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Ethical Franchising


To maintain a good reputation with franchisees and within the franchising industry, it is important that franchisors have an ethical framework by which to operate.  Many franchises are members of associations such as the International Franchise Association or the British Franchise Association, which both have a code of ethics in place.


These codes are a way for franchisors to self-regulate themselves and give franchisees a level of comfort that they are dealing with reputable sources.  The codes of ethics adopted by franchises cannot cover every potential situation that arises, but they do provide a baseline for the resolving of issues amicably and consistently.  Please keep in mind that even if a franchise isn’t a member of a franchise association, it still likely has a code of ethics it abides by.


At the cornerstone of any ethical code that has been, or will be, devised are the tenets of honesty and trust.  Franchising is a partnership between franchisors and franchisees, and like any other relationship transparency is key.  When each party knows where it stands, it becomes easier to focus on the tasks necessary for business success.


Trust is also established through constant communication.  Many ethics codes do make mention of the need for teamwork and mutual respect between both parties.  Franchisees get a degree of responsibility to improve their franchise systems, as long as they work within the franchisor’s business structure.


As part of the franchise agreement, there should be a straightforward method for dealing with internal disputes so franchisees know there are proper channels of recourse towards the franchisor and vice versa.


Following a structured code with not only dispute resolution, but other issues such as contract terms will help to create a positive image and reputation for the franchisor and foster a foundation for success with each individual franchisee.


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