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Log In / Register | Jul 23, 2018

RE. treating all franchisees equal by the franchisor

I'm interested to discuss more about this topic.

From what I know from my limited studies so far there's ways in which franchisees are treated equally and ways in which they're treated different depending on their needs and individual situations.

For example when it comes to financial obligations, my understanding is that both in respect to royalty fees and marketing fees, franchisees should be treated equally in terms of being charged the same percentage rates for each of these fees. That being said, naturally, the bigger the operation, the more they'll obviously contribute as these percentages take an increased amount from their profits, but in the greater sense as profits increase, and fixed costs are set, high performing franchisees should still be able to generate higher levels of profit even after paying larger amounts in dollar figures to the franchisors.

In terms of non-financial arrangements between franchisors and franchisees, some of this seems to depend on the relationship and communication between franchisors and franchisees. As is often the case, the squeaky wheel does get the grease in that franchisees that call on franchisors for more help will often receive more than their average share of time and assistance from franchisors. This can go both the way of well performing franchisees that then seek more support as well as under-performing franchisees that want assistance to boost their bottom lines.

I think that most franchisors will put on area managers whose role is to support franchisees on the basis of managers across a particular country looking after roughly the same number of franchisees to try and allow for a similar amount of cover of management's support in terms of time and effort devoted to each franchisee. And I would assume that franchise operations management would try and suggest that these area managers spend a roughly equal amount of time with each franchisee wherever possible.

Again, although I am not an expert on the subject, I would have to think that there may be some instances where if a conflict arises between a particular franchisee, and the relationship between this franchisee and the franchisor is adversely impacted, how they are treated may change for the worse and have some impact on their business and financial viability. If this were the case, it would be up to the franchisee to review the terms of their agreement with the franchisor to see if any breaches have been made or any obligations are not met. Additionally they would need to prove that they are not receiving the same treatment of other franchisees to mount a case for recourse.

It's an interesting discussion and I'd like to hear more views on this and what the nature of such claims area.

Thank you.



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