6 Steps To Managing a Franchisee’s Non-Performance

By treating non-performance as an opportunity for growth rather than just a problem, franchisors can build stronger, more resilient franchise networks.

Non-performance is not always a franchisee-only issue—it can also highlight gaps in the franchisor’s support structure. Assess whether the onboarding, training, and ongoing support programs need improvement to prevent similar issues in the future.

Franchising is built on the premise of consistency, brand reputation, and mutual success. However, within any franchise network, there will be franchisees who struggle to meet expectations. Managing a non-performing franchisee is a delicate yet essential task that, when handled correctly, can turn an underperforming unit into a thriving success story. Here’s how franchisors can proactively address non-performance and support franchisees to get back on track.

1. Identify the Root Cause

Before taking corrective action, it’s crucial to diagnose the real issue behind the franchisee’s non-performance. Some common causes include:

• Lack of training?– Does the franchisee fully understand operational procedures and brand standards?
• Financial mismanagement?– Are cash flow issues preventing investment in marketing, staffing, or stock?
• Poor location performance?– Is the market saturated, or is there a mismatch between the brand and customer expectations in the area?
• Operational inefficiencies?– Are internal processes causing bottlenecks that impact service delivery?
• Lack of engagement?– Is the franchisee motivated and committed to success?

2. Open a Transparent Line of Communication

Effective communication is key. Instead of waiting until the situation worsens, initiate a conversation with the franchisee early. Approach discussions with a supportive rather than punitive mindset. Encourage them to share their challenges openly and assure them that the goal is to find a solution together.

3. Provide Targeted Support and Training

Once the issue has been identified, tailor support to the franchisee’s specific needs. This might include:

• Refresher training?– Revisiting operational best practices to improve efficiency and consistency.
• Mentorship programs?– Pairing the struggling franchisee with a high-performing peer for guidance.
• Marketing assistance?– Helping with local marketing strategies to increase foot traffic and brand awareness.
• Financial advisory support?– Offering guidance on budgeting, stock control, and profitability.

4. Set Clear Performance Goals and Timelines

Improvement should be structured and measurable. Work with the franchisee to develop a performance improvement plan (PIP) with:

• Specific targets?(e.g., increasing monthly sales by 10%)
• Defined timelines?(e.g., achieving improvements within 90 days)
• Regular check-ins?(e.g., bi-weekly progress reviews)

5. Foster a Culture of Accountability

Accountability is essential in a franchise system. Ensure franchisees understand that while they have autonomy, they must adhere to brand standards and business fundamentals. Implement:

• Regular audits and performance reviews
• Peer review sessions?to encourage franchisee collaboration
• Recognition and incentives?to reward improvements

6. Know When to Make Tough Decisions

If a franchisee consistently fails to meet their obligations despite support, franchisors may need to consider tougher measures. These could include renegotiating terms, selling the franchise unit to a more capable operator, or, as a last resort, termination. A clear legal framework in the franchise agreement should guide such decisions.

Final Thoughts

A struggling franchisee doesn’t have to remain underperforming. With a proactive approach, strong support systems, and open communication, franchisors can help franchisees regain momentum and contribute positively to the brand’s success.

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