It is not uncommon for franchisees to feel overwhelmed by all the policies and procedures that need to be followed for the operation of a franchised business. Policies and procedures can cover everything from how your store should look, how to stock the shelves, what products to carry, how to greet a customer, and even how to clean the bathrooms. The rules, policies and procedures often feel very constricting and it is not uncommon to see franchisees trying to take short-cuts. For example, a franchisee with the license to operate a home cleaning service may find a cleaning product that is less expensive than the products prescribed for use by the franchisor. Cheaper is better, right? However, upon checking the operations manual and the franchise agreement, the franchisor is likely not permitted to use any new cleaning product unless it is first tested and approved by the franchisor. Seems unnecessarily complicated? What most franchisees may not realize is that these procedures are in place to protect the franchise system and to maintain brand consistency. The franchisor wants to control how your business operates because they want to make sure that each customer experience with your franchised business is consistent with the level of service and product quality they would encounter at any location. Franchisors are often strict about how and what their franchisees sell and how they operate because consistency is what customers tend to want and expect. Consumers tend to gravitate towards a business that they know and trust because of their past positive experiences. It is extremely important that they can rely on that brand to deliver that product or service like it did the last time. What first comes to mind when thinking about how to protect a brand? Competitors look to increase market share at the expense of other brands. Third parties may look to piggyback on the name, goodwill and brand of an existing business. While these are certainly threats to any business, perhaps the biggest potential threat to a franchise system is its own franchisees and their employees. A poorly operated franchise can do a huge amount of damage to a brand. That is why other franchisees often end up being the biggest champions of the franchisor cracking down on franchisees in the system that are not properly following the rules and procedures of the franchisor. Franchisees don’t necessarily band together against the franchisor and are often the “whistle blowers”. While this might initially seem to be a bit strange, it really isn’t, since in many ways franchisees have the most to lose if the brand is damaged by the actions of one or more poor operators. Franchisees that have been operating for awhile usually come to the realization that they want their franchisor to be strict and protect the brand and reputation of the franchise system. But franchisees also want and need the franchisor to be fair. Strict for the sake of being strict is not a good thing. Franchisors need to be able to listen, hear new ideas, consider new ways of doing things. For long term success, franchisors need to be able to innovate, change with the times, and foster a willingness to consider new ideas. Firm, but fair.
|Peter Snell is a partner in Gowlings’ Vancouver office. His practice is primarily focused on domestic and international franchising, licensing, product distribution, business law and intellectual property/trademark law. Peter also assists businesses with corporate reorganisations, corporate governance issues, mergers and acquisitions, joint ventures and negotiating and drafting commercial agreements. Peter has been listed as a leading lawyer in several legal industry publications, including The International Who’s Who of Business Lawyers, Who’s Who Legal: Canada, Canadian Legal Lexpert Directory, Best Lawyers in Canada and Expert Guides’ World’s Leading Franchise Practitioners. Peter has written for numerous publications including the Franchise and Distribution Journal, Franchise Entrepreneur magazine, FranchiseCanada magazine and Canadian Business Franchise magazine. Peter is also the co-author of International Franchise Sales Laws and co-editor of Fundamentals of Franchising–Canada, both of which were published by the American Bar Association. Peter is a member of the Canadian Bar Association business law subsection, the American Bar Association business law section, the American Bar Association forum on franchising, the International Franchise Association, the Canadian Franchise Association, and the International Committee of the Forum on Franchising. His community involvement includes being President and Chairman of Ronald McDonald House British Columbia, a Director of the Canadian Franchise Association, volunteer with St John Ambulance’s therapy dog programme, Scouts Canada, Future of Howe Sound Society, and the Gambier Island Conservancy.|