Some in the franchising sector might try to spin today’s survey from Griffith University’s Asia-Pacific Centre for Franchising Excellence on the subject of conflicts in franchising in a positive way.
After all, the survey does show 70% of franchisees have a high level of trust in their franchisor.
But I think the fact that 30% of franchisees do not trust their franchisor to keep their promises or to even “do what is right” should make everyone in this sector sit up and take notice.
Australia’s franchising boom is rolling on beautifully. After largely sailing through the GFC, the sector is once again growing strongly and, anecdotally at least, attracting strong interest from people keen to join the industry.
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But the Griffith survey suggests that beneath this happy exterior lies a group – and not a small group – of industry participants who basically feel they have been ripped off by their franchisor.
Poor communication between franchisors and franchisees is seen as one problem, but Professor Lorelle Frazer from Griffith says more work needs to be done in the area of pre-entry education, to prevent franchisees coming into the sector with unrealistic expectations, which apparently turn into mistrust.
This has been a perennial problem for the sector that everyone – franchisors, franchisees, industry groups, regulators and even governments – have tried to address.
But the work is clearly not done and the sector needs to look at new solutions to the problem.
There seems to be a consensus that pre-entry education needs to be a requirement for all franchisees, but how do we make this happen?
Is government regulation possible? Should the Franchise Council and big franchisors take the lead, ensuring that a franchise agreement cannot be signed without the prospective franchisee completing some sort of education process?
These approaches might sound heavy-handed and might not be appropriate. But the level of mistrust in this huge sector suggests something needs to be done.