In any business where people interact with one-another there is bound to be miscommunication, pain points – and, quite often, conflict. What is vitally important, though, is to resolve differences before they become a threat to your business.

Importantly, the level of conflict within a franchising relationship has long been recognised as a strong determinant of how well – or poorly – a business will operate. There is a myriad of reasons why conflict can arise in a business – and yet cases can often be unique to a particular workplace or business structure.

Major causes of conflict include (a perceived) lack of support from the franchisor; compliance with the system; issues relating to franchising fees and profitability; communication problems; and more.

Then again, it may be as simple as a clash of personalities.

What is clear, however, is that volatile situations need to be identified quickly and addressed tactfully in order to reach a resolution to the mutual satisfaction of the parties involved – and to avoid an escalation of the problem.

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Communicating clearly and concisely is a fantastic first step to resolving any potential conflict, particularly given miscommunication is quite often the main cause of franchise conflict across all sectors. Franchisors need to be transparent and keep franchisees informed of any developments within the business; while franchisees need to voice any concerns as they arise. Clear and regular communication, as well as greater emphasis on notions of equity, works to engender trust between the parties.

It is also highly recommended that all prospective franchisees conduct a rigorous due diligence process before entering into a business.

As highlighted in Griffith University’s Survival of the Fittest research, although potential business entrants should seek extensive and specialised advice (from both formal and informal business networks) at the pre-entry stages of the business evaluation process, often individuals (in the drive towards semi- or fully-independent self-employment) make important business decisions based on an emotional response without conducting adequate due diligence.

It is suggested that gaining in-depth knowledge of their industry of choice, franchise agreement, and franchise systems means that prospective franchisees can avoid much of the angst that comes with conflict with a franchisor.

Of course, it is also worth noting that should conflict escalate to a point that the situation becomes untenable, there are external resources available that can provide assistance. One such resource is the Australian Office of the Franchising Mediation Adviser.


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