Understanding the dynamics of conflict within business franchise systems

High levels of franchising density and impressive growth in both franchise units and sector turnover have seen Australia described as "the franchise capital of the world". In the Australian Franchising 2006 survey, 35% of franchisors reported being involved in substantial disputes with franchisees, raising questions in relation to both the nature of power sharing within franchising relationships and the suitability of current sector regulation. This article reports on research on franchising conflict conducted by Griffith University academics in conjunction with the Australian Competition and Consumer Commission. Causes of franchising conflict include system compliance, communication issues, misrepresentation concerns, and intervention of third parties, as well as profitability concerns. While mediation-type processes have generally been productive in managing franchising conflict, such processes will not always be suitable. A broader range of processes could be utilised, along with systems-based approaches.