Complaints in a franchise network: agree who is responsible to customers

When you turn your established business into a franchise network, a customer complaint may no longer concern a sale made by your own company. The customer sees a shared name, but the seller may be an independent franchisee. That is why you should plan how complaints will be received and resolved, and who will bear the costs, before the first franchisee-run outlet opens. This guide focuses on consumer complaints in Finland: the aim is a smooth service with no uncertainty about who is responsible to the customer.

1. First, identify the customer's contracting party

In your own business, complaints may have gone straight to the founder. In a franchise network, the same practice can create the mistaken impression that the franchisor is responsible for every sale. A shared trade mark does not, on its own, determine which company the customer has contracted with.

Map out a simple sequence for each sales channel: who makes the offer, which company the customer contracts with, who issues the invoice and who supplies the product or service. Look separately at sales through outlets, online sales and centrally managed bookings. Neither the party that technically receives payment nor the party that carries out the work necessarily determines who the contracting party is.

Then make sure the selling company is clearly identified in the information given to customers. Check at least the following:

• the online ordering process and terms and conditions
• quotations, order confirmations and receipts
• appointment confirmations and service agreements
• complaints guidance and customer service responses.

For example, a shared booking service may pass bookings to independent franchisee businesses. In that case, customers need to understand which company's service they are buying. If, instead, the franchisor sells the service in its own name and the franchisee delivers it, the responsibilities cannot be described to the customer in the same way.

Set this out in a one-page summary that even a new franchisee can explain to a customer. If the explanation needs a long list of exceptions, either the sales model or the information given to customers still needs clarifying.

2. Separate statutory liability from the shared service promise

Finland has no separate franchise act, no specific statutory franchise pre-contractual disclosure procedure and no dedicated register of franchisors. Franchise relationships are governed by general legislation, such as the Contracts Act and the Competition Act. Business-to-business marketing is also subject to the Unfair Business Practices Act. The Finnish Franchising Association's Code of Ethics is self-regulation, not law.

For consumer complaints, the key legislation is the Finnish Consumer Protection Act. The applicable provisions depend, for example, on whether the sale concerns goods or services. The internal allocation of responsibilities in a franchise agreement does not remove customers' rights under mandatory legislation. Nor is an automatic refund always the correct response to a defect or failure: the remedies available, and the order in which they apply, depend on the circumstances.

Distinguish three things in your guidance: statutory liability for defects, any guarantee, and voluntary goodwill compensation. A guarantee does not replace statutory liability. Goodwill compensation, meanwhile, can help preserve the customer relationship even where no defect or failure has been established in legal terms.

Decide separately whether the network will promise customers that they can deal with any outlet. Such a promise requires a workable system for settling costs between franchisee businesses. Do not promote a network-wide service benefit until every outlet can deliver it on the agreed terms.

3. Set out decision-making authority and costs in the right documents

The franchise agreement should define the basic obligations for handling complaints together: who deals with complaints about their own sales, when the franchisor must be notified and how costs are allocated between the businesses. Practical steps, contact details and response templates belong in the operations manual. This ensures that day-to-day guidance does not depend solely on general contractual clauses.

Draw up a responsibility table naming a person responsible and a deputy for each stage:

• Receipt: who acknowledges the message and records what the customer is asking for?
• Investigation: who gathers the order, delivery and incident details?
• Decision: who decides on corrective action or another remedy?
• Implementation: who arranges the repair, repeat performance of the service or refund?
• Follow-up: who checks that the promised action is completed?

A shared customer service team can receive a complaint even when the seller is a franchisee business. In that case, agree how far the team is authorised to make decisions that bind the seller. Access to a shared email inbox is not, in itself, clear authority to promise compensation on another company's behalf.

When allocating costs, also account for situations caused by the franchisor. If incorrect instructions for a shared campaign create a promise to customers, the franchisee should not automatically be left to pay. Document a process for establishing the cause and deciding who bears the costs. However, handling the customer's complaint must not, in practice, be put on hold because the businesses are in dispute with each other.

4. Test the complaints process before the franchisee's outlet opens

Trial the model in your existing business through exercises in which the person receiving the complaint and the person resolving it are different people. Choose a routine product defect, a service failure and a complaint about another outlet submitted through a shared online channel. Also test a situation in which the responsible franchisee is absent.

Check whether the person receiving the complaint can identify the correct selling company, explain the next step to the customer and pass the necessary information to the person resolving it. Set internal targets for acknowledging complaints and progressing cases. Do not present your own target response time as a general statutory deadline.

For monitoring purposes, record details such as the reason for the complaint, its current stage, the agreed solution and whether it has been carried out. Process personal data only to the extent necessary, and restrict access according to people's duties. A summary without customer-identifying details is often sufficient for shared learning.

Review recurring problems with franchisees: does the complaint stem from a particular work step, an unclear promise to customers or missing guidance? This allows complaints to help improve service across the franchise network, rather than remaining a problem for individual outlets.

Practical summary: before opening, confirm three things: the customer can identify the seller, each complaint has a named handler, and authority to approve remedies and responsibility for the costs have been agreed.