Whether you’re a lawyer, accountant, consultant or insolvency specialist, advising clients in the franchising sector requires both technical knowledge and commercial sensitivity. The franchise model presents unique risks, particularly when individual franchisees experience financial distress that may impact the broader network.
How you guide your clients, both franchisors and franchisees, during these moments can significantly influence outcomes. This includes whether the relationship survives, the site remains viable, or the brand suffers reputational damage.
Why proactive support is better than reactive litigation
When relationships sour between franchisors and franchisees, parties often turn first to enforcement, legal pressure or formal complaints. However, that path is expensive, time consuming and rarely improves outcomes. A commercial, solutions-focused approach can better preserve value for both parties, especially when supported by objective third-party expertise.
Advisors play a crucial role in facilitating that outcome.
Key ways advisors can support better outcomes
- Help clients identify distress early
Assist clients in building systems that flag early warning signs, such as financial stress, declining KPIs or compliance breaches. Franchisees often delay seeking help, and franchisors frequently overlook signals until it’s too late. Early action is critical. - Support practical commercial solutions
Encourage clients to explore commercial workout options first. These may include operational support, revised payment terms, temporary fee adjustments or new local marketing strategies. These solutions are often more successful and less damaging than immediate legal action. - Mediate and reframe strained relationships
When the franchisor and franchisee relationship has broken down, advisors can step in to reframe discussions, align interests and reduce conflict. A neutral party can open the door to solutions that would otherwise be rejected out of principle. - Prepare structured exits where necessary
If recovery isn’t viable, help your client pursue managed buybacks or step-ins that allow the franchisor to retain the site. Structured exits protect the brand and help franchisees avoid formal insolvency. - Ensure legal and compliance frameworks are robust
With increasing regulation, especially around disclosure, franchisee protections and fund usage, advisors should review and update franchise agreements, policies and governance processes to reduce risk and ensure consistency in managing distress.
How you can support clients through franchise distress with help from de Jonge Read®
At de Jonge Read®, we regularly partner with professional advisors to help navigate franchise distress. Our role is to complement your expertise with practical, on-the-ground support that helps both franchisors and franchisees avoid escalation and preserve value.
We work alongside lawyers, accountants and consultants to:
- Conduct independent assessments of franchisee viability and network risk.
- Facilitate commercial workouts that are acceptable to all parties and reduce exposure to litigation.
- Design and support structured exits or franchisor buybacks to maintain continuity across the network.
- Deliver strategy and execution support to reduce the burden on advisors and clients during complex negotiations.
Our approach is grounded in commercial reality, regulatory knowledge and deep franchise experience. Whether your client is a franchisor trying to protect their network, or a franchisee trying to exit without collapse, we can help deliver practical, defensible solutions.
Let’s work together to achieve better outcomes for your clients. Contact de Jonge Read® for confidential support and strategic insight.
Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.mo1770885057c.arj1770885057d@ofn1770885057i1770885057
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
