Balancing Franchisor and Franchisee Interests

As soon as I wrote the title of this article, I hit the first hurdle of this delicate subject because I was about to write: "The general interest VERSUS the particular interest".

The whole paradox of this problem, which is of course not exclusive to the world of franchising, is that not only can the individual interest of one of the members of the network diverge from the general interest at any given time, but sometimes the sum of the individual interests does not coincide with the general interest!

However, the franchisor, who can and should only be the guarantor of the general interest, cannot ignore the particular interests of its franchisees.

Let's take a concrete example (a lived one when I was managing Subway in France, although here I am caricaturing a bit to illustrate the point):

The franchisor concludes a terms and conditions agreement with a supplier who will supply all the outlets in the country. This agreement includes, of course, the respect of several conditions, one of the most important being the achievement of a certain volume.

Some franchisees tell the head office that they have found the same product cheaper at a large Cash&Carry and that,…