Ashton Kutcher is reported as commenting of his marriage to Demi Moore that Sometimes the most illogical decisions you make in your life can be the best ones when it comes to love. In a lot of cases when you think too much about things you make the wrong decisions. This may be true of love, and even of marriage, but I doubt it is true of franchising.
 
These thoughts have been prompted by the recent release of a Griffith University survey supported by the ACCC titled Towards Conflict Resolution which contains much of interest for franchising stakeholders. That there can be different takes on the survey results is clear from the headings of the various media releases.

While the ACCC went with the more prosaic Communication lacking in franchising relationships, Smart Company used the more attention seeking Almost 30 per cent of franchisees don’t trust their franchisor. Both are correct and neither should really surprise. Franchising is a very significant business relationship but marriage of course remains the mother of all relationships.

Yet such headlines in relation to marriage would not surprise. The failure rate of marriage is, sadly, much greater than the failure rate of franchising. If a prospective franchisee had the same chance of long term success as a prospective spouse he or she may be more reluctant to sign the contract. I am indeed reluctant to use the convenient term commercial marriage to describe franchising because of the association!

While overriding his logical mind and letting his illogical mind and heart talk [him] into it worked for Ashton Kutcher it is not a recommended strategy for prospective franchisees.

Yet the Griffith survey found that 49 per cent of franchisees relied heavily on gut feeling in making the decision to go into franchising. This is a remarkable statistic. Half of Australia’s 65,000 franchisees adopted the Ashton Kutcher method of decision making. It is highly unlikely that all these gut feeling-driven franchisees will be as lucky as Ashton and wake up one morning with their franchise system representing the equivalent of marrying Demi Moore.

In the Griffith Survey just over 20 per cent of franchisees reported that they had no idea of what they were getting themselves into when they entered into the franchising agreement. That the equivalent percentage in relation to marriage would presumably be very much higher is no consolation.

Prospective franchisees of course need to know what they are getting into and a variety of good information sources and introductory courses have been developed for this purpose. Of course a franchisor – knowing that unrealised expectations are the root cause of most friction in the franchise relationship – should steer a prospective franchisee towards these resources.

A good franchisor should even insist on a prospective franchisee’s getting of wisdom. But a franchisor’s failure to do no more than the minimum required by the Franchising Code of Conduct – provide prescribed disclosure information and the agreement and recommend that specialist advice be obtained – does not absolve the prospective franchisee from personal responsibility to have regard to his or her own interests in taking on such a significant commitment.

In light of the casual and cavalier manner in which so many prospective franchisees enter franchise relationships it is hardly surprising that issues such as a lack of communication and lack of trust and dissatisfaction – all of which provide the genetic material for franchisee failure – arise.

Regulation is of course a necessary element of franchisee protection. But it is not, and can never be, the exclusive ingredient.

Prospective franchisees must take personal responsibility. Informed due diligence by prospective franchisees facilitates logical decision making and provides a necessary counterbalance to gut feeling.

There is a time to go with the heart and that is a beautiful thing but committing to a franchise relationship is not one of these times.

Andrew Terry is Professor of Business Regulation in the faculty of Economics and Business at The University of Sydney and consultant to DC Strategy.