Know your franchisees

Posted 01/07/2013

For many years now it has been common practice within the food and beverage sector for franchisors to carry out spot checks on particular outlets, as well as using mystery diners to check in particular the hygiene and cleanliness of the outlets, the quality of the food and the customer experience.

In recent years, however, we are noticing a trend that more and more franchisors within the service sectors are using the concept of auditing franchisees and tying this in with the ability through the franchise agreement to impose sanctions and other measures should the franchisee not meet the required standards of such audits and fail to deal with any proposed remedial plans. The most common areas covered are the quality of service delivery and the uniformity of the client experience.

Of course while the legal agreement contains the appropriate sanctions, the details of the business audit and any appropriate scoring system are detailed in the Manual to allow the franchisor the flexibility of developing the scoring systems and required standards. Whilst many franchisors in the service industry rely on the requirements on franchisees to produce business plans and achieve appropriate sales targets, the use of an audit which covers all areas of the franchisee’s business enables the franchisor to take a much more holistic approach to controlling the network.

Anecdotally having recently implemented these business audits many franchisors have actually found that they have received a positive reaction from the franchisees as the franchisees feel that the franchisor is first taking an interest in the business and giving a well run franchise the appropriate level of recognition.

In most well written franchise agreements, business audits can be introduced through the Manual without express provisions in the franchise agreement. However, implementing sanctions against a struggling franchisee without express provisions in the franchise agreement becomes more challenging. Click here to find out more about our Franchising Solicitors. For an initial discussion, please contact Damian Humphrey on 01603 703243 or email damian.humphrey@ashtonslegal.co.uk . Alternatively complete one of our enquiry forms.