Friction in the franchisee-franchisor relationship: what you need to know

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Anytime there is a partnership in a business, it can lead to friction, and that includes franchises. When you are a franchisee, you are not alone and free to follow your own plan. While having this support and guidance from the franchisor in place brings many benefits, there is also the potential for friction in your relationship with your franchisor.

Although friction between franchisees and franchisors can arise from many areas, there are two areas where this is most often observed: upfront costs and ongoing costs.

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Initial charge pressure

When you first sign up with your Canadian franchise, you’ll pay an upfront fee. In theory, these fees give you access to the relevant trademark, licenses, trademark rights and more, including assistance and advice in opening your business.

Problems can arise in the franchisor-franchisee relationship when the franchisor does not follow through on what has been promised in return for the franchise fee. For example, a franchisee may receive initial training but find that they cannot reach anyone at the company level for help when they have a problem or question. An isolated franchisee can find himself in difficulty if he does not have the regional support of the franchisor, or a franchisee could find himself facing a territory which is not well defended by the franchisor.

Whatever the cause, early stress due to franchise fees can cause significant problems in the franchisor-franchisee relationship. A franchisee should always voice his concerns immediately when his franchisor does not meet expectations. Many times being persistent and working more with the franchisor will solve this problem.

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Continuous cost pressure

As with franchise expenses, the ongoing charges vary by brand and often include things like technical fees, royalties, and marketing funds. Of course, for the franchisee, every dollar that goes to the brand is a dollar less in their bank account. For these fees, franchisees want to see real value. It can be very frustrating when it appears that a franchisor is using funds raised from franchisees in a frivolous manner. Any concerns from a franchisee regarding how funds are spent should be expressed. Franchisees can also work together to help make changes when a franchisor’s use of funds does not appear to benefit people in the system.

Although disagreements between a franchisor and a franchisee do occur, communicating with the franchisor and having realistic expectations can go a long way in keeping this relationship strong. If you’re having trouble communicating with a franchisor early in your franchise research phase, it’s time to consider another brand.


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