Buying a franchise: assess your say in the network

When you buy a franchise, you join a wider community while running an independent business at your own financial risk. You therefore need to know how your experience and concerns will be taken into account. A promise of “close dialogue” does not tell you who makes the decisions. Examine how much say you will actually have before committing to a franchise concept.

1. Distinguish between information, consultation and decision-making

A franchise network needs shared ways of working, but that does not mean everyone has the same decision-making rights. The franchisor may be willing to listen to franchisees without being obliged to follow their suggestions. This is an important distinction when comparing brands.

Divide the promised involvement into three levels:

• Information: You are told what the franchisor has decided, for example through meetings or written updates.
• Consultation: You can give your views before a decision is made, but the decision still rests with the franchisor.
• Decision-making rights: Your approval, or that of a joint body, is required for certain expressly specified matters.

Ask the franchisor to identify which level applies to each forum for collaboration. An annual network meeting may be valuable for sharing experience without giving you any formal say in decisions.

Also ask which matters are open to influence at all. These might include working procedures, planning joint activities or setting priorities for support. Ask for concrete examples of proposals that changed as a result of franchisees’ feedback. This makes it easier to distinguish between a friendly meeting culture and genuine influence.

2. Find out whom a franchisee council represents

If the network has a franchisee council, ask to see its rules or terms of reference. The name alone does not tell you how the council works. It may be an advisory forum appointed by the franchisor, or a body whose representatives are elected by franchisees.

In particular, check:

• Who appoints the members, and how long do they serve?
• Can all franchisees put forward issues and nominate candidates?
• Are both new and established businesses represented?
• How are situations handled where a member has a particular interest in an issue?
• Can other franchisees access agendas, minutes and responses?
• Who pays for travel and other costs of participation?

Also look at how votes are allocated if the council uses voting. An owner operating several units may have different priorities from someone who has just opened their first. There is no single obvious answer as to which model works best, but you need to understand which perspectives are represented.

Ask for anonymised examples of minutes, or an explanation of how a recent proposal was handled. Respect the confidentiality of individual businesses. The aim is to understand the process: was the issue raised, did it receive a response, and were the next steps clear?

3. Put your influence in its legal context

Sweden has an Act on Franchisors’ Duty to Disclose Information (2006:484). It requires the franchisor, well before the agreement is entered into, to provide clear and comprehensible written information about what the agreement entails and any other matters that need to be disclosed in the circumstances.

The minimum information includes financial terms and conditions governing changes to, renewal of and termination of the agreement. If a promised say in the network is important to your purchase, you should therefore request a clear written explanation of how it works.

However, the disclosure legislation does not itself give you a general right to a seat on a franchisee council, voting rights within the network or a veto over the franchisor’s decisions. Such rights need to be supported by binding terms. Contractual matters are also assessed under general legal rules, including the Swedish Contracts Act.

Ask an independent lawyer to examine whether the promised arrangements for franchisee involvement actually place binding obligations on the franchisor. Also check whether the council is authorised to act on your behalf or merely to make recommendations. Do not assume that the council’s approval can automatically change your individual agreement, or that your own approval is always required. This depends on the terms and any powers of attorney granted.

4. Test the decision-making process with a concrete scenario

Test the system before buying. Suppose, for example, that several franchisees believe a shared working procedure creates unnecessary duplication. How do they get from raising a concern to receiving an answer?

Ask the franchisor to explain each step: who receives the issue, when it is considered, what supporting information is needed, and who makes the decision? Ask whether a small-scale pilot can be run before a solution is rolled out across the network. Also find out how dissenting views are recorded.

An effective process should make it possible to distinguish between “the proposal is being assessed”, “the proposal has been rejected” and “the issue has not been considered”. Seek clarity on response times and feedback rather than a general promise that the door is always open.

Then weigh the model against your own expectations. Do you mainly want to follow an established concept, or do you want to contribute actively to its development? Either approach can work, but a mismatch between expectations and actual decision-making rights risks creating lasting frustration.

Practical takeaway: Do not buy into a promise of involvement without understanding the process behind it. Find out who represents you, which matters you can influence and what contractual backing your say in the network has.