Legal Security & Franchise Software
“A lawsuit often ends up costing between 40,000 and 50,000 euros, because it is very difficult to prove that we have done our job as a franchisor — which consists of a thousand small tasks carried out every day for several years by numerous head office employees on a daily basis.”
declared together a well-known lawyer and the CEO of a client brand in our presence.
“The use of our 100% Franchise platform has saved us a great deal of money. In the end, we had unknowingly subscribed not only to additional fire insurance, but also to a growth accelerator!”
admitted that same CEO.
Thus, the use of our franchise software has recently allowed several franchisors to save tens of thousands of euros in court.
How? Why? Here’s a bit more in just a few lines.
More and more franchise brands are choosing to use a true “Franchise Software”, that is, a collaborative platform that brings together in one place all the functions usually offered through multiple separate tools: an extranet, a forum, a directory, collaborative project management, an online operations manual, e-learning courses, a candidate CRM, an audit and site monitoring tool, reporting tools, surveys, and quizzes…
Whether the result of often very costly in-house developments or offered more simply as a subscription service by Cerca (formerly Franchise On Cloud), these software solutions are not only designed to open more points of sale and provide them with all the tools they need to succeed.
In other words, a “Franchise Software” is not only a tool to ensure your success — it can also help you avoid the worst: costly lawsuits with your franchisees.
As we know, losing a lawsuit can jeopardize the growth of a brand that is still developing, given the amounts to be paid and the impact on the network’s cash flow.
Bringing together all the features required for the franchisor’s role within a single tool makes it possible to track the entire relationship between the head office and the franchisee — from recruitment to daily support, including training and the transfer of know-how.
Most lawsuits filed against franchisors are initiated by franchisees who have failed. Indeed, when facing failure, it can be tempting to place the blame on the franchisor. Case law, moreover, is largely favorable to franchisees and is based on already quite protective legislation.
Two main lines of attack are often used by franchisees’ lawyers: proving that the franchisor poorly supported the franchisee and failed to meet their obligations, or that the contract binding the franchisor and the franchisee is null and void, thereby opening the way for its termination.
The first case concerns the daily operations within the network: the transfer of know-how, proper communication of its updates, training, visit reports accompanied by recommendations, and more.
The second often concerns the candidate recruitment phase and its pre-contractual stage: was the contract signed at least 21 days after the signing of the D.I.P? Was the D.I.P complete? Was it indeed the correct document that was presented and signed on that date?
Let’s be honest, it’s difficult to find proof and trace all exchanges with the franchisee when a lawsuit arises. The same reflexes are seen across all brands: everyone asks the field managers to retrieve sent emails, visit reports, and proof of follow-ups… Everything comes to a halt at head office amid the panic.
Only a tiny fraction of these exchanges is ever recovered — often those dating from periods when the relationship between franchisors and franchisees had already begun to deteriorate. These searches take time. Yet this time is crucial and works against the franchisor. Indeed, much is at stake during the pre-litigation phase, when each party assesses and evaluates its own legal strengths as well as the arguments of the opposing side. Each must show its strength as early as possible.
What happened with the brands using Cerca, formerly Franchise On Cloud?
It took barely 2 days to send the franchisee’s legal counsel all the evidence proving, over a 3-year period, the actual actions carried out by the franchisor, namely:
- an online operations manual available 24/7, which the franchisee consulted only 4 times despite the 25 emails announcing updates and containing direct links to the modified sections.
- 67 news updates read only 12 times by the franchisee and never commented on.
- 15 precisely dated visits with 15 visit reports consulted online by the franchisee, each accompanied by recommendations and identified issues that the franchisee confirmed as resolved.
- Proof of communication during the recruitment phase, where the candidate (via an online questionnaire) presented the strengths of their application as well as the areas in which they were least skilled (compared with the topics covered in the initial training, which focused on those very subjects).
- Proof that the correct D.I.P document was signed at the right time by the right person, thanks to the integrated electronic document signature module.
- Proof of support during the opening phase through the project management workspace, where each team member and the franchisee check off the completion of the required tasks.
- Exchanges through the internal messaging system between all head office employees and the franchisee.
- Proof of the 13 e-learning modules completed by the franchisee’s employees, including details of the time spent, the results obtained, and their progress over several months.
- The 42 quizzes and surveys in which the franchisor requested feedback from its franchise partners on various key topics — ranging from communication to supplier referencing, including the quality assessment of its support services.
- The 22 sales challenges proposed, in which the franchisee never participated.
- The complete traceability of the pages viewed online over the 3-year period by the franchisee, showing the limited effort made to update the know-how, which was nevertheless regularly provided by the franchisor.
The result was quick. The franchisee and their counsel fully grasped the franchisor’s arguments and the wealth of evidence showing the almost daily interactions with franchisees, the support provided to them, and the consideration given to their feedback. No lawsuit was ever filed by the franchisee, and two other franchisees threatening similar legal action abandoned their plans.
These powerful tools will never distort reality. They will never allow a dishonest franchisor to twist the facts or fabricate support that never existed. And that’s a good thing.
But these “franchise software” solutions are effective tools for closing or limiting the consequences of a lawsuit for the many committed and honest network heads who are the pride of the great brands growing every day for the benefit of all, and who embody the strength and integrity of the entire Organized Commerce sector.
