Troubled Franchisees: Franchisor To The Rescue?
Weathering the current economic storm requires clear, level-headed thinking and a strategic process for action.
By John E. Berg and Ryan R. Palmer – IFA:
Low consumer confidence, fickle consumer spending, unpredictable commodity costs, and tight credit markets are all causing distress throughout the franchise industry and injecting new stress into the franchisorfranchisee relationship. Faced with declining unit revenues and failing locations, franchisees have been looking to their franchisors and other creditors for help, and franchisors, perhaps more than ever, are being forced to consider creative options to help their franchisees survive one of the most challenging economic environments since the early 1930s.
Every distressed situation presents unique challenges for a franchisor, but the central question is almost always: “What should I do?” It’s a simple but important question, and answering it incorrectly could cause irreparable damage to your brand. Franchisors should consider the following steps before deciding how to address the issues presented by a struggling franchisee.
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