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A System in Crisis

By Ruth Dünisch

The Client

  • A "hybrid" franchise system with numerous branch offices and 160 franchisees.

The Problem

  • A market experiencing economic difficulties and a change in management at the head office. Franchisees had the impression that the company was primarily concerned with the branch offices in this situation. The franchisees were highly dissatisfied.
  • Coalition of 40 of the total 160 franchisees in an interest group association formed behind the back of the system headquarters. Threat that the franchise system would disintegrate

Our Approach

  • Avoidance of hard-nosed legal steps to avoid further escalation of the confrontation. "Behind the scenes" legal and conceptual advice to the franchise headquarters.
  • Investigation and analysis of the reasons for dissatisfaction and development of a strategy to re-integrate franchisees, particularly the 40 "renegades".
  • Starting point was that virtually no communication existed anymore between headquarters and franchisees. Addressing the demands of franchisees would offer them a means to vent their issues and give system headquarters the opportunity to align services to franchisees with these needs and improve services.
  • Over the course of this process, a system advisory board was established to offer franchisees opportunities to become involved in the further development of the franchise system.
  • Presentation of the concept to company senior management and coordination of individual measures with the retained attorney.
  • Invitation to franchisees to attend regional meetings in which the system advisory board concept was presented by the retained attorney as an external adviser. The number of attendees was deliberately kept to a manageable size to facilitate discussion.

The Result

  • Consolidation of findings in advisory board by-laws and presentation of the by-laws and other measures to all franchisees. One-on-one meetings with the "ringleader" of the interest group of the franchisees who was then voted chairman of the advisory board.
  • Achievement of improved communication and higher level of satisfaction among franchisees. Not one legal action was filed.