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Advisory 2012-07-29

Happy consumers make happy franchisees

Customer satisfaction is of utmost importance for any business owner, retailers or service provider. Franchise is not an exception. An unhappy customer can bring negative impact to franchisee and may lead to break up of franchise agreement. Explore more

By Abha Garyali Sub Editor

A franchisee is responsible for the satisfaction of his clients or customers and is required to maintain the standard of the franchise being a sole representative of the brand in the region.

Franchising has come up as one of the prominent business models which pave the way for aspirants to become successful entrepreneurs. It offers numerous benefits but with added responsibilities as well. Franchisee carries the brand name of the franchisor and benefits from the well established business. However it is difficult to maintain the standards of the brand especially in the service industry.

Product vs service brands

Product as well as service franchise offers equally profitable opportunity. Handling a service franchise needs some extra care and consciousness as the services provided to the clients have to meet their expectations. In product franchising, the franchisee just sells the products, whereas in service sector, like health care, beauty salons, education, a franchisee has to be trained enough to use the already established brand name. Sometimes it is possible that a small negligence faced by a client from a franchisee can disrupt the whole franchise network. In such trying circumstances, both the franchisor as well as franchisee will deal in different ways, as expected.

Franchisor’s approach

The franchisor after having established his brand after years of hard work cannot allow his franchisees to ruin the brand image. Therefore franchisors should at all cost protect his brand image by providing adequate training to the franchisees at the time of launching new outlet. The franchisors should also support and make himself available to his franchisees so that if the franchisee has any problem, he can discuss it with the franchisor. The franchisors should also hold meetings, where new products and innovations are discussed with the franchisees.

Sometimes it may happen that in spite of all the cautions taken and training given to a franchisee, he fails to provide adequate services to the clients. Under such circumstances the franchisor can deal in the following ways:

Discussion with franchisee: As soon as a franchisor comes to know about the unsatisfactory services provided by the franchisee, he should directly call up the franchisee to discuss the problem. A healthy discussion can finish more than half of the problems facing both the parties. Sometimes a franchisor in anger can make rash decisions but it is always advisable to hear the franchisee’s part and act accordingly.

Find out the reasonFranchisor should try to find out the exact reason for the unsatisfactory service provided to the client. If it’s out of negligence or due to some other reason necessary action need to be taken against the franchisee.

Cancellation of franchise agreement:  Franchisor can surely cancel his franchise agreement if the franchisee has seriously endangered the client or he keeps repeating mistakes. Shahnaz Husain, Founder and MD, Shanaz Husain Group shares: “In case the franchisee causes any harm to the client and client takes a legal action, then franchisee has to deal with it. In some extreme case where a client suffers and negligence on the part of the franchisee is established, we may also cancel the franchise agreement. However, there has been no such instance till now.

Impact on franchisee

It is not only the franchisors who can get effected or face trouble due to the irresponsibility of their franchisees. The franchisees, owning the outlet may also have to face dire consequences. Few of them have been mentioned below:

Bad name: In any situation if a franchisee causes discomfort to his client , a bad name would be given to the franchisee. It will surely effect his whole clientele and cause bad word of mouth.   More and more people would stop visiting the outlet and the franchisee would lose clients.

Loss in business: The reduction in clients would lead to low income which ultimately can lead to business loss.

Wastage of time and capital in legal action: In case if a client takes a legal action, the franchisee will have to spend a lot of money and time on lawyers and in courts. This would further lower his income.

Cancellation of agreement: As mentioned in certain cases, the franchisor can cancel the franchise agreement if the mistake committed by franchisee is too big. This would mean the franchisee will be out of business also.

Disruption of life:  Cancellation of franchise agreement can lead to the loss of reputation for a franchisee. No other franchisor would take him as his franchisee. Moreover the bad name earned would not allow him to start his own venture as well. This can lead to commotion in whole life of a franchisee, due to one mistake.

Starting an outlet is like climbing the first step on the success ladder. Therefore, stumbling on it may make the franchisee fail altogether. Franchisees need to be more careful and enthusiastic at the beginning of establishing their career as their future is dependent on it. Risking it by making clients unhappy can hamper their future success as well.

Comment
Iqbal 12, Feb 2012 at 02:32 PM
the real esatte scene in india is depressing. much of the housing is a scam between real esatte mafia like power houses and the politicians. the politicians have advance knowledge of lands and buy large tracts, and sell them at a higher price to the realty barons who then price it even higher with artificial demand. the end result is a middle class who’d otherwise divert all that excess fund in buying an overpriced apartment to other investments. the rise of “affordable homes” is also another scam, as they deliberately price it lower with a sub standard product. its like you pay a premium for our standard homes (dubbed luxury and slapped a hefty price for an elite label), or, you pay a standard price for an ordinary deal. either ways the realty barons win. i hope this correction is long and painful for the real esatte barons.I also hope that there are legislation pressure from private enterprises like banks forcing it on government to reign in the black money. its a c
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