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Mismatched expectations and limited franchisee education can result in conflict in franchise systems. Find out more through this Slideshare presentation.
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Reducing Conflict Through Franchisee Education
Asia-Pacific Centre for Franchising ExcellenceGriffith University
www.franchise.edu.au
Pre-
entry
• Lack of due diligence
Mid-
term
• Franchisor management practices
Random
• External influences
Origin of Conflict
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Agree / Strongly
Agree
34%
Neutral
28%
Disagree /
Strongly Disagree
38%
Franchisee: Not getting enough information
I didn’t know I would have to spend an extra $50,000 to
update my store.
I didn’t know I would have to spend an extra $50,000 to
update my store.
“I should have been more diligent in gathering information,
prior to entering the franchising agreement.”
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Agree / Strongly Agree47%
Neutral26%
Disagree / Strongly Disagree
27%
Franchisee: Unrealistic Expectations
I knew it would be tough...But it didn’t click that I would
have to start work at 4 am every day
I knew it would be tough...But it didn’t click that I would
have to start work at 4 am every day
“My expectations of franchising were very accurate.”
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Agree / Strongly Agree59%
Neutral19%
Disagree / Strongly Disagree
22%
Franchisee: Perceived Support
We pay a 20% royalty for nothing –
no training and no marketing!
We pay a 20% royalty for nothing –
no training and no marketing!
“Help is readily available from my franchisor when I have a problem.”
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Causes of conflict – Franchise Perspective
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Lack of support from franchisor
Compliance with system
Fees
Communication problems
Misrepresentation issues
Marketing issues
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RESEARCH ON CONFLICT IDENTIFIED THE NEED FOR
BETTER FRANCHISEE EDUCATION. A FRANCHISEE PRE-ENTRY PROGRAM WAS
LAUNCHED IN 2010
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13
Need for better pre-entry education
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Free eClasses
5 Topics
OnlineLaunchedJuly 2010
Review Question
s
5000participants
Program Content
Doing thorough due diligence
Agreement
Disclosure
Fees &
Finance
Intellectual Property
Franchising Relationships
Site selection
&
Leasing
Support
Operations Manual
14
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Effectiveness of franchisee education
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Research Project
2 year study* Stage 1 - Interviews
» Interviewed 50 people who undertook pre-entry franchise education program
Stage 2 – Survey» Pre-entry education (194 participants)» No pre-entry education (326 participants)
*See full report at www.franchise.edu.au/home/research/franchise-management/preparation-for-franchising-research
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Characteristics of the Groups
Pre-entry education No pre-entry education
Looking for larger systems Lower investment level
More anxious More confident
Sought broader information Info from franchisor and franchisee only
More diligent information search Make up mind early in the franchise search process
Influenced by others Didn’t seek other’s opinions
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Benefits of pre-entry franchise education
Pre-entry education No pre-entry education
More likely to buy a franchise (64%)
Less likely to buy (40%)
Better due diligence Due diligence lacking
Better understanding of performance factors
Less understanding
More realistic expectations Greater expectations gap
More satisfied overall Less satisfied with franchisor and their performance
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