How Do You Deal With Termination Of Franchisees?

Termination of franchisees is never easy for at least two reasons. One, no matter how much we keep things ‘business like’, when we are dealing with people, emotions get involved. Two, good franchise companies are focused on growth and it is counter-intuitive to terminate franchisees. However, termination is not necessarily a bad thing. Generally, companies get to a termination stage when there is disagreement as to compliance with the franchise agreement.

Related: Understanding The Nature Of Franchisor-Franchisee Relationship.


I advise beginning with some introspection. Amongst the many questions the franchise company must ask of itself are, Why and how did we get to this stage? Did we not select the right franchisee based on a certain defined profile? Did we not set the right expectations? Did we not provide the right support (both reactive and proactive)? Did we not launch the unit right? Did we not clearly define the role of the franchisee in making their unit successful? I am not suggesting that all the blame lies with the franchise company, because on the contrary, in my experience, a majority of times, it is the franchisee not doing their part. However, introspection is valuable because the premise of a franchise is to create results that are ‘somewhat similar’ for all franchisees. Many times in the early stages of a new franchise, who makes a good franchisee is not clearly defined, and as such the wrong type of people are brought into the system who later have to be ‘replaced’. Whether this is the issue or something else, you must pinpoint where something went wrong.

Whenever you terminate franchisees, existing and prospective franchisees will have questions as to why. If termination is done to protect the integrity of the system because the wayward franchisee was refusing to comply, then that can have a positive message for the system, demonstrating the company’s willingness to protect the brand.

If termination is because people are failing, then that can have negative consequences. For a short time you may think you’re able to ‘get away’ by explaining that the franchisee failed as they were not following the system, but if that is the pattern, then you must go back to the entire process of the franchise model - especially Pillar One (the first seven triggers) of the Franchise Mind System.

While it is easy for someone responsible for recruiting new franchisees to focus on just that, building a successful franchise system is more like a puzzle and all the pieces of the puzzle must fit together in order for success to take place and many times, that requires a re-visit to the basics – even for companies that have been franchising for a long time and think they have the system perfected.


Harish Babla, Managing Director of Franchise Mind Corporation based in San Diego, USA.

Harish is a successful entrepreneur, a business visionary, an inspiring franchise leader, a mentor to many companies and a growth strategist who has honed his franchise skills in various capacities since 1983. Harish is passionate about growing franchise companies and helping others achieve their dreams of building successful global franchise companies by ensuring the highest standards of franchise excellence with a strong focus on growth and operating results.

Harish is a Certified Franchise Executive as designated by the International Franchise Association and conducts learning events and mentoring for numerous companies all over the world.

Harish can be reached at

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