Zee & Zor Disputes

The relationship between franchisee and franchisor is not a marriage, it is not a partnership, it is not a friendship.  It is quite simply a legal business relationship.  When it comes to franchising relationships we hear a lot of 'Success Stories' and unfortunately we also hear far too many 'Horror Stories'.  The difference between the two, can often be traced back to how disputes were handled during the relationship.  From the perspective of the franchisee the following should be helpful in building a long, strong, profitable relationship with your franchisor.   

How To Handle Disputes With Your Franchisor*(PART ONE)

It is a relationship that exists between a franchisor and a franchisee. It is a business relationship, a legal relationship, and at least to some extent, a personal relationship. Business and business law is all about relationships.  It can be helpful to keep a relationship healthy if it is remembered that it is a relationship.  The same things that help a personal relationship to succeed will also help a business and legal relationship to succeed.  These things include: never stop talking to each other; listen carefully to each other; understand exactly how money is to be handled; accept the fact that sometimes you will be wrong and they will be right; know what transgressions to forgive and which ones to take a stand on; act in good faith; be honest and loyal; and, remember that you are in this together.  However, not every relationship will be successful.  Even in those relationships that do last there can still be problems.  It is necessary, therefore, to have an understanding of how to handle the disputes that develop.

Here are some guidelines:

  • Understand the difference between franchise issues and business issues. It is the franchisee’s responsibility to handle business problems. It is necessary, though, to deal with business problems in a way that does not lead to franchise problems. True franchise issue deal directly with matters contained in the franchise agreement, as well as those matters that have an effect on requirements of the franchise agreement. Some problems will overlap both business and franchise issues, but each problem tends to be primarily one or the other. Focus on the primary issue, but remain cognizant of how other issues can be affected.
  • Remember the two basic obligations of every franchisee, to operate the franchise as described in the franchise agreement (which includes manuals and other documents made a part of the agreement), and, to pay all fees and expenses to the franchisor in the correct amount and on time.
  • The franchisor is not the enemy nor the bad guy nor the opposition. The franchisor is nothing more nor less than the other party to your franchise agreement. It is not a social relationship, it is a business and a legal relationship. No one has to like anyone, it is only necessary to work together (although it is often easy to like each other).
  • Refer to the franchise agreement as the primary source of answers to questions, instructions on how to handle things, and in general, what to do.
  • Do not hesitate to contact the franchisor for answers to questions, explanations of things that are not clear, and for guidance as needed.
  • Respond to inquiries from the franchisor. Provide the information requested in a timely manner and in the format requested.
  • Keep good records. A record is good when:
    • It is made in the same time frame as the events and issues covered by the record;
    • The information in the record has enough detail that someone else can make sense of the record;
    • The record is not edited to create incomplete or misrepresented facts;
    • The record is kept in the required format and on the required forms, if there are such requirements;
    • Records are maintained in a way that preserves the information in the record;
    • They are retained for at least any minimum required time period;
    • Confidentiality is properly protected as it relates to the information in the record;
    • They are organized by some method that allows for ready access of any needed information; and,
    • They can easily be used for their intended purposes.
  • Send confirmation letters or email to confirm decisions with the franchisor (or others) in order to make sure each party has properly understood the other. Some disputes arise because of a misunderstanding of what was decided for handling something.
  • Be careful when delegating decision making authority. The decisions and actions of a person you authorize to act on your behalf are legally your decisions and actions. Even if that person did not handle the situation properly or to your satisfaction, you are still legally responsible for all the consequences, whether good or bad.
  • Employment problems that are not handled well often become franchise problems. Employees can make or break a business, but they will never care as much about the business as do the owners. It is not an employee’s responsibility to do anything more than their job, although many employees will do more. Do not lose focus of what any given employee is supposed to do for the business. Do not expect more than you have hired and are paying the employee to do. The single best employment law advice is to treat each employee with basic courtesy and respect. Remain professional when dealing with employees. Be consistent in how employment issues are decided (do not play favorites). As much as possible, be picky when hiring employees. When an employee needs to be fired, fire them. Employees do pay attention to how the employer does things. There are no secrets and plenty of rumors in the workplace. It is crucial to become and remain a good employer.

Look for more guidelines next week.  Until then... 

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

* Taken from THE LAW & Your Franchise, a book specifically written for FranSynergy and the subscribers to The FranSynergy Franchise Service Package.  by Kevin B. Johnson.

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