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Lorelle Frazer and Anthony Grace

Franchising relationships are centred on the intersection of contractual agreements and personal dynamics between the parties. Franchisors have been known to comment that if they have to resort to the contract to resolve an issue with a franchisee then communication and trust has already broken down. This chapter explores the unique nature of the franchisor-franchisee relationship from both contractual and interpersonal perspectives. Whilst the legal definitions and framework governing franchising differ around the world, the basic tenets are similar. Franchising is, at its very core, a method of distribution of goods or services. Franchisors and franchisees generally share similar goals around growing the business and retaining the integrity of the brand. However, their goals can sometimes diverge out of self-interest. When their goals are misaligned and their objectives become incompatible, maintaining balance and equity in the relationship is vital. Communication, consultation and interdependence are important aspects of the franchising relationship, which are examined in this chapter. Both the franchisor and franchisees hold considerable power in the relationship, although it is clear that franchise contracts are generally drafted in the franchisor’s favour as custodians of the brand. This perceived or actual imbalance in power may cause tension in the relationship which may escalate to a state of heightened conflict, sometimes transforming into disputation between the parties. This chapter scrutinizes the complex interplay between power, control and conflict in franchising relationships.