Despite franchisors and franchisees entering into franchise agreements with the best expectations and highest hopes of mutual success, relationships sometimes sour and businesses sometimes fail. Franchisees have a lot riding on the viability of their franchised businesses, with their entire livelihoods hanging in the balance.
Franchisors have plenty on the line, as well, primarily in the form of brand value. The better the franchisees are, the stronger the brand. However, the opposite is equally true, and, as brand ambassadors of the franchisor, franchisees may need to offer added security to the franchisor, as assurance he or she is a committed partner, but also as a recourse should the business fail.