Many franchisees in New Zealand are not happy with their franchisors, compounded by problems related to communications and conflict resolution, according a new study.
Massey University conducted the study called, ‘Towards Understanding and Resolving Conflict: Franchising in New Zealand 2011’ focusing on one of the most important aspects of the country’s commercial sector.
Dr Susan Flint-Hartle, senior lecturer at the School of Economics and Finance said that many respondents believed that their franchise relationship did not match their earlier expectation and that a number of areas needed improvement.
“What is interesting is that franchisees have a very different view to franchisors over how the level of satisfaction. Franchisors reported a low incidence of conflict and that their franchisees were, on the whole, very happy,” she said.
Inadequate attention
The Survey found that less than 50% of the participating franchisees believed that they had followed the due diligence process before signing franchise contracts.
But they believed that their interests were inadequately addressed while trying to resolve disputes.
“Resolving conflict was revealed as a problem area. In general, it can be said that conflict is not well handled by franchisors and often the outcomes are seen as unsatisfactory by franchisees,” the Report said.
According to Dr Flint-Hartle, about a quarter of the franchisees said they had experienced problems on issues related to ‘too much franchisor control,’ ‘a lack of profitability,’ and ‘unfair franchise agreements.’
About 40% of the respondents involved in disputes said that their conflict was never resolved, while 28% said that the resolution was not satisfactory.
The Report found that very few franchises offered formal training in conflict resolution and that 42% of the franchisors did not have a formal dispute resolution process.
Dr Flint-Hartle said the Report would be useful for franchisees and franchisors to build more productive business relationships.
She said prospective franchisees should get a better understanding of the nuances of franchising before signing contracts.
“There are currently no pre-education programmes for would-be franchisees in New Zealand. This report provides impetus for getting that programme in place. Franchisors could benefit by actively delivering on the promises they make when they sell their franchises and be aware of how their franchisees are faring, especially during the tough business conditions,” she said.
Second Report
Massey University will publish its second ‘Franchising New Zealand’ Report jointly with Brisbane’s Griffith University and the Asia Pacific Centre for Franchising Excellence later this year.
The new Report will consider the growth, turnover, challenges and contributions of the franchise sector to the New Zealand and Australian economies.
The growing importance of this sector and the absence of adequate training facilities may encourage Massey University to offer a course in franchising in the near future.
Franchising in New Zealand
Some Basic Facts concerning franchisees
51% felt their expectations were met; 25% disappointed; 24% no opinion
48% said they had conducted due diligence
44% spent less than one month researching franchise opportunity
44% were satisfied with the communication received
40% felt they could rely on their franchisor
23% felt relationship with their franchisor was not ‘fair.’
20% experienced frequent disagreements with their franchisor
12% reported intense disagreement.
29% felt there was a satisfactory resolution
