Franchise conflict: why you should expect it

Conflict is a very common companion of the franchise system. It is normal and happens naturally. Both franchisees and franchisors should expect it and be prepared for it.

Could conflict be predicted and prevented? It is inevitable but could be predictable. There are situations that are followed by conflict more often than others and being aware of them might lead to reduced conflict.   

In another article we pointed you a few things franchisors should consider before selecting a franchisee. If you followed our advice you should have eliminated a major prerequisite to conflict arousal – a wrong franchisee. If a franchisor partners with someone who is not quite suitable for her franchise concept, the partnership could cause damage to both sides.

The most common causes of conflict are considered to be the lack of support from the franchisor and the difficulty to comply with the franchise system.

At one point franchisees might not want to follow the agreement or it might become an obstacle rather than support. This is what happened to Burger King. A franchisee sued the company for not letting him close earlier than it was specified in the agreement. The problem was that by staying open late, the franchisee’s business suffered. Burger King was profiting from the extra hours but the franchisee was in fact at a loss.

Cases like this one show that companies should be more open and considerate. In case of conflict it helps if both parties could try walking in the other’s shoes.  Here is a piece of advice – examine the case and act accordingly without causing damage to either side. Being flexible is an asset.  

The franchise agreement should be comprehensive and comprehensible. It could list in detail the solutions for possible scenarios that could happen. The roles of the franchisee and the franchisor should be clarified and documented. It is better to prevent conflict before it happens.

Even if everything is crystal clear in the franchise agreement, conflict might still be present. Corporate relationships could be as hard as any kind of relationship. The franchise business is not all about money; it’s about people. Both business relationships and personal relationships are based on mutual trust and respect. Well, business relationships are also about profits and reputation /in other words, about business/, but money shouldn’t be the key factor in a franchisee-franchisor relationship.  As they say, it’s nice to be important, but it’s more important to be nice.  

To avoid any unnecessary confrontation, we need to be transparent. Both sides should try to be as little ambiguous as possible. Franchisees and franchisors alike get into a business relationship for the long run and clarity is the best way to avoid conflict.  

For instance, franchisees should have total access to information that concerns them. If they think something stay hidden, they might feel threatened even if there is no reason for that. Franchisors, on the other hand, should express freely what they want so franchisees know what is expected of them. Try to be consistent. If there is a discrepancy between what you say and what you do, it might not be clear for others what you mean.

This brings us to communication. Poor communication could be an indicator of upcoming confrontation. In case a problem appears and one of the parties is passively aggressive, they might not communicate freely their concerns Tension between the two will build continuously until it causes a nervous explosion.

Keep in mind that people with different personalities communicate in different ways. While some feel comfortable with casual manners and conversations, others prefer to keep their business relationships completely professional. Make sure you know what type you are dealing with. Also keep in mind any cultural differences. If the franchisee and the franchisor are from different countries, it’s easy to make unintentional mistakes. Jokes and smileys are not suitable for most business correspondence.

If the franchisee and the franchisor are related or are close friends, at some point it might become a problem for them to do business together. Since the borderline between personal and professional relations could be blurred, it is usually a mistake to mix them.

Don’t necessarily think of conflicts as of something bad. They might turn out to be constructive. If there is a problem in the franchise system which you don’t know about, a franchisee’s natural reaction to it might be to confront the franchisor. Once you realize there is a crack in the system you can fix it and make it better and stronger.