Churning: The Dark Side Of Franchising

SmartCompany.com.au:

Few topics provoke greater debate in the franchise sector than the issue of churning. It is a hugely controversial issue that has the capacity to draw strong responses from both franchisors and franchisees alike, though from entirely different perspectives ranging from denial to claims it is endemic in the franchise sector.

But what is churning and why is it such an emotional issue?

At its worst, churning is recognised as the deliberate setting-up of a franchisee to fail so that their business can be resumed and resold by the franchisor. The reasoning behind this view is that a franchisor who is able to reclaim and resell the business will enjoy greater profits than from any ongoing royalties that might have been generated by the business.

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