The importance of compliance with the franchise agreement cannot be overstated. After all, compliance results in consistency, so the success of your franchise business depends upon it. So, how can you boost compliance and make sure you are staying in line with the brand guidelines of your franchise? This article shares seven reasons you should care about compliance along with some effective strategies you can try.

The Importance of Compliance in Franchises

First, let’s linger a bit on the importance of compliance in franchises and why, as a franchisee, that should be your top priority.

Compliance refers to following the rules laid out in the franchise agreement.

Those rules are in place to ensure consistency.

And consistency is the key to success.

 Compliance with Franchise Agreements - 7 Ways to Comply

Your franchisor has spent years building:

  • Systems they know work to grow a profitable business. 
  • A brand that is well known, recognizable, and likable.
  • A reputation for quality products and customer service.

When you enter the franchise system, it is your responsibility to replicate what the franchisor has done to create a consistent experience for customers in your local area. When customers think of your franchise, specific images, thoughts, and feelings they associate with the brand come to mind. It’s your job to deliver that to them, and remaining compliant to the franchise agreement is how you do it.

When franchisees become non-compliant with the franchise agreement, which upholds the brand standards, they are not just hurting themselves. Non-compliance of one franchisee damages the whole franchise system. For your business to grow—and the brand as a whole to succeed—every franchisee in the chain has to support the brand and act as one cohesive unit.

Compliance – Why and How

Given the importance of compliance for individual franchise businesses and the entire franchise, franchisees should always remain compliant with the franchise agreement and seek to uphold brand consistency. Here is why it’s important and some specific ways to do it.

1. Know the Operating Manual Inside and Out

Compliance with Franchise Agreements - operating manual

A franchise operating manual is typically 300 to 500 pages long. It can be tempting to skim over certain sections, but you must study every word to understand how the franchisor needs you to run the business. Consult with a franchise lawyer or ask the franchisor to explain if you have questions. There’s a lot to learn, so keep the operating manual handy, and refer back to it whenever you need clarification on how something works or should be done in your business.

2. Focus on Quality

Branding makes your franchise a destination for customers. Live up to their expectations by providing top-notch products and services to every customer on every visit. Ensure the franchise is clean, the staff looks professional, and they are trained to meet and excel at the product and service standards. If there is a complaint, resolve it with the customer quickly, and make adjustments to avoid similar problems in the future.

3. Purchase from Approved Vendors

Compliance with Franchise Agreements approved vendor

Franchisors will often require franchisees to buy supplies and services from certain vendors. This ensures quality and consistency, so everything from a chicken sandwich to ketchup to napkins is the same at all franchise locations. Some franchisees resent having to use specific suppliers and would rather source their supplies and services from the vendors they choose. Avoid the temptation. Not only will it result in a violation of the franchise agreement if you get caught, but your non-compliance will also hurt brand consistency and the customer experience.

4. Get Authorization

The advertising section of a franchise agreement will often dictate that the franchisee must obtain explicit, written approval for local advertising, marketing, and promotional materials used at that franchise location. Make sure you know the approval process and follow the steps for this and any other big decision you will make that may impact the franchise. In addition to marketing, approval could be required to select a vendor, change a menu item, or choose technology. The authorization process is in place not to hinder your creativity but to ensure your and the franchise’s success.

5. Participate in Marketing

One fee that franchisees may overlook is the marketing fee. The cost is often based on gross sales, and it allows the franchisee to participate in national advertising campaigns run by the franchisor. Many franchises require participation in the marketing fund, but for some, it is optional. If it is optional in your franchise, it’s still in your best interest to join. Large national campaigns are well promoted and can draw many customers into your business. It also helps you avoid customer disappointment when they learn that the promotion is “at participating locations only” and yours is not participating.

6. Attend Conferences

Compliance with franchise agreements - attend conferences

A great way to stay up to date with what is happening in your franchise and maintain compliance is to attend meetings and conferences hosted and organized by the franchisor. During these valuable networking events, you’ll learn the latest ideas, problems, and solutions happening in the franchise and also have the opportunity to learn from other franchisees and make connections. Attending conferences requires time and money, but it is well worth the experience.

7. Regular Communication

Aside from conferences, franchisees will also have to communicate regularly with the franchisor, including submitting weekly, monthly, and annual reports as detailed in the franchise agreement. Reporting is used to calculate fees, but it can also help the franchisor identify areas of improvement in your business. By maintaining compliance in this area, you’ll avoid a breach of contract, and you’ll also get valuable coaching from your franchisor to help your business grow.

Franchisees Should Care About Compliance

Compliance is more than just a set of rules that you must follow. Compliance with the franchise agreement is an essential element of franchise systems that helps franchise businesses succeed. By being compliant, franchisees can deliver the consistency and quality that customers have grown to expect from the franchise. They can also receive feedback and support from the franchisor, who knows what it takes to grow a profitable business. As such, compliance is in the franchisee’s best interest, and it is a crucial element of success in a franchise business. Follow the tips above, and you will experience the positive benefits of franchise compliance!