In a previous article “Start the year right: the art of selling franchises”, we touched upon the first part of the adage “hire slow, fire fast” and examined how it carries a different meaning in franchising when compared employment. It’s not just about swiftly addressing issues—it’s about doing so with care, strategy, and adherence to your franchise agreement. When a franchisee relationship isn’t working, you can’t just march the person out the door and the process of exiting must be handled thoughtfully. Rushing can damage your brand, while compassion and clarity can preserve goodwill and even enhance your reputation. This 2020 article in Forbes addresses head on how to hire slow and fire fast the right way in employment. But how do you “fire fast” the right way in franchising? It starts with solid foundations and a commitment to supporting your franchisees, even when the relationship begins to strain.
Do what’s within your control
Begin with solid documentation, transparency and effective communication of these documents. This means providing prospective franchisees with a Franchise Disclosure Document (FDD) that is accurate, clear and concise and ensuring that you have a strong Franchise Agreement (FA) in place. These are your first line of defence. They set clear expectations for both parties and outline the procedures to follow if things don’t go as planned. These documents are far more than just a formality; they are the roadmap for managing challenges and, if necessary, exiting franchisees in a way that is fair and legally sound. In Canada, there are mandated timeframes that must be adhered to in terms of when these documents are served, including a ‘cooling off’ period, after receiving an FDD and before a prospective franchisee is allowed to sign the FA.
Next, building a solid relationship with your franchisees means that it should be easier to address issues before they get too far out of hand. And this starts from the very beginning after they’ve signed the FA. Providing robust training, comprehensive ongoing support, and clear guidance as and when needed will go a long way. Bend over backward to address their concerns and provide the tools they need to thrive. When franchisees feel supported, they are more likely to work through difficulties and less likely to view you as adversarial if the relationship eventually needs to end. Before even considering breaching a franchisee’s agreement, ensure that you’ve done everything possible to help your franchisees succeed.
How to respond when issues surface
When performance issues arise, highlight them immediately. Waiting too long to address concerns can allow problems to escalate and create unnecessary tension. Open, honest communication is key. Discuss the specific issues, explain the potential consequences, and work collaboratively to find solutions. Always speak to the person in the first instance (whether on the phone or via video conferencing software) and then follow up in writing with a summary of what was discussed and what was agreed upon. Just make sure you give the person a heads up before the meeting, so they don’t feel hijacked if you call out of the blue.
If a franchisee’s performance continues to fall short despite your efforts, it’s time to move into the formal stages outlined in your FA. This typically involves issuing warning notices. These notices should be clear, detailed, and constructive, giving the franchisee a chance to address the issues raised. If the problems persist, breach notices may be necessary. These documents should outline the specific issues, reference the agreement clauses being breached, and include “cure” periods—timeframes within which the franchisee can rectify the situation. Offer strategies and support during this period to give them every opportunity to get back on track.
It’s still not working, what do I do?
Help them to exit gracefully and with dignity. If it becomes clear that the relationship cannot be salvaged, consider helping the franchisee sell their business. This approach is compassionate and allows them to walk away with something reasonable. More importantly, it ensures a smoother transition for the brand and minimizes the risk of reputational damage. By handling exits positively, you demonstrate your commitment to fairness and professionalism. This not only benefits the departing franchisee but also reassures your remaining network that you prioritize integrity in all aspects of the business.
Termination should always be an absolute last resort, reserved for situations where all other avenues have been exhausted. It’s a decision that requires careful consideration and should never be taken lightly. When done correctly, it should be clear to everyone involved that all possible alternatives were explored.
Exiting a franchisee is rarely straightforward, but it doesn’t have to be damaging. By following a structured process, addressing issues promptly, and prioritizing fairness, you can navigate these situations with compassion and professionalism. While “fire fast” in franchising may not always mean literal speed, it does mean identifying problems early and taking decisive, thoughtful action. Done the right way, it’s not just about protecting your brand—it’s about strengthening it.
