7 Ways to Deal with Rogue Franchisees

Consistency is the bedrock of any successful franchise business. Customers expect the same experience from your brand no matter where they’re shopping, eating or staying, which is why it’s important to keep your franchisees in check and ensure they stay consistent with brand standards, corporate guidelines and policies. 

A good starting point to achieving this lies in having solid training programs and resources. Franchisees must be onboarded and trained on your brand’s standards and they need to have easy access to materials that they can reference while running their locations. 

That being said, some franchises may still drop the ball when it comes to compliance and consistency. It could be something relatively minor, like a local branch using the wrong artwork or font on a community or social media post.

In some instances, it could be a franchisee knowingly implementing something that isn’t sanctioned by corporate. This is what happened when a few McDonald’s locations continued doing the popular All Day Breakfast program even after the corporate office pulled the plug on the initiative.

No company wants to see franchisees go rogue, but it’s always important to be aware that these things happen, and you need to take steps to prevent and mitigate them. 

This post will shed light on how to do just that. In the following paragraphs, we’ll discuss what to do when faced with non-compliant or rogue franchisees. Have a look and consider implementing them in your franchise. 

Determine the reason behind non-compliance

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How you handle a non-compliant franchisee will depend on the situation. Franchisees have different reasons for failing to comply with your policies. Maybe they weren’t aware that what they’re doing violates your standards. Perhaps they feel that corporate initiatives don’t work well in their local market, so they’ve decided to tweak their practices. 

Whatever the case, get clear on why the franchisee is having compliance issues, and address the matter from there with the help of your district or regional manager. 

Ensure that franchisees have what they need to properly implement your programs and policies

It’s important to remember that franchisees generally want to be successful and do right by your company. As such, when they violate things like your brand guidelines, they’re not necessarily doing it to be dodgy or deceitful. They’re simply doing their best with the resources they have. 

Let’s say the franchise is running a special promotion and sends its franchisees creative assets to support the campaign. Unfortunately, those assets aren’t customizable, and stores are unable to tweak details like hours of operation. So, the franchisees attempt to recreate the assets themselves, but fail to fully meet the HQ’s standards. 

In these cases, franchise owners can prevent non-compliance by giving local stores the freedom to customize the materials they receive from corporate. Instead of sending stores inflexible posters or static files, consider sending editable documents or using a brand and asset management platform that lets franchisees tailor assets to their needs. 

There may also be instances when franchisees don’t have the technologies they need to fully comply with company guidelines. For example, if a franchisee is constantly running into inefficiencies or productivity issues, it could because they’re using the wrong hardware or software. Here, it may behoove you to re-orient them on company-approved solution providers and ensure that they’re set up with the right tools. 

Listen to your franchisees

“When franchisees go rogue, it is often a sign that they are trying to solve something in the business model that isn’t working for them. Franchisees want to make money so they are not going rogue to hurt the business,” says Jessica Yarmey, Chief Executive Officer at The Kick House, a fitness franchise. 

According to her, franchise owners should be open to input from their franchisees and dig into the reasons why they haven’t done things your way. 

“As a franchisor, you only have one job to do when a franchisee goes rogue: Listen.” 

She continues, “What problem are they trying to fix? If there’s an existing and approved solution to that problem, have they tried to execute it and with what results? And most importantly, what results are they seeing from what they’ve put in place?”

The next time you see a franchise location that’s not following corporate procedures, have an open discussion with them to see where they’re coming from. You just might find interesting solutions that work for both you and your franchisees.

Support your initiatives with data

If a franchisee insists on doing things a certain way or if they aren’t receptive to your programs, it may be helpful to turn to data and analytics. 

In a panel discussion at the 2019 Fast Casual Executive Summit, Matt Friedman, CEO and co-founder at Wing Zone, shared his thoughts on how the company uses data to get franchisees on board with Wing Zone’s advertising initiatives. 

At the time, Wing Zone secured 60% participation among franchisees on company-driven advertising. According to Friedman, Wing Zone was able to do this by showing franchisees data on the effectiveness of advertising. “You have to be able to provide that (data) that or they’ll fall off the program,” he remarked.

Consider doing something similar in your programs. If you’re looking to encourage franchisees to follow your initiatives, use data to make a strong case, and make sure to demonstrate how the franchisees benefit. 

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Regularly audit your franchise locations

An efficient way to deal with non-compliance is to address issues early on or prevent them from happening altogether. The only way to do that is to periodically evaluate and audit franchise locations. 

“I have found quality assurance to be the most effective way of dealing with rogue franchisees,” comments Harriet Chan Co-founder & Marketing Director at CocoFinder.

“I have a bias towards field trips in helping ensure there is a standard of quality that the franchisees adhere to. With in-house visits to these outlets, it is much easier for me and my team to assess what is happening on the ground.”

Chan continues, “Moreover, it allows me to spot any early indications of a franchisee going rogue and mitigate the situation.”

Schedule regular visits to different franchisees so you and your team can get a first-hand look at their operations. To make this process easier, arm yourself with retail audit software that comes with checklists so you can easily spot and flag issues. 

Be sure to be on the lookout for common rogue behavior, including:

  • Using the wrong equipment, assets and materials (e.g., wrong coffee machine, non-branded napkins, etc.)
  • Running unsanctioned offers or promotions
  • Having a menu or catalog that’s inconsistent with HQ’s guidelines
  • Staff behaving in a way that doesn’t represent the brand well

It’s also important to use communication and task management solutions that enable you to coordinate any corrective action steps in the event of non-compliance.

Conduct customer surveys

In addition to inspections, conducting customer surveys can help you identify franchisees that aren’t meeting with your standards. 

“Another technique that has come in handy in my field of work is customer surveys,” adds Chan. “Customers tend to be very honest when evaluating the performance of a particular franchise. Through this feedback loop, I can figure out which outlets are problematic and either issue a warning or forward the matter to my superiors. To make customer surveys effective, my franchise brand ensures the respondents can directly send their feedback without tampering with the franchisee.”

Follow this advice the next time you’re evaluating different franchise locations. Send out surveys to your customers asking about their experiences, and be sure to include a field where respondents can indicate the specific location for which they’re providing feedback. 

Retrain franchisees if necessary

If you’ve identified issues or areas of improvement, consider retraining franchisees on your policies and guidelines. 

Find ways to make this practice as engaging as possible. Rather than giving them a handbook, for example, consider sending a team to the location so they can walk franchisees through the things that they should and shouldn’t do. 

You could also use visual resources, such photos and videos, to demonstrate the right (and wrong) way to perform certain actions. 

Once completed, be sure to conduct a post-training follow-up with franchisees to see how they’re doing. 

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Ensure you have a strong franchise agreement

If a franchisee goes rogue, you need to communicate, in black and white, exactly how they’re violating your agreement. To do this effectively, you need a solid contract with them. 

As David Reischer, Esq. Attorney and CEO of LegalAdvice.com, puts it, “The Franchise Agreement is the contract that governs the relationship, rights and obligations between the franchisor and franchisee, and it will be the basis for a breach of contract claim that prohibits the franchisee from going rogue.”

If your policies are clear-cut and unambiguous, it’s much easier to point out — and hopefully correct — rogue behavior. 

So, review your contracts on a periodic basis and consider updating them if necessary. 

Final words

Maintaining consistency in a franchise business is a continuous process. The best way to address and prevent issues to stay in close contact with franchisees and ensure that they have everything they need to run smoothly. If problems do come up, keep an open mind and deal with them on a case-by-base basis. 

About the author:

Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.

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