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What to Do When a Franchisee Goes Rogue

At first glance, a rogue franchisee can be described in one of two ways. The first is a rogue franchisee who does not follow regulations and his or her business is floundering because of it. The second example is a rogue franchisee whose business is booming—primarily because he or she is breaking the rules. Quick survey: which of the two is the biggest threat to your franchise brand? Quick answer: BOTH OF THEM!

Franchising exists as a staid and steady player in the business world because of the standards which create the framework and environment for success. Divert from these principles and we’re no longer talking about franchising. During this week’s blog, we’re going to discuss what to do when a franchisee goes rogue.

The franchise industry sites and news arenas are littered with case studies where franchisees went rogue—and what the consequences were. Extreme cases of this activity have led to lawsuits, court battles, settlements and lasting damage—ostensibly to the franchisor as much, if not more, than the rogue franchisees themselves. As a franchise brand, you must remain vigilant and on guard against this type of activity and its potential outcomes. Here are some ways to maintain the right amount of oversight before – and after – a franchisee signs on the dotted line.

Brand Compliance Guidelines
You may think you have a strong set of brand compliance guidelines, but a rogue franchisee can test your limits in real time. Many strong franchise brands can cite chapter and verse the PMS colors of their logo and usage rights, but overlook simple items such as preventing a franchisee from creating their own promotional content. If there isn’t a chain of command for approval of activities such as this, how will you enforce action when violations are discovered? Even then, will it be too late to mitigate damage to the brand itself?

Quality Assurance
This is a term subject to overuse, but quality assurance is crucial to maintaining a safe and profitable environment on the front lines. Franchise organizations should have in place an iron-clad reference guide for operations and periodically check in on this practice. Deviations from these standards can lead to disastrous results. Which is why our coffee at McDonald’s isn’t as hot as it used to be (wink, wink).

Visitation Rights
How often your franchise brand schedules routine location visits can go a long way towards preventing the type of activities and situations which lead to rogue franchisees. What is your current policy? Once a year? Franchise brand executives, or even a special compliance team, should be in place to make periodic visits. Face-to-face inspections and reviews can successfully monitor system compliance while ensuring the franchisees are properly meeting their mandated business operations obligation. And it also might just permeate the type of continual goodwill necessary to reduce the possibility of future rogue operations.

As a franchisor, having a vigilant approach to the risk potential of rogue franchisees is a sound strategy. What’s really at risk for these preventable situations is the very credibility of your brand and organization. Rogue behavior within your group of franchisees is a constant possibility and there is no substitute for being prepared to meet the challenge head on. In your approach, be fair, but firm.

The best way to prevent potential rogue franchises is to not let them in your system in the first place. As a franchisor, it is imperative to know which existing and potential franchisees best fit your business concept. Proven Match is the proven solution in determining those factors.

Through our proven behavioral assessment techniques, predictive analysis becomes a predictive success for your franchise concept. If you’re ready to show your leadership by getting started, give us a call and we’ll put you on the path to a more productive year in 2016.

 

 

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