Why you should be looking at compliance
What should franchisors focus on right now in their businesses? According to the Legal Symposium which launched the annual National Franchise Convention yesterday franchisors need to be looking to governance and compliance.
In an ever-changing world franchisors are challenged to keep up with digital transformation but there are some tips for getting this right.
Practical suggestions include looking at documentation and whether in the current form it serves what will be the future requirements.
Start checking your disclosure document – is it broad enough to cover what’s going to happen within the business?
Consider what the future is going to look like and what would someone entering the business would want to know.
Franchisees are signing up for five years, so do you know what will happen in the next five years? Is this reflected in your disclosure document.
Record keeping, a check list, time frames and the attitude to do the right thing are crucial to producing a good disclosure document.
There are emerging risk areas for compliance such as community standards and expectations of fairness. So franchisors need to ask themselves, ‘how are my customers going to look at this?’
Some things to think about:
- Employing a code compliance officer
- Should you be doing documents yourself?
- The importance of training
- Don’t wait for the ACCC to insist on it.
- Foster a culture of continual compliance improvement.
Strong corporate governance is about good leadership and the risk and regulatory environment.
Does your legal department or lawyer have an understanding of what is going on in the business? Ensure lawyers are engaging with other elements of the business to get a 360 perspective.
It’s an approach that has worked for McDonald’s.
“A few years ago a new CEO brought together the senior leadership team geographically. We sit across the table from each other, and conversations happen more naturally – risk and reward and business are part of the conversation every day,” said Craig Cawood, General Counsel, McDonald’s.
“From governance and compliance, it has made a really significant difference to the way we operate.”