From the Franchising Law experts – The number one issue Franchisors have

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There are a number of stories from our Clients, however, the story that is most recurring is “we recruited a difficult franchisee”. The biggest mistake a Franchisor can make, is selling a Franchised Business to the wrong person.

We understand how it happens though. It can be hard for a business owner that has recently turned into a Franchise System to turn away a delicious cheque looking back at them from a boardroom table. The Franchisor generally knows that this person is ‘not quite the right fit’, but “hey” they tell themselves, “with a bit of training and some support, they could work, right?” trying desperately to convince themself. The lack of business experience, the lack of industry experience and the lack of interpersonal skills are things that can be ignored, because what this potential Franchisee does not lack is money and “that cheque that would be so useful for marketing right now!” 

Often times, for a Franchisee, it is their first time owning a business. That’s a big responsibility on the shoulders of a Franchisor. A Franchisor becomes responsible for someone who has ‘worked for the man’ their entire life, received their pay cheque each month for showing up to work and told by a boss what to do. This individual buys a Franchise, and with no sense of ‘hustle’ or ambition, with little customer service skills or understanding of business principles, the Franchisee quickly realises, ‘hey, owning a business is really hard work’. Unfortunately for Franchisors – and unlike other business owners, who only have themselves to blame if things are not working out – a Franchisee can point the finger at a Franchisor if their business is not turning over the profits they expected. The Franchisee is not interested in learning scripts to deal with clients, they do not want to learn processes to follow up leads, that stuff is boring. It is far easier for the Franchisee to email and text the Franchisor blaming them for how horrible the system is and how terrible their franchised business is doing. The Franchisor bends over backwards to assist the Franchisee (in vein) – the Franchisor suggests that the Franchisee strictly following the Franchise Agreement and the Manual. …But the Franchisee is not listening, not following the systems, the Franchisee puts its energy into complaining, and it can drive a Franchisor mad.

IP Partnership is a national commercial law firm who act for Franchisors located all over Australia and are the experts in franchise law. If you are looking to turn your business into a Franchise system, we invite you to contact the office to arrange for a no obligation and no cost meeting with some of our solicitors. If you are buying into a franchise system, we are also here to assist; to review the documents and ensure the Franchise Agreement is a balanced contract. The Franchising Code of Conduct is a robust piece of legislation and it is important to have franchising lawyers who understand this unique area of law. Whether you are a Franchisor or Franchisee, as a commercial law firm which places a high value on long term client relationships, you can think of IP Partnership as your business’ very own inhouse counsel.

Read More: From the Franchising Law experts – The number one issue Franchisors have 

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