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Last week's blog in this space explored some of the
advantages of franchising a business. Lest would-be
franchisors think that it's all upside, and as simple as giving
someone permission to use your brand's name while you collect
the royalty cheques, it is worth knowing what some of the many
challenges to franchising can be.
Primarily, it's all about control – or rather, the
loss thereof. In licensing another individual the right to
operate a business under its brand, a franchisor is entrusting that
individual with maintaining the same quality of products and
service which the brand was built on. That's not always a
seamless transition, as some franchisees may not share the vision
the franchisor does, or may not be able to execute that vision with
the same consistency that is so vital to successful
franchising.
Franchisors need to be vigilant in their monitoring of
franchisees within the system to try and enforce that vision and
consistency which was always easier to oversee when the franchisor
owned a small handful of businesses himself or herself. This
becomes a larger obstacle as the franchise grows into territories
beyond those where a franchisor can physically inspect the
operations every single day.
Further, the franchise relationship is not always necessarily
harmonious. Disputes are common and there is no blueprint on
how to successfully manage them. In some cases, there is a
breakdown in communication between franchisor and franchisee, the
franchisor is wholly unsupportive or the franchisee has refused or
is unable to meet its obligations under a franchise agreement.
At that point, difficult decisions like a sale or termination of
the franchisee are on the table, both of which distract a
franchisor from the day-to-day operations of the system.
Franchising is a proven method for successful brand expansion,
but newcomers should be aware of the challenges they are likely to
encounter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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