How can franchisors balance profitability and franchisee support during conflict?

Totally agree with Stan and David. I would add that Core Value alignment is the first major indicator of bringing in the right franchisee. Too often, the franchisor might not have their core values set and ingrained to measure the franchisee prospect's match. If the core values are matching, that will foster a culture that avoids a lot of conflict. If there is conflict, it can be resolved quicker and back to growing the business!

O conflito existe em qualquer área de atuação e não deve ser associado ao Franchising . Pelo contrário, franqueadores bem sucedidos só conseguem escalar seus negócios para centenas de unidades e mante-las se atuarem no sentido de ter uma rede integrada e com uma cultura forte. Acredito que o franchising seja o modelo de gestão mais eficiente possível, pois é calcado na colaboração genuína entre dois grupos de empresários e seus times – franqueadores e franqueados. Agora, o verdadeiro valor dessa relação é maximizado quando, além do modelo de negócio e processos bem estabelecidos, há entre os participantes do sistema a compaixão – resumida pelo interesse genuíno de ajudar o próximo, a escuta ativa e a capacidade de sentir pelo outro.

Too often, conflict arises because not enough consideration was given to the proper management of expectations, leading up to awarding the franchise. It all starts with bringing the right people onboard as franchisees, in the right places, at the right times, for the right reasons. Setting proper expectations of the zor and zee from the very start helps mitigate disappointment later. The economy and markets will always shift and change, but when the proper level of care goes into the decision making process during selection, trusting relationships are born and proper communication can punch holes through almost anything that becomes the problem of the day.

É fundamental a clareza e entendimento dos papéis da franqueadora e do franqueado. Um deles é o critério de escolha do candidato pela franqueadora e do empreendedor pela franquia. Não flexibilizar aspectos que são relevantes é uma das proteções que ambos devem tomar. Nesta etapa a construção do alinhamento de expectativas e objetivos criarão os alicerces necessários para vencer os desafios que ambos, franqueadora e franqueado, enfrentarão.

Absolutely, you've nailed some of the key reasons conflict can crop up in franchising. Transparency and aligned expectations are vital to minimize disputes. Whether it's about financial obligations, brand representation, or territorial rights, conflicts often arise from miscommunications or unmet expectations. Regular check-ins and open dialogues can prevent small issues from snowballing into major problems. Keep in mind that both franchisors and franchisees are working towards the same ultimate goal: the brand's success. Keeping that in focus can often help resolve conflicts quicker.

To be more to the point of the question of “how to maintain profitability and support during conflict” I would recommend separating the issues during the conflict so that the support functions can operate in a normal everyday fashion while the conflict issues are addressed in a separate time and space while maintaining mutual respect.

Pela minha experiência, muitas franqueadoras se preocupam mais em quantificar a prestação de serviços ao franqueado, do que qualificar o suporte de fato necessário. Além da clusterização da rede, para mapear nível de maturidade dos franqueados, momento operacional etc., é importante preparar a equipe da franqueadora para dar um suporte mais estratégico e qualificado. Por exemplo a consultoria, que há muito tempo é denominada como "de campo", porém o maior valor agregado que um consultor pode prestar a um franqueado é o estratégico e educacional, e para isso, o campo não é sempre necessário. Com isso, otimiza-se tempo, aumenta a produtividade e, por fim, ataca o problema raiz de forma mais assertiva.

Conflict disrupts the business ecosystem, affecting everything from the bottom line to franchisee-franchisor relationships. While legal disputes eat away at profits and time, the real casualty can be the trust and collaborative spirit essential for long-term success. Deteriorating trust makes franchisees less willing to adopt new systems or invest in brand promotions. It can also create a 'domino effect' where negative sentiments spread across the franchise network, causing systemic issues that are hard to contain. It's crucial to address conflict head-on and as quickly as possible to minimize these kinds of damages.

Quando há conflitos, a atenção pode se desviar dos clientes para as disputas internas. Isso pode piorar a qualidade do serviço, afetando a satisfação e retenção dos clientes. Franqueados desmotivados por conflitos podem não se dedicar totalmente ao negócio, resultando em menos esforço, inovação e dedicação, o que impacta diretamente nos lucros da unidade. Conflitos também podem prejudicar o suporte oferecido pelo franqueador. A falta de cooperação e comunicação significa menos recursos para resolver problemas, fornecer treinamento adequado ou ajudar em situações difíceis.

When conflict disputes arise, the focus shifts from business operations to resolving issues, leading to inefficiencies and diverted resources. Protracted conflicts can erode trust, hindering open communication and collaboration between the franchisor and franchisees. This strained relationship may diminish franchisee satisfaction, affecting their motivation and commitment to the brand. Reduced support from franchisors can impede the implementation of systems and innovations, hindering overall operational efficiency. Ultimately, conflicts can undermine the profitability of both franchisor and franchisees by disrupting the synergy and mutual support essential for a successful franchise system.

Absolutely, a win-win mindset is crucial. Transparency and clear lines of communication are key in any conflict situation. When both parties understand the concerns and constraints of the other, it's easier to find a solution that benefits everyone. Training and resources should be continuously updated to help franchisees adapt to any changes. Being receptive to franchisee input can yield valuable insights for problem-solving and even future strategy. Quick and fair resolution methods, such as mediation, can often prevent issues from escalating and affecting the broader franchise network. Balancing both profitability and franchisee support might be challenging, but it's necessary for long-term success.

The right focus on franchise support and success always leads to franchisor success and it will avoid a lot of conflict developing. Conflict resolution becomes easier and more proactive.

In my personal experience as a franchise consultant, I've learned that franchisees who are able to effectively resolve conflict with their franchisors are more likely to be successful. As simple as taking responsibility for your actions and willing to apologize if you make a mistake goes a long way. Also, collaborative problem-solving has always work wonders. You know working together with the franchisor to identify the root cause of the conflict, brainstorm solutions, and agree on a plan to move forward really helps in making the business successful.

A very powerful technique that was taught to me years ago by a mediator, is for each party to the conflict to assume the role of the other and give thought to situation, through the eyes of the other. That paradigm shift would tend to help soften some of the hard spots and enable both parties to perhaps narrow the scope of their demands or issues.

Entendo que a formação de um Comitê de Franqueados é uma maneira democrática e muito útil para aproximar a rede de franqueados e a franqueadora, de forma organizada e formal.

You gotta make things happen right first time and every time with tracking results and taking the extra miles to ensure consistency of the quality of products n services

Absolutely. I think a lot of this falls on the sales team as well: a franchise is a massive commitment and, while getting one over the line is commendable, operators that don’t align with the franchise values, have unrealistic expectations, or may be prone to “go rogue” damage the brand for all. Territory and location is another big consideration. Too close to one another makes it a nightmare for the respective franchisees - in contrast, being in a new market or region has its own challenges and there is more responsibility on the franchisor to do the groundwork and brand awareness piece if their presence isn’t there yet

Impact studies are a great way to ratchet down concerns about encroachment. Each side has to be willing to follow the facts and data, not just their heart or emotions. And communicate, communicate, communicate. Too much information is far better than the alternative.

Spot-on, each strategy has its place. Active listening can defuse tension and open doors to compromise. Both parties should aim for collaborative problem-solving; it leads to long-lasting solutions that everyone can stand behind. Negotiation skills are invaluable; knowing when to hold your ground and when to give a little can be the difference between a protracted conflict and a speedy resolution. Apologies, when genuine, can quickly mend fences, but they have to be backed by actions that show a commitment to improvement. Forgiveness is a longer-term strategy that helps rebuild trust and ensures the longevity of the franchise relationship. Implementing these strategies can create a conflict resolution culture that benefits everyone.

I've learned that a pivotal strategy to mitigate conflict is dedicating ample time to assess the fit. While the temptation to expedite the franchise awarding process exists, hastily closing on the wrong deal can result in substantial costs such as wasted time and increased conflict. Similar to any enduring relationship, it's imperative to invest time in understanding potential franchisees' short and long-term goals, motivations for pursuing a business, and their alignment with the franchisor's culture. Implementing qualification metrics and decision gates that thoroughly evaluate the fit significantly reduces the likelihood of conflicts emerging within the franchise family.

Focus on your FBC's having a healthy proactive coaching system and mindset instead of the reactive approach. This will build trust, profitability and create the win - win mindset.

One thing often overlooked is the power of periodic "health checks" between the franchisor and franchisee. Scheduling regular meetings where both parties can discuss any concerns, plans, or even potential areas of conflict can be invaluable. These check-ins serve as a preventative measure, catching issues before they escalate into major conflicts. Also, fostering a culture of open dialogue can make the conflict resolution process more natural and less formal, reducing the friction and tension usually associated with conflicts. A proactive approach is generally better than a reactive one.

The core of the problems/ conflicts arise due to the fundamental positioning & approach a franchisor takes towards resource deployment for the success of their franchises. Over a period of time this builds up and a simple conflict triggers into a never ending series of confrontations. At sparkleminds, we ensure that the franchisor is heavily invested in the success of their franchise systems and this is built solidly in the franchise brands we consult and as early as possible, while the focus is also on communicating extensively at all points. Also when a bulk of franchisees are profitable, all conflicts are easily manageable since the core is built solidly and there is enough room to support the struggling ones.