Franchise agreements give franchisors incredible power. Still, how franchise agreement terms are enforced, or the way in which they are utlized to control franchisee behavior will vary widely from franchisor to franchisor.

All franchisors have a political side to the organization. The larger the franchisor, the larger the political machine. Each of the franchisor's political appointees (employees) will have the ability to use discretion in the enforcement of the franchise agreement.

How this discretion is used, and to what purpose makes a big difference in the life of a franchisee.

As an example, franchise agreements generally state that the franchisee will adhere to the standards set by the franchisor, and that those standards may change from time to time. Usually, the franchisor publishes a very specific, detailed operating manual that sets forth the procedures, rules, and regulations governing your operations. When you sign the franchise agreement, you agree to abide by this massive document that you have probably not even seen.

Enforcement of these standards is normally accomplished by some sort of an area franchise representative, who is charged with making sure you follow the rules to his satisfaction. This fellow or lady will visit your stores so often to grade your performance.

These "grades" can be used by the franchisor to determine whether or not you have the right to expand your franchise, and can even be used to default your agreement.

In my experience as a franchisee, I have seen more than a few cases where the political power vested in these employees is used to manipulate the franchise relationship, or "coerce" the franchisee into doing what the franchisor wanted it to do. I have also seen many cases of "selective" enforcement of standards where the franchisor enforces standards on one franchisee but ignores them in other franchisees.

This is just one of the many things that makes owning a franchise so different from the non-franchised business. Trying to explain this to a new or potential franchisee is not easy. But it is important to know.

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Recommended reading:

• Franchise Compliance: The Franchisee's Side of the Ledger by Richard Solomon