Dealing With Change and Conflict in Franchise Business

The relationships that make up a franchise system are inherently full of conflict. Franchisees may feel that they’re in competition with one another or that the franchisor isn’t earning its franchise fee or royalty payments.

Franchisees should speak up if they feel that something is going wrong. They can speak to the field representative in the area to see if they can resolve the matter without much fuss. Incidentally, this is yet another reason why franchisees should get to know the staff of their franchisor when things become difficult, these personal relationships can help a franchisee find resolution to challenges.

Many franchisors have an ombudsman who addresses complaints from franchisees. The IFA has also developed an ombudsman position for conflict resolution. The ombudsman is a neutral party whose job is to help find solutions for problems to the satisfaction of all parties. Franchisees can look to this as an extra arena in which their voices can be heard.

In addition, although it hopefully will not get to this level, the UFOC spells out how conflicts can be sorted out at a more formal level either through mediation or visa the courts in a specific state.

Many times, conflict is generated when the franchise goes through a big change, and franchisees are expected to go along for the ride. For example, a franchise may decide to upgrade its entire software network, and the franchisees will be forced to undergo rigorous training and be inconvenienced during installation. They may even have to bear some or all of the cost. This software will, incidentally, allow the franchisor to have access to more customer data, which the franchisees aren’t so crazy about.

However, in this case, franchisees should understand that a change such as this one will benefit them in the long term. Despite the short-term inconvenience or expense, this software will give them a competitive edge over their rivals. In addition, the data will help the franchisor develop more targeted strategies to reach the right customers. It isn’t excessive prying or snooping - it’s being involved with technology that can grow the business for all.

Whatever the change is, franchisors should communicate their strategy and rationale clearly, and franchisees should listen - as well as find an appropriate way to voice their concerns. Again, this goes back to trust. Franchisors must trust that franchisees are operating their units according to the system, and franchisees must trust that the franchisor is making decisions that will benefit the entire system and create more franchise opportunities.

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