Ethical Franchising
To have a good reputation with franchisees and in the franchising industry, it is important that franchisers have an ethical framework by which they operate and adhere to.
Many companies are members of franchise associations that have an ethical code structure in place and to which franchisors adhere to.
These codes are a way for franchisers to self-regulate and for franchisees to have a good idea of the role they need to play in making the franchise as a whole more successful. They will not have an answer to every dispute, but a set of principles will be established to ensure problems are dealt with correctly and as amicably as possible.
Although Cyprus does not have a franchise association, this does not meant that franchises should not have a set of guidelines for themselves and franchisees to work from.
At the cornerstone of any code that has been or should be devised is honesty and trust. There should be no ambiguity when franchisers advertise for franchisees and in what franchisees tell franchisers about their past and current financial situation.
Each party needs to fulfill their part of the agreement and be open about any problems that occur, which means that both the franchiser and franchisee knows exactly where they stand.
Once a franchise is up and running, the parties need to have a system in place to ensure a quick response when one gets in touch with the other, by phone or email.
Effective communication will help create trust between franchisers and franchisees and it is also important for the financial progress of franchises. For example, if a sales system is not working, the sooner an improved version is discussed and implemented the more money a franchise will make.
A code should highlight the need for teamwork and mutual respect between both parties so that franchisees get a degree of responsibility to improve their franchise systems, as long as they work within the business structure.
Franchisers should also recognize and reward franchisees that achieve better than expected results and show major commitment to the franchise.
In addition, as part of the franchise agreement, there should be a straightforward method for dealing with internal disputes, and all national and state laws concerning franchising must be strictly followed. Following a structured code with these and other issues will help to create a positive image and reputation for the franchiser and each individual franchise.
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