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EXPERTADVICE


JANE MASIH


Director and head of franchising at Owen White Solicitors


How can I ensure a dispute with a franchisee is resolved quickly and effectively?


Just as sure as night follows day, disputes will arise in every network from time to time. Resolving these quickly and effectively requires the franchisor to establish the facts swiftly while remaining as objective as possible. The fi rst step is to analyse the events leading up to the dispute. It is possible that it occurred as a result of a failure to communicate and a subsequent misunderstanding. Clear and unambiguous lines of communication are desirable but hard to achieve in even the most positive franchise networks. Once the facts are established, it is a good idea to propose a face-to-face meeting as soon as possible. It is all too easy to get caught up in increasingly terse email chains, which only serve to entrench positions. If an initial meeting doesn’t succeed, check


the contractual position and take appropriate legal advice to ascertain what rights you have and that your position is supported by the franchise agreement that ultimately underpins the relationship. A fi ve-minute telephone call to your lawyer, who knows your agreement inside out, could prevent valuable management time being wasted and the risk of the problem escalating through the network. Don’t be afraid to be pragmatic in suggesting a solution, even if it means giving some ground to the franchisee. All situations must be evaluated in the appropriate context, but offering a sensible compromise that allows the matter to be resolved quickly can pay dividends. A sensible franchisor chooses their battles with franchisees wisely and does not lose sight of the bigger picture.


How should I determine my fi nancial projections for prospective franchisees?


Franchisors will always face questions from their prospective franchisees regarding what they should expect to earn from their businesses. While these projections should be based on historical experience within the franchise, it’s important that they are always adjusted by the franchisee themselves to consider their own personal circumstances and variations within their locality. Typically, franchisors will support with a starting point based on averages achieved within their network or by their pilot franchisees, along with indications on average profi t margins achieved. However, the franchisee would need to understand the methodology behind the fi gures and apply it to their chosen territory. Key considerations include looking at local demographics, affl uence, pricing, competition and opportunity


of their own territory. These factors would all have either positive or negative implications on the projected turnover and can also affect certain key margins depending on the locality they operate in. Naturally, there will be geographical differences for franchisees, which will need to be understood fully when putting together viable projections. Therefore, no two sets of projections within a franchise should ever be the same, as they will each have their own adjustments in accordance with their individual marketplaces. As a franchisor, you should always check the fi nal fi gures to ensure that the correct methodology has been followed. However, the actual performance will invariably come down to the drive, determination and hard work shown by the franchisees that will enter your network. n


SUKI DEHAL


Franchise development manager at Lloyds Bank


If you would like to ask our experts a question please email fnews@vmgl.com 16 | www.franchisornews.co.uk


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