In the “topsy turvy” world of franchise contracts, agreements etc, (which many franchisees have little understanding of) it’s painfully obvious that many of these documents ask the franchisee to jump through hoops, but how about working things the other way?

Over time the franchisor will build a “watertight contract” and expect the franchisee to know a lot of things about business and how to get results, but if the result in the business for the franchisee is less than spectacular, where is the “Duty Of Care” by the franchisor in all of this. It’s far too easy for them to throw their hands in the air and say things like “You knew what you were getting into” or “You had the disclosure documents…” “You had the info” and a whole list of other statements/excuses.

When a franchisee is experiencing challenges (not enough customers, not enough turnover, not enough full stop!) then the franchisor says “Well ask us for help” So some do, they drop their pride and call for help. Often the answers given relate to “Put more into your local area marketing” Hello! if I am down the “tubes” and have less cash, how can I put in to make things “better”.

I figure the franchisor should establish a “Duty Of Care” policy and or procedure for the good of the franchise, and the good of the franchise industry. In fact the duty of care policy should state. (For example) That a franchisee must keep a reserve float of emergency cash (in a bank account) that ensures they are able to pull out some extra to make things go “voom”, and over time add to that so it grows to cope with inflation etc.

I also figure they should be held accountable for the marketing… If they put an advert in a publication, was it designed by a marketing expert or the copy room at the local paper…? Then making sure the results are clearly and effectively measured so you can know how well the marketing $$ are spent and you are definitely getting a respectable return on the investment.

If the franchisor is working at building a robust organisation that can provide an effective system for the franchisee, then they need to make sure the people investing in the business are developing their business and financial accumen as well. Okay some have an annual conference, the people go and have a great time, but how many put the information into action? Is their “area supervisor” following up on that? Are their business plans reflecting that development? In many cases no.

Watch out for more “Duty of Care” observations, as they arise and franchisees become savvy to the idea and franchisors get caught out.

So far it’s a one way street with the contracts, but a savvy organisation will ensure they provide avenues to ensure a franchisees ongoing success and what a selling point that will be.

Steve Gray -

Steve is a business educator – Trainer – Speaker (Steve You can get his Leadership E Book from
The info provided in these articles is for educational purposes only and is intended as a starting point for you to build your business from, not as specific advice.

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