If you receive a request for early exit, try and put emotions to one side and consider the substance of the situation. It might be that the landlord is proposing a rental increase that would render the franchise business unviable. It is wise not to make an immediate decision, although a formal decision and reasons must be provided within 28 days.  

Respond promptly and substantively: Provide a written response to the franchisee's proposal within 28 days, as required by section 54 of the Franchising Code of Conduct. Make sure your response is substantive and addresses the franchisee's reasons for termination. 

Consider the franchisee's perspective: Understand the franchisee's reasons for wanting to exit and consider any potential solutions that may address their concerns while protecting your interests. If there are immediate health or safety concerns (including mental health), a check-in with the franchisee or a visit to any premises may be appropriate. 

This is a big step for a franchisee and in most cases, it is not taken lightly.  

Consider the franchisee’s motivation and if the proposal is: 

• notification that the business is about to close, or the franchisee is in serious financial difficulty
• a request for help in circumstances where a franchisee is unsure how to best raise an issue, such as a serious health issue
• a well-considered or unavoidable commercial proposition
• a negotiating tactic in the context of a broader dispute
• request for better support or attention from a neglected franchisee. 

Consider the substance of the proposal, as opposed to how it is expressed or any inherent emotion. This may include trying to find out what the franchisee really wants. 

Consider the best interests of the franchise system: It may be beneficial for both parties for the franchisee to exit, particularly if the franchisee is not running a successful business. The Code requires a yes/no response, however, there is often an opportunity to discuss early termination on some alternative basis if it makes commercial sense for both parties. Franchisors are often better placed to come up with solutions or assist franchisees with problems they may see as insurmountable. 

Maintain good faith: Engage in franchisee negotiations in good faith, as required by the Franchising Code. This includes being transparent and reasonable in your responses. Engage in any dispute resolution process with an open mind to possible solutions. 

Provide support and resources: Think about offering support and resources to help the franchisee through the termination process. This could include financial advice, legal assistance, or access to training programs.  

Often relationships need to be managed. Think about how the handover will occur if the franchisee has sold the business. An exit interview might be a good idea as a debrief for the franchisee and for feedback to the franchisor.