THE STICK: PROGRESSIVE ENFORCEMENT SYSTEMS

When positive reinforcement fails to bring non-complying franchisees into line, stronger measures are warranted. Like in the employment setting, progressive discipline fairly applied and thoroughly documented achieves the company’s goals by:

  • Notifying the errant franchisee of his violations;
  • Letting him know how to fix the problem; and
  • Making clear the consequences of continued breach.

Often, written notice of non-compliance is enough to bring a franchisee into line. When, however, the dealer is either unwilling or unable to correct the deficiencies, progressive discipline allows the franchisor to terminate the franchisee and reduce the risk of a lawsuit.

Design a Discipline System
We help clients design progressive discipline systems and the notices, communications and records that constitute the essential “paper trail.”

A progressive discipline system in a franchise system works best when:

  • Dealers are treated fairly and consistently;
  • Notice of the problem is provided at the earliest possible moment;
  • The troubled franchisee is made aware at the outset of the negative consequences of non-compliance;
  • The steps in the discipline process are clearly spelled out to the errant franchisee; and
  • The franchisor follows up on notices and warnings with inspections and additional corrective steps.

The prospectively designed system that is publicized to the dealers is the most successful. At the Franchise Law Source, we can help you design and implement a progressive discipline system that your dealers will support and that will dramatically reduce your risk of litigation with franchisees.

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