Frequently asked questions - Black Enterprise
Black Enterprise Magazine September/October 2018 Issue

Q: I’m considering acquiring a franchise. Do franchise companies have all of the control?

A: Franchising is a mutually dependent business partnership, says Debbie A. Smith, vice president of public affairs and emerging markets at the International Franchise Association in Washington, D.C. The franchise company is just as interested in your success as you are. If their franchisees don’t make it, they don’t. The best way to determine how flexible a franchise company will be is to contact as many of its franchisees as you can. Federal law requires franchise companies to give you a disclosure document that, among other things, lists current and former franchisees. Ask these franchisees about communication with corporate headquarters. Find out if they have a voice in decisions that affect their bottom line.

It’s also important to follow the franchisor’s standards because protecting system standards is the key to making franchises work. A consistent experience is the main reason consumers continue to support franchised businesses where it counts: at the cash register. Because of that, not only franchisors but also franchisees insist that uniform standards of quality, service, value and cleanliness be enforced. If some franchisees aren’t adhering to the company’s high standards, every franchisee suffers, as consumers take their money to the competition. However, there is room for creativity. Good communication, both before and after you’ve signed the franchise agreement, is the key to a successful relationship between you and your franchisor. To that end, many systems have franchisee advisory councils that will relay your interests to senior management. These are great ways to work together with your franchisor to affect positive changes in your new business. If a conflict does arise, there are remedies, such as formal mediation. The National Franchise Mediation Program, administered by the Center for Public Resources, allows franchisors and franchisees to reach nonbinding agreements with the help of neutral third-party mediators. The mediation program enjoys a nearly 90% success rate and avoids the often crippling costs of litigation.

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