Franchisors: How to deal with your ‘ex’ factor

Much like a disgruntled former lover, an ex-franchisee can cause no end of problems for a franchise owner once the relationship ends. Yet an ex-franchisee does not have to be a negative influence when the relationship ends, according to Lorelle Frazer from Griffith Business School.

She recommends that franchisors maintain an ongoing positive relationship with ex-franchisees, even when the franchise agreement ends.

“From copycat concepts to negative media coverage and litigation, ex-franchisees can be a potential distraction for any franchise system,” says Frazer.

“Changes to the Franchising Code of Conduct mean ex-franchisees have more power than ever to influence the future success of a franchise system, with franchisors now required to disclose contact details of former franchisees,” says Frazer.

These contact details will allow prospective future franchisees to contact ex-franchisees to do their homework on the business.

To coincide with Griffith University’s launch of its new Asia-Pacific Centre for Franchising Excellence, a free seminar – Stopping your Ex-Franchisee Destroying your System – was held recently in Brisbane by Frazer in partnership with Franchise Advisory Centre director Jason Gehrke. The seminar produced some salient tips and strategies.

  • Keep franchisees, current or past, as strong brand advocates, Frazer says, by setting up a network of ex-franchisees, and keep them informed with newsletters or an intranet connection into the business.
  • Franchisees often think they can do better on their own. Keep providing value with new products, services and campaigns, and keep them interested.
  • Stay proactive and maintain continual feedback to address concerns that come up. Invite ex-franchisees as mentors or guest speakers.

Frazer says that during an economic downturn, stress in the franchise relationship tends to rise; both parties should communicate and work together.

In the current slowdown, retail based franchises should heed the advice. Frazer cites the problems of Klein’s Jewellers franchises as an example of poor disclosure.

Further seminars will be held in Melbourne and Sydney to offer advice on how to best protect your brand. The Sydney seminar will be held on Monday 19 May at the Radisson Hotel and Melbourne has its turn on Tuesday 20 May at the Marriot Hotel.


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