Uniformity and consistency among all franchisees in a network are critical to its success and sustainability.
For current and potential customers, it is important to be able to easily recognize the franchised businesses of the same network and to have a positive and similar buying experience from one franchised business to another.
This is a prerequisite for developing a healthy synergy among the franchised businesses within the network and a favourable reputation for the network as a whole, which will obviously benefit the franchisor and, equally, each franchisee.
Uniformity is also essential to the management of a network. The more differences, even minor ones, there are among the franchisees in a network, the more complicated the management of the network will be. Comparing the performance data of each franchised location will also become more difficult and less reliable.
The same is true for the supply of the network and for several programs common to the entire network, such as point-of-sale design, training of franchisees and their employees, promotions and advertising.
Any deviation from the franchisor's business model must therefore be justified and, of course, also be approved in advance by the franchisor. Indeed, a change made to one or a few establishments in the network will inevitably have an impact on other establishments in the network and on the image of the network as a whole.
For example, a customer may have difficulty understanding why a product or service she normally purchases at one franchised location is not available at another.
However, despite its fundamental importance to any franchise network, uniformity should not become an absolute.
It must also be combined with a certain degree of adaptability.
The primary objective remains to meet as well as possible the needs and expectations of current and potential customers, while allowing them to enjoy a shopping experience unique to the franchise network that is as easy as possible for customers to recognize and find from one location to another, and to distinguish the network's franchised businesses from their competitors.
Thus, some franchise networks allow adaptations to their concept between different markets.
For example, several large fast food chains offer poutine in Canada, but not elsewhere. Similarly, certain products that are popular in many markets (such as McDonald's McRib® sandwich) are not offered in other markets.
This is therefore a first form of adaptation made by the franchisor to allow its concept to perform better in markets with different preferences, tastes and needs.
A second form of adaptation is legal.
Indeed, the legislation and regulations in effect in certain markets served by a franchise network may require certain changes to comply with them.
A third form of adaptation results from exceptional and unforeseeable circumstances.
The Covid-19 pandemic is perhaps the best example.
For the vast majority of franchise systems, it required several significant changes, some temporary and some permanent.
For example, several franchise networks whose business model did not include delivery had to add this service to maintain their operations during mandatory point-of-sale closures.
A fourth form of adaptation, more specific, but also controlled by the franchisor, concerns certain important events specific to one or more markets.
Thus, particular merchandise and special promotions may be offered temporarily on the occasion of major events.
A fifth form of adaptation may also involve some variation in the interior and exterior layout and appearance of each franchised outlet.
Uniformity does not always imply perfect sameness and, at times, it can be interesting for a network to allow for some differences in appearance between various locations in the network.
Care must be taken, however, to ensure that the two essential factors for uniformity within a network are always maintained, namely (i) a positive and similar shopping experience for customers, and (ii) the consistent and uniform display of the network's distinctive elements so that customers can easily recognize each location as being part of the same network and distinguish it from those operated by other networks or independently.
A sixth form of adaptation is temporal.
The appearance, layout, range of products and services, and operating methods of a network's franchised businesses must evolve over time.
This means that changes have to be made on a regular basis.
Some of these changes are minor and can be made simultaneously in all locations of the network.
Others, however, are more significant and may take months or even years to implement, and therefore cannot be done simultaneously in all franchise locations.
Again, this may result in differences between locations in the network. However, just as with variations in appearance, it is important to always maintain the two key factors for consistency discussed above.
What about variations, modifications, additions and deletions that one or more franchisees wish to make in their franchised businesses, such as, for example, a change in hours of operation, the addition of a new product or service, the withdrawal of a service, a change in appearance, etc.?
Taken in isolation, many of these requests from franchisees may seem trivial and not cause major problems.
However, once the franchisor has begun to accept, or even simply tolerate, such minor differences, they tend to accumulate and, after a while, to raise increasingly serious issues.
At this point, it may be difficult for the franchisor to back out of changes it has already accepted and even to reject new changes similar to those it has already accepted on several occasions.
From a legal point of view, a franchisee who considers that too much disparity in the network causes her/him damage could potentially hold the franchisor liable, if she/he demonstrates that this lack of uniformity directly causes her/him damages, since it is on the shoulders of the franchisor (under an obligation of means) that rests the obligation to protect both the whole of its network and each franchisee who is part of it.
It is important, therefore, that the franchisor make it clear to its franchisees at the outset that any change, however minor, to the franchise model or to the appearance or operation of a franchised business requires the prior written approval of the franchisor in accordance with the franchise agreement and that, in deciding whether to grant such approval, the franchisor will have regard, in the first instance, to the maintenance of appropriate and desirable uniformity and consistency among all businesses in the network.
Any serious franchisor should also have the means to ensure that such consistency is maintained and that any changes made by a franchisee, with or without the franchisee's approval, are promptly followed up. Obviously, appropriate action should be taken promptly with respect to any unauthorized changes. Authorized changes should be documented, including the parameters of the authorization granted, the conditions of such authorization, its duration and its withdrawal.
From a legal standpoint, a franchisor must remember that, pursuant to section 50 of the Trademarks Act, as the owner of the network's trademarks that it allows its franchisees to use for their franchised businesses, it has an obligation to the public to maintain control over "the character or quality of the goods or services, then the use, advertisement or display of the trademark" by its franchisees. Failure to do so may result in the loss of the franchisor's exclusive rights in the network's trademarks.
Despite this, the creativity, ideas, requests and suggestions of franchisees are important and should be valued, heard and evaluated by the franchisor.
Many of the most important and profitable changes made by franchise networks are the result of ideas put forth by one or more franchisees.
For example, many of the most popular food items at restaurant giant McDonald's (including the Big Mac® sandwich, the Egg McMuffin® and its Ronald McDonald® clown) came from ideas generated by franchisees in that network.
The franchisees of a network have an important role to play in the evolution of the franchise concept.
However, this role must not be played in isolation, but as a team with the franchisor and other franchisees.
The franchisor must remain both the leader and the coach of this team.
As a leader, it is the franchisor's responsibility to set the course, to preserve the integrity of the franchise concept and to ensure that it remains consistent. The franchisor is ultimately responsible for making the right decisions.
As a coach, the franchisor also has a duty to encourage the active participation of the members of the network (the franchisees), which also implies that it values their ideas and suggestions, that it remains attentive to them and that it consults them in advance on changes that affect them as much, if not more, than the franchisor.
Just like a sports team, cohesion, consistency and working together in the same direction are more important to a franchise network than the individual initiatives and performance of each team member.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
