To have a good reputation with franchisees and in the franchising industry, it is important that franchisers have an ethical framework to operate by. In addition, franchisees should behave to certain standards so that they can progress their business(es).
Many companies are members of associations, such as the International Franchise Association or the British Franchise Association, that have an ethical code structure in place. These codes are a way for franchisers to self-regulate and franchisees to have a good idea of the role they need to play in making the franchise as a whole more successful. They will not have an answer to every dispute, but a set of principles will be established to ensure problems are dealt with correctly and as amicably as possible. Therefore, franchisers that are not involved with associations should still have a set of guidelines for themselves and franchisees to work from.
At the cornerstone of any code that has been or should be devised is honesty and trust. There should be no ambiguity when franchisers advertise for franchisees and in what franchisees tell franchisers about their past and current financial situation. Each party needs to fill their part of the agreement and be open about any problems that occur, which will mean both the franchiser and franchisee knows exactly where they stand.
Once a franchise is up and running, both parties need to have a system in place where it is ensured that when one gets in touch with the other, by phone or email, it is picked up quickly and a response is swiftly made. Effective communication will help to create trust between franchisers and franchisees and it is also important for the financial progress of franchises, for example if a sales system is not working, the sooner an improved version is discussed and implemented the more money a franchise will make. A code should highlight the need for teamwork and mutual respect between both parties so that franchisees get a degree of responsibility to improve their franchise systems, as long as they work within the business structure.
Franchisers should also recognise and give awards to franchisees that achieve better than expected results and show major commitment to the franchise. In addition, as part of the franchise agreement, there should be a straightforward method for dealing with internal disputes and all national and state laws concerning franchising must be strictly followed.
Following a structured code with these and other aspects will help to create a positive image and reputation for the franchiser and each individual franchise. Franchisers will be more likely to attract potential franchisees, as most of them will talk to current franchisees before making a decision on which franchise they want and franchisees will benefit from high levels of consumer loyalty and satisfaction.