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Common causes of franchise disputes

Starting a franchise is a great way for people to make a living. There are various steps for entrepreneurs to take to start a franchise, but it is important to remember that while a franchise owner may oversee the day-to-day operations of the business, he or she is still accountable to the franchisor. 

Franchise disputes are shockingly common. Occasionally, the two parties can resolve these disputes internally. On other occasions, legal counsel becomes necessary. Either way, both parties should be cognizant of the most common sources of these disputes to adequately circumvent them. 

Disagreements over stock and input

Franchisees will have a vested interest in making as much money as possible. However, franchisors may be fine if one location is not as profitable as the others because they have an interest in maintaining a positive reputation across the board. To cut costs, the franchisee may use inferior ingredients or products, resulting in a reduction in customer satisfaction. The franchisor does not want the franchisee using inferior substances, and a dispute erupts. 

Changes to everyday processes

As time goes on, franchisors may want all franchises to update their systems, such as investing in new technologies. One franchisee may be resistant because he is the one being asked to front the cost and believes everything operates just fine as it is. 

Miscommunication

As with many relationships, miscommunication is a common source of contention. The franchisor operates miles away or in another state. When all communication is through email or phone calls, statements can become misconstrued. 

Lack of adequate training

It is the responsibility of the franchisor to provide the franchisee and all the hired employees with sufficient training to do the job adequately. The team will require ongoing support so that everyone knows how to adapt to changes in the market. When the franchisor becomes absent, the team may become frustrated and pursue other avenues for making the business work. 

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