Franchisee control

The franchisor is obligated to maintain control over all outlets within the network. There are several compelling reasons for this.

Firstly, non-compliance with franchise standards damages the brand's reputation.

Consumers will not differentiate between a single instance of poor product quality and a systemic issue. If they receive a subpar product, they are more likely to boycott the entire brand and network, rather than just the specific outlet of the negligent franchisee.

As the example clearly illustrates, all franchisees have a vested interest in upholding standards. A single violation by one franchisee casts a shadow over all partners within the franchise network. The larger the network, the more significant the damage caused by each transgression.

A network with lax standards over time will inevitably lose customers, leading to a decline in the number of individuals interested in acquiring a franchise. After all, potential franchisees initially approach the opportunity from a consumer perspective. If they are dissatisfied with the product, they are unlikely to proceed with the franchise purchase.

Consistent product quality is the main attribute of a strong network. Each franchisee must meet established standards; in this they are helped by documents, guides, technological maps, etc., provided by the founder.

The franchisor also helps the partner meet these standards and carries out regular audits to do this. A conscientious franchisee should perceive control in exactly this way - as help and support.

Along with product quality standards, the franchisor conveys service standards, which it also regularly monitors.

The franchise network has established corporate identity standards. These standards are enshrined in the franchise brand book, which is transferred to the franchise partner immediately after signing the franchise agreement.

A good brand book should not leave any design issues. It should provide standards along with templates and sources that will help design an object according to the rules of the network and leave no room for creativity.

All network points must be designed uniformly: in the same style, in the same positioning, in the same color scheme. Any deviations from the brand book must be eliminated.

Brand reputation is of paramount importance to every franchisor. This is understandable, as a reputation takes years to build but can be destroyed in an instant. Large brands often employ reputation management companies to gather and analyze all online mentions of their brand and provide regular reports to the founders.
If your brand is well-known, especially if it's spearheaded by a recognizable media personality, you'll be under constant scrutiny from the media and bloggers, who are always on the lookout for a scandal to exploit. Therefore, it's crucial to stay vigilant and promptly address any mentions or discussions about you and your franchisees.
It's equally important to monitor and regulate the public statements, social media presence, website content, and media interactions of your franchisees. Any deviation from the established guidelines must be addressed promptly.
To illustrate the point, consider a scenario where one of your franchisees decides to make a political statement on your brand's social media account. Such an action is unacceptable and could have detrimental consequences for the entire network and all other franchisees.
Firstly, the franchisee agreement should explicitly prohibit such statements. Secondly, you must have mechanisms in place to promptly detect and address any unauthorized or inappropriate content.

Franchise outlet inspections are the primary and fundamental tool for monitoring and maintaining standards. An inspection involves a thorough evaluation of all aspects of a franchise outlet. Typically, an inspection of a restaurant or store takes one and a half to two hours.

The inspection is conducted by an inspector who visits the premises unannounced and follows a predetermined checklist. Any violations are documented and an inspection report is generated, which is sent to both the franchisor and the franchisee.

In response to the inspection report, the franchisee's team is obligated to rectify all identified violations within a specified timeframe and provide evidence of corrective action. Photographs are typically used as evidence.

The team at the inspected establishment is expected to cooperate fully during the inspection and must not hinder the inspector's work in any way.

The inspector is responsible for identifying a set number of violations during the inspection. The number of violations identified is an indicator of the inspector's effectiveness. If no violations are found, the inspection is considered inadequate.

Naturally, only you know what exactly needs to be checked in your business. But to simplify your work, I will give you a checklist template, a kind of skeleton, and you can add the essence to it yourself.

During the inspection process, shortcomings may be identified that definitely interfere with the operation of the facility, but are not on the checklist; in this case, the inspector will have to finalize the standards and notify all franchisees of the network about this.

Video surveillance is a very effective control tool, with the only condition that someone must constantly watch the cameras and report violations online. If the franchisee and the team understand that the cameras are there “for beauty,” then such control will not have any effect.
It is ideal when cameras cover the entire space of the hall and the employee does not have a space in which he can remain without control. If this is not possible, then cameras should be directed at least to the cash registers in order to detect theft and incorrect accounting.

The founder constantly exercises financial control over the franchisee’s activities. For the convenience of such control, the parties usually work in a single accounting system: cash register programs, CRM, 1C, etc. In this case, the partner gives access to data about his activities to the franchisee. In this case, complete transparency is maintained and the franchisor’s accountant can always obtain information about the franchisee’s income and expenses.

The last resort is to close the franchise point. Closure is extremely undesirable because it has an extremely negative impact on the reputation of the brand and the climate in the franchisee community. But sometimes closing is the only right decision. We will analyze the adequate reasons for terminating relations with a franchisee.

Please note that in each paragraph I am talking specifically about “systematic”, “regular” and gross violations. Any violation is a reason for conversation, for an act, for a recommendation to eliminate violations.
Closing occurs when the parties reach an impasse in the discussion, or when the partner’s further activities threaten the existence of the entire network.