Franchise complaint handling: one brand, clear responsibilities

Customers see the brand, not the contracts between the businesses behind it. If something goes wrong at a franchisee’s outlet, they may well expect head office to resolve it. Before expanding your existing business into a franchise network, it is therefore worth establishing a dedicated complaints procedure. The aim is not to take over the franchisee’s day-to-day work, but to ensure that every case has someone responsible for it, customers receive a clear response they can follow up on, and the shared reputation is protected.

1. Distinguish the brand from the responsible business

In company-owned outlets, the same business often makes the sale, issues the invoice and handles the complaint. In a franchise network, these tasks are spread across several legally and financially independent businesses. Having a central email address or social media page does not, in itself, make the franchisor responsible for fulfilling every customer contract.

Start by clarifying which business the customer contracts with for each sales channel. Review in-person purchases, online orders, central bookings and gift voucher redemptions. For the latter arrangements in particular, customer information must reflect how the business actually operates.

Draw up a short responsibility matrix covering:

• who the seller or service provider is;
• where complaints are received;
• who investigates the case;
• who decides on a remedy or goodwill compensation;
• who responds to the customer;
• who bears the cost of resolving the complaint.

For example, head office may receive a complaint about a service provided by a franchisee, but the franchisee must be involved in decisions concerning their delivery of that service. Customers should not have to work out how responsibilities are divided internally: the network should arrange for their complaint to reach the right person.

2. Keep statutory requirements separate from internal commitments

Hungary has no standalone, comprehensive franchise act, but that does not mean franchise relationships are unregulated. Act V of 2013 on the Civil Code expressly provides for franchising in Sections 6:376–6:381, which govern franchise agreements. General contract rules also apply.

Act CLV of 1997 on Consumer Protection is also important when handling consumer complaints. As a general rule, oral complaints must be investigated immediately and remedied where necessary. If this is not possible, or the consumer disagrees with how the complaint has been handled, a formal record must be made. Written complaints must generally receive a substantive written response within 30 days, in a verifiable manner. Different requirements may apply to certain activities.

Proper complaint handling also includes explaining any rejection and providing appropriate information about routes for redress. There are statutory requirements for retaining records of complaints and the responses to them, too. Have your final procedure checked against the rules applicable to your specific products and services.

An important distinction: the deadline for responding to a complaint is not the same as the deadline for fulfilling every statutory defect liability or guarantee claim. Nor may internal forwarding be used to circumvent statutory obligations.

The Hungarian Franchise Association’s code of ethics also emphasises maintaining a shared identity and reputation. It is not legislation and does not replace compliance with consumer protection law, but it can provide a useful basis for cooperation.

3. Create a single, trackable complaints process

A good procedure is not a collection of lengthy letter templates: it is a clear workflow. Every case should have a reference number, a designated person responsible, a recorded receipt date and time, and a next action. Staff should know what to do even when a complaint reaches the wrong outlet.

It is useful to set out the process in five steps:

1. Receipt: record the complaint and the necessary contact details.
2. Classification: identify the franchisee, purchase and problem involved.
3. Investigation: gather transaction records, staff accounts and other relevant information.
4. Decision: distinguish the customer’s statutory entitlement from any additional goodwill gesture.
5. Closure: provide a substantive response, take action and document the outcome.

Set internal targets for forwarding and responding to complaints that leave enough time for investigation. These are your own operational commitments, not separate statutory deadlines specific to franchising.

Flag urgent cases separately: personal injury, suspected product safety issues or the same fault affecting several outlets should not follow the routine correspondence process. Ensure that a central contact and a deputy are available. Any action involving authorities or safety measures must nevertheless be determined under the rules applicable to the particular case.

4. Define decision-making authority, costs and feedback

The franchise agreement should set out the foundations of cooperation on complaints, while the detailed steps can go in the operations manual. Clarify when the franchisee must notify head office, what support they will receive and who may speak publicly on behalf of the brand.

Compensation is a particularly sensitive issue. Head office should not promise a refund at the franchisee’s expense without authority agreed in advance. The reverse should also be clear: when may a franchisee offer a discount at their own expense, and when is a joint decision required? A goodwill gesture cannot replace the consumer’s legal rights.

Before launch, run through a few test cases together: a complaint sent to the wrong address, a disputed service and a public negative review. Check that everyone involved has the same understanding of their role. Later, produce regular summaries of closed cases, preferably without information that could identify individuals: which problems recur, and what operational changes do they call for?

Practical takeaway: before your first franchisee joins, have a responsibility matrix, a tested complaints process and clear compensation rules in place. Customers should see one brand, while every business behind it knows exactly what it is responsible for.