With every franchise agreement, comes the duty to refurbish, upgrade, and maintain current design and brand standards. The wording is different, but the obligation is the same. Franchisors, generally, have a nearly an unfetter right to require refurbishing. The duty to refurbish- rebrand is seen as essential to maintaining the relativeness and competitiveness of the franchise brand.
In August, Quest Apartment Hotels ‘relaunched’ franchises with a 10 million dollar re-brand initiative in Australia. Yes, re-branding is expensive. It can hit the franchisees’ bottom line hard. It is important to sell the concept of the rebranding not only to consumers, but also to franchisees. Franchisors have the right to require refurbishments, but failing to sell it to franchisee can lead to the dreaded assertion that the franchisor is acting contrary to the ‘implied duty of good faith and fair dealing.’
Here is an outline of Quest’s plan:
- Garner system energy by unveiling the re-branding at the franchisee annual conference.
- Pair up with the right people by inviting members of franchisee’s advisor counsel to be in on re-branding planning and implementation.
- Have a plan for recouping the cost of the re-branding by tying the re-brand upgrades to justification for high prices.
- Proudly announce the re-branding to consumers via an advertising campaign.
It is harder to build the case of unreasonableness and unfairness if franchisee’s advisory council has some ownership to the re-branding. If there is plan to bring in higher revenue dollars by increasing prices or attracting new consumers via advertising, the re-branding has business investment value. These step can help to reduce claims that the franchisor breached its duty of good faith and fair dealing.
Get our Free Newsletter!
Click here
