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Most owners choose franchising because it offers the security of an established business model and brand. With that security comes an expectation of an ethical and well-performing business. However, would-be franchisees sometimes discover that their preferred franchisor has some complaints or litigation. But those issues do not mean that it’s a bad idea to buy that franchise.
You might come across social media complaints from customers. These user reviews have their place in your analysis of a franchisor’s model. For example, if there are a lot of billing complaints from multiple franchise sites, that could point to inferior franchisor billing software. A franchisor whose commonly criticized billing software might point to an inherent operational problem. It is reasonable to ask franchisees about those complaints to understand the source.
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Read online reviews critically, then validate or debunk them. If the billing software is a headache, it is something you want to know before you take on the inevitable future complaints that would come your way. For this example, current and past franchisees will give you a hands-on view of the problem.
Franchisees, past and present, are integral in deciding on your franchisor partner. These business people have insight into the franchisor’s operation and are allies in your search. Franchisees depend on each other’s success and will gladly provide the pros and cons (as they see it) of your chosen franchise. Ask them tough questions to get deeper answers and suggestions.
Lastly, the Franchise Disclosure Agreement requires that franchisors provide information, including certain types of past and current litigation. An extremely long list might be a warning flag, but each has a story. Plus, perspective matters. Are there hundreds of franchise locations? Larger franchise networks will likely have higher numbers. The franchisor must also provide data on franchisees who leave the brand. If there is high turnover, it is important to figure out why they don’t stay. If the reasons are complaints and legal issues, that will give pause before partnering with that franchisor.
Should I Still Buy a Franchise if There are Legal Issues and Complaints?
It is nearly impossible to avoid complaints or legal issues in business. Ultimately, you may choose to move ahead with a franchise purchase even if there are legal concerns. What matters most is your comfort level. Your due diligence into social media and franchisees contributes to an understanding of what owning the franchise would be like. But it is only one aspect. Ultimately, franchise investors should choose the franchise that suits them. If you are comfortable with a few billing software issues, they won’t dissuade you because your personal preference outweighs a smaller nuisance.
Judge the merits of complaints and weigh them against how you envision your franchise life. Some serious accusations should scare you, of course, but these are rare. Dig into the issues, and you will likely find they are unimportant if the franchise is well-suited to your plans and aspirations.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.