Advisory Aug, 17 2010

Unhappy customers steal your happiness

By now franchising has proved to be a success mantra for the aspiring entrepreneurs. It gives immense satisfaction and recognition to be a part of an established brand. But, what about the responsibilities attached to it. Read on to know about the repercu

By Abha Garyali
Sub Editor
Unhappy customers steal your happiness

We have been talking about the manifold benefits of franchising from time and again as it is a profitable arrangement for both the franchisor and franchisee. However, dissatisfaction among the clients/customers due to disappointing services by the franchisees is often a cause of concern for both the partners. The article deals with the aftermath of such dissatisfaction of the consumers on the franchisor and franchisee.

Let us take an example of a customer who is all set to explore the delicacies of a newly opened franchised outlet of a well known F&B brand. He visits the new outlet because he is sure of its quality and services. However, it may happen that the experience he had may not be in accordance to his earlier experiences. Under such a situation, the customer would surely take matter further and complain to the owner or may directly write to the franchisor.

Similarly, in a franchised beauty salon the effects of franchisee’s irresponsibility while offering beauty treatment can be far more serious in case of inability to maintain the franchise standards. Client dissatisfaction can also be seen in education franchises. Here in this article we are highlighting, what can be the best course of action for the franchisor and franchisee under all such dire state of affairs to protect themselves against the wrath of the client? Let us have a look at the reaction of the franchisor as well as the franchisee.

Franchisor’s perspective

The franchisor who has established his brand after years of hard work cannot allow his franchisees to ruin the brand image. To safeguard themselves from such consequences, the franchisors should provide adequate training to the franchisees at the time of launching the 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.

Elaborating on this Shahnaz Husain, Founder and MD, Shanaz Husain Group informs, “The franchisee enjoys several benefits of being associated with the Shahnaz Husain name. But, these benefits also imply responsibilities. Each franchisee represents the Shahnaz Herbal name and we impress upon each franchisee that the name should not be devalued.”

Cancellation of franchise agreement: In case the franchisee causes any harm to the client and client takes a legal action, Husain states, “The franchisee has to deal with it. Of course, 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.”

Direct feedback to franchisor: Informing about the action, the franchisors would take steps against the franchisee. Major KV Rajan, Executive Director, Amoha Education (Veta) says, “We try to endow franchisees with all possible assistance. There are panel of trainers, field representatives who help them at all times. However, for our students at the franchised centres we have a feedback form in which they can share their complaints to us. These cards are not shown to the franchisees but directly come to us.” Feedback mechanism is a convenient way to reach directly to the franchisor. Agreeing to the above Sagar Ratna’s Director, Sadashiv Bhat informs, “If our customers are not happy with the services or food items in any of our franchised outlets, they can directly launch a complaint with us.”

Discuss the problem: Regarding the action to be taken against the franchisee Rajan informs, “In case of serious trouble we talk to the franchisees and even to students. We try to sort out all their problems with the franchisees.” Communication is the most effective medium to find a solution to such problems.

Improving the franchisee and the outlet: Regarding dissatisfaction against franchisees Bhat says, “We can promptly make the changes or deal with the situation. The franchised outlet can be improved and the client can be handled so that he holds no anger towards our franchisee.”

Franchisee’s perspective

It is not only the franchisors who can get effected or face trouble due to the irresponsibility of their franchisees. Regarding the franchisee’s role Husain informs, “The franchisee is responsible for protecting, enhancing and promoting the brand name. In fact, the franchisee's own success depends on it. Franchisees need to uphold the name and enhance it, by following the highest standards. It is important that all franchisees operate in accordance with our principles and standard.” The franchisees, owning the outlet may also have to face dire consequences. Few of them have been mentioned below:

  • Loosing clientele: If a client is dissatisfied with the outlet, the bad reputation will spread through word of mouth. More and more people would stop visiting the outlet and the franchisee would lose clients.
  • Business loss: The reduction in clients would lead to low income which ultimately can lead to business loss.
  • Monetary loss in case of 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.
  • Loss of brand: 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.
  • Loss of reputation: The cancellation of franchise agreement can lead to the loss of reputation of the franchisee. No other franchisor would take him as his franchisee. 

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. Regarding the franchisee’s role Husain informs, “The franchisee is responsible for protecting, enhancing and promoting the brand name. In fact, the franchisee's own success depends on it. Franchisees need to uphold the name and enhance it, by following the highest standards.” Even a small error by the franchisee can have dubious effects on the brand as a whole and even on his outlet as well.

To sum it up, it can be said all franchisees at some point can face problems with their clients and customers. They should learn to deal and pacify their clients and mend ways to stop them from reaching the franchisor. Moreover, franchisees should be cautious as any single mistake on their part could have dire consequences.

Related: How to make your franchisees perform better

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