Communication lacking in franchising relationships
A study by Griffith University into franchise conflict has revealed the need for better communication between franchisors and their franchisees.
The study, which was funded by the Australian Competition and Consumer Commission and the Australian Research Council, examined the relationship between franchisees and franchisors and the causes of conflict between the two groups. 350 franchisees from Australia responded.
ACCC deputy chairman Michael Schaper said the study results show that open, honest communication – and an honest assessment of the franchise system – was critical to the success of any franchise.
“Thirty one per cent of the franchisees indicated that communication within their franchising relationship was unsatisfactory. Disturbingly, the study also found that 49 per cent of franchisees relied heavily on their gut feeling when deciding to go into franchising.
“Despite an obligation under the Franchising Code for franchisors to provide accurate disclosure documents to potential franchisees, 41 per cent of franchisees surveyed said they faced surprises after buying their franchise.
“The ACCC has and will continue to take action, where a franchisor blatantly disregards a franchisee’s right to accurate disclosure,” Dr Schaper said.
The study also indicated that many franchisees were failing to make use of available mediation services to resolve the problems that they had with their franchisor. The Franchising Code of Conduct makes explicit provision for access to cost-effective dispute resolution and mediation procedures, yet only two per cent of franchisees surveyed used mediation to resolve conflict with their franchisor.
“The ACCC will look to address some of the issues raised in this study through further education of the franchising sector, with a particular focus on prospective franchisees,” Dr Schaper said.
The ACCC also signalled that it would continue to encourage franchisors to deal with conflict internally. “Ideally, all franchise system should develop effective in-house compliance systems to prevent conflict escalating to the point where a complaint is lodged with the ACCC.”
The research was funded by the Australian Research Council and the ACCC.
i would like to know what the accc can do for me.
2 month ago lenards poultry made a major mistake with my shop lease where i had to walk away from my business valued around $400000.00 plus leaving me with $240000.00 in loans.
Lenards were warned not to drag out negotiations like that had done previously it then took lenards three month to begin negatiations they where then warned that the lease would go to open market if they didnt hurry up which i had been told previously and told the lenards leasing people of which i was told they are bluffing lenards continued to say they are bluffing right up to the day i informed lenards that the lease had been given to someone else.
Then lenards CEO informed me that it was my fault as the shopping cntr did not like me. Of which i approached the shopping cntr and was told this was not true when i told them it will probably go to court they said they would go on my behalf and say it was due to lenards. after this the lenards general council said it was because it was not viable. i have now given up on going to court as i have no money left to continue legal procedings. is there anything that can be done. 6years of building up my business to have it destroyed by incompetence not even mine