systematic collective dispute resolution process should be used.

The results of this inquiry are projected to bring about significant transformations within the franchising industry in the country. When there is better understanding and cooperation between franchisees, it can boost morale and help create positive working relationships between all the franchisees and their franchisor. This can benefit everyone in the equation and create a better working environment and seamless work processes within the network.

In Closing…

In many ways, working collectively with the other franchisees in the network will benefit you and find a suitable solution to your issue and will help all the franchisees as well.

If you want to know more about setting up a franchise, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form, and one of our experts will contact you as soon as we can.

Thanks for reading,
The Franchise Institute Team
1300 855 435

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