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What do you do if franchisees within your franchise system are in conflict?

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Franchising is a popular and profitable way of expanding a business, but it also comes with some challenges. One of them is dealing with conflicts that may arise between franchisees within your franchise system. How do you handle these situations without damaging your brand reputation, your relationship with your franchisees, and your overall performance? Here are some tips to help you manage franchisee conflicts effectively.

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Dave Galvin QFP

Business Leader / Franchise Specialist / Operations Professional / Sales Leader
Fernando Casas Jiménez

Management | Strategy | Franchising | Marketing | Operations | Retail | Restaurants | B2C | Leadership | MBA
Hernán Alejandro R.

Cofundador, emprendedor.

1 Identify the source of conflict

The first step is to understand what is causing the friction between your franchisees. Is it a territorial dispute, a pricing issue, a quality problem, a communication breakdown, or something else? You need to gather as much information as possible from both sides of the conflict, and try to avoid taking sides or making assumptions. Listen to their concerns, acknowledge their feelings, and ask open-ended questions to clarify the facts.

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Fernando Casas Jiménez

Management | Strategy | Franchising | Marketing | Operations | Retail | Restaurants | B2C | Leadership | MBA
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Uno de los más comunes generadores de conflicto son las disputas de territorio, es muy importante que desde un comienzo su estrategia de asignación de territorios le permita evitar al máximo este tipo de eventos. En mi caso particular me ha funcionado muy bien seleccionar desarrolladores de zonas o regiones completas. Esto facilita la relación con los franquiciados, pues no tienen “competidores” de su misma marca en la ciudad, el apoyo era mucho más sencillo y las estrategias de promoción y precio se podían controlar, enfocándolos únicamente en la competencia.

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Juarez Le?o

Conselheiro de Administra??o, Board Member, Consultor em Varejo, Franchising, Estratégia, Governan?a e Desenvolvimento Comercial. CEO Le?o Group
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é essencial intervir prontamente para preservar a coes?o do grupo. Comece compreendendo a origem do desacordo, escutando atentamente todas as partes para captar suas vis?es e inquieta??es. Organize uma media??o para que os envolvidos possam dialogar de forma estruturada e produtiva. Ajude-os a encontrar um acordo que seja aceitável para todos, enfatizando a importancia da coopera??o e do respeito mútuo. Encoraje a comunica??o constante entre os franqueados, fomentando um ambiente colaborativo. Se necessário, introduza treinamentos focados na resolu??o de conflitos e no fortalecimento de rela??es interpessoais. Em situa??es mais sérias, considere o auxílio de um mediador especializado ou de um consultor jurídico.

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2 Follow your franchise agreement

Your franchise agreement is the legal document that defines the rights and obligations of both you and your franchisees. It should also include a dispute resolution clause that specifies how to handle any conflicts that may arise within your franchise system. You should follow the procedures outlined in your agreement, and remind your franchisees of their contractual obligations. If your agreement does not have a clear dispute resolution clause, you may want to consult a lawyer and update it.

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Dave Galvin QFP

Business Leader / Franchise Specialist / Operations Professional / Sales Leader
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I would suggest that the point at which you have to read your franchise agreement then the issue has gone too far. Yes, it's an important document and will have a dispute resolution clause however, there is no better resolution than talking it through with the conflicting parties. Then, facilitate a meeting either face-to-face or online to talk over the issues in person, there will be some common ground to be found and an amicable agreement reached. NB - it doesn't always work but it's better than going legal, as the only people to win in this instance are the lawyers (sorry lawyers)

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3 Facilitate a dialogue

Sometimes, the best way to resolve a conflict is to let the parties involved talk to each other and find a mutually acceptable solution. You can facilitate a dialogue between your franchisees by setting up a meeting, a conference call, or an online platform where they can communicate. Your role is to act as a mediator, not a judge. You should help them focus on the problem, not the personalities, and guide them towards finding common ground and shared interests.

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4 Provide support and guidance

As the franchisor, you have a responsibility to support and guide your franchisees, especially when they are facing difficulties or challenges. You should provide them with the necessary resources, tools, and training to help them run their businesses effectively and efficiently. You should also monitor their performance, give them feedback, and recognize their achievements. By doing so, you can foster a positive and collaborative culture within your franchise system, and prevent or reduce future conflicts.

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Hernán Alejandro R.

Cofundador, emprendedor.
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El Franquiciante debe jugar un papel clave en la resolución de conflictos y actuar de manera oportuna. Debe tener una posición imparcial pero a su vez debe tener la capacidad de identificar las fortalezas y oportunidades de cada actor para que se complementen de manera efectiva, siempre invitando a los escenarios de concertación y concenso. Lo que NUNCA debe hacer (y eso es muy común) es castigar y penalizar a un franquiciado con otro mencionándole al que es más vulnerable, lo bien que lo hace el que tiene buenos resultados.

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5 Seek external help

If you cannot resolve the conflict internally, or if the situation escalates to a legal dispute, you may need to seek external help. You can hire a professional mediator, arbitrator, or lawyer to assist you in finding a fair and impartial resolution. You can also contact your industry association, your local chamber of commerce, or other relevant organizations that may offer advice or assistance. However, you should always try to exhaust all internal options before resorting to external help, as it may be costly, time-consuming, and damaging to your reputation.

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Cristiana Carpini

CEO| ANBBA delegate | scale Italia org| founder WVREC I female forum member| Professor for the University course for Property Manager UPO
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The first thing to check is how the franchisee deviated and what were the causes and effects. did it cause irreparable damage to the franchisor? at this point refer to the contract and/or to a lawyer. Will it solve the problem ? partially. If the two are in a state of anger, mediation is difficult. In my experience normally a franchisee who does not follow the franchisor does so because the location doesn't allow them to do so . So they risk being damaged themselves. It can be prevented of course but when the damage is done, one person above the parties has to take the pros and cons of both sides. Normally if the consultant or mediator is good it can be resolved, with a small operational and contractual change.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Kirsha Campbell CPA,CMA

I help create sustainable cashflow using strategic financial systems, processes + insights??Franchise Cashflow, Growth + Profits ?? ?? Leadership + Strategy I Freelance Writer I Not for profits I Trainer + speaker??
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Conflict usually originates from deviation from the common goals or targets as well as misunderstand. First step is to have a fierce conversation to reiterate the fact that the franchises have a common goals such as profit, cashflow, social impact, environment regulations adhered to in addition to team development. Next it would be to explore each alternative to the root of the conflict, what possible compromises are available for execution. Then, if there is no compromise- analyze each decision in terms of pros and cons as well as financial impact and impact on franchise's goals, vision and strategy.

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What do you do if franchisees within your franchise system are in conflict?

1

2

3

4

5

6

1 Identify the source of conflict

2 Follow your franchise agreement

3 Facilitate a dialogue

4 Provide support and guidance

5 Seek external help

6 Here’s what else to consider

Franchising

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What do you do if franchisees within your franchise system are in conflict?

1

2

3

4

5

6

1 Identify the source of conflict

2 Follow your franchise agreement

3 Facilitate a dialogue

4 Provide support and guidance

5 Seek external help

6 Here’s what else to consider

Franchising

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