How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
Any time there is a partnership in a business, it can bring friction, and this includes franchises. When you are a franchisee, you are not on your own and free to follow your own plan. While having this support and guidance from the franchisor in place brings many benefits, there is also a potential for friction in your relationship with your franchisor.
Although franchisee-franchisor friction can stem from many areas, there are two areas where this is most commonly seen: initial and ongoing fees.
.
Initial fee tension
When you initially sign on with your Canadian franchise, you will pay an initial fee. In theory, this fee gives you access to the brand, licensing, relevant trademark rights and more, including support and guidance for the opening of your business.
Problems can occur in the franchisor-franchisee relationship when the franchisor doesn't follow through on what was promised in exchange for the franchise fee. For example, a franchisee may receive initial training but find they cannot get a hold of anyone at the corporate level for help when they have an issue or question. A lone franchisee may find themselves struggling if they don't have regional support from the franchisor, or a franchisee could find themselves dealing with a territory that isn't very defended by the franchisor.
Regardless of the cause, tension early on due to the franchise fee can cause significant problems in the franchisor-franchisee relationship. A franchisee should always voice their concerns right away when their franchisor is falling short of expectations. Many times, being persistent and working more with the franchisor will solve this problem.
.
Ongoing fee tension
As with franchise expenses, ongoing fees will vary by brand and often include things such as tech fees, royalties and marketing funds. Naturally, for the franchisee, each dollar that goes to the brand is one less dollar in their bank account. For these fees, franchisees want to see the true value. It can be very frustrating when it appears that a franchisor is using the funds collected from franchisees in a frivolous manner. Any concerns a franchisee has about how funds are being spent should be voiced. Franchisees can also work together to help make changes when a franchisor's use of funds does not appear to be benefiting those in the system.
While disagreements between a franchisor and a franchisee do happen, communicating with the franchisor and having realistic expectations can go a long way toward keeping this relationship strong. If you are struggling to communicate with a franchisor early on in your franchise research phase, it's time to consider another brand.
