Franchising a business is a great way to grow your business and increase profits while taking on a limited amount of personal responsibility. However, one of the risks of franchising is that you are effectively handing over the hard-earned reputation of your business to new investors.
Thus, it is important to maintain some level of control over your franchisees to ensure they do not operate in a manner which may be damaging to the original business. Here are a few steps that you should take in order to ensure that your franchisees are kept under control.
Choose your franchisees carefully
In the initial stages of franchising a business, it can often be difficult to attract the investors you need in order to begin growing your brand. However, do not allow yourself to settle for any investor who makes an offer to purchase a franchise.
Take the time to assess each investor on their individual merits. Assess their business history and consider how easy it will be to work with them moving forward. A franchising relationship will be long and fruitful if proper forethought is given by both parties.
Establish a clear franchise agreement
Before entering in a franchising agreement, it’s important that you establish a clear, concise and legally accurate franchising agreement. This agreement will outline the rights and responsibilities of both the franchisor and the franchisee, and will prove invaluable in ensuring that both parties are on the same page.
You will want to include sections regarding the ownership of your intellectual property and how your company’s brand and image can be used. Above all, make sure that your franchising agreement is prepared by an experienced and professional solicitor.
Prepare an operations manual
On top of your franchising agreement, you will also want to ensure that you have prepared an operations manual which explains in depth how you would like the franchise to be run.
When prepared correctly, your franchisees can refer to this manual any time they have questions or concerns. Not only does having a well-prepared operations manual improve your ability to maintain control of franchisees, it can also enhance your relationship with the franchisees as well.
Offer training and support to your franchisees
Offering additional support to your franchisees, on top of the operations manual, is a great way to ensure they function in line with your business principles.
Take the time to educate your franchisees as to the best way to run their franchise, and continue offering ongoing support moving forward. Take care, however, not to be overbearing or controlling, as this may hinder their ability to operate.
Know how to resolve disputes
Should the aforementioned steps fail, and your franchisees begin acting in a way that makes you concerned about the wellbeing of your business, do not be afraid to take action.
It is prudent to become familiar with the Franchising Code of Conduct if you plan on franchising in Australia, so that you have a strong understanding of where you stand legally when it comes to franchising disputes.
The Office of the Franchising Mediation Adviser (OFMA) can assist you in settling franchising issues outside of court. While there is a fee involved in using a professional OFMA mediator, this can be a worthwhile expense if it can help preserve the integrity of your brand and the strength of your franchising relations.