When Franchisors Break Promises
Can a franchisor renege on its promises? How to make sure you get what you paid for.
Q: I purchased a franchise nine months ago. I was the sixth franchisee to join the system. At the time I signed my contract, I was told the operations manuals were not quite finished, but they would be done by the time I was ready to open my business. I've been open for almost six months and still have not received an operations manual. In talking with the other franchisees, it seems like the company is focused on selling more franchises and too busy to finish the operations manuals, visit our locations or help us train our employees. These are all things they promised to do for us. Is there anything we can do to make them live up to their promises?
A: It is unfortunate when franchisors get caught up in selling franchises and forget that their long-term success depends on having successful franchisees.
You did not mention whether the support that the franchisor promised was specified in the contract or not, so let's discuss both instances.
The relationship between franchisor and franchisee is contractual in nature. The contract spells out the minimum requirements for each side. Since the franchisor and the franchisor's attorney wrote the contract, you should be able to rely on their intention to provide the support they describe in the contract. Both the franchisor and the franchisee have an obligation to live up to the terms of the contract they sign. And, each side has a right to expect the other side to do likewise.
Franchisors who recognize the value of building a strong relationship with their franchisees will do their best to honor their commitments even if they are not legally required to do so. In discussing these issues with your franchisor, it's important to remember the distinction between what support is required by the contract and what the franchisor has offered over and above what they are obligated to provide.
To give them the benefit of the doubt, your franchisor may have been swept away by the excitement of signing franchise agreements and let time get away from them on some other issues. There is also a chance that if the promises were made to you by a franchise salesperson, the franchisor may not even be aware of what was promised.
We'd suggest that your first step in resolving the problem is to sit down with your franchisor and let them know what support they are remiss in providing to you and how it is affecting your ability to execute the concept to system standards. Be specific in identifying what support you believe you are entitled to, what they have not provided and what impact the lack of support is having on your business. If your claims are based on statements made by the franchisor's staff, be prepared to disclose who made the statement and when it was made.
The goal of your meeting should be two-fold: to get the franchisor to agree that the missing support is important to the operation of your business, and to work out a time-action plan in which they provide the support you require. Be sure to prioritize what support you believe is needed, so the most important items are completed first.
Strong brands are built when franchisors and franchisees work together for their mutual success. Open and straightforward communication is the key to establishing a solid working relationship. Let your franchisor know how you feel.
Michael H. Seid is managing director of Michael H. Seid & Associates, a West Hartford, Connecticut- and Troy, Michigan-based management consulting firm specializing in the franchise industry. Seid co-wrote Franchising for Dummies (IDG Books) with Dave Thomas, the late founder of Wendy's, and serves on the International Franchise Association's Board of Directors.
Kay Marie Ainsley, managing director of Michael H. Seid & Associates, consults with companies on the appropriateness of franchising; assists franchisors with systems, manuals and training programs; and is a frequent speaker and author of numerous articles on franchising.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.