A chain is only as strong as its weakest link, and the same rings true for franchise networks. When a crisis hits, the entire brand bears the brunt, even if only one location is at fault.
The unique nature of franchises means decision-makers must manage corporate-level reputation while addressing franchisees’ individual needs and challenges.
In these moments, a solid reputation management plan is essential to ensure swift, coordinated action that protects the brand on both local and corporate levels.
Learn how to navigate a crisis and restore trust across the board with proven strategies. This blog covers:
• What Is Reputational Risk: The Domino Effect of Bad Reputation
• What Is Crisis Management?
• Common Reputational Risks for Franchise Businesses
• Franchise Reputation Management: How To Mitigate Reputational Risk
What Is Reputational Risk? The Domino Effect of Bad Reputation
Reputation risk is a threat or danger to the good name of a business. Reputational risk can happen:
• Directly, through the company’s actions, such as product failures, non-compliance with regulations and data breaches.
• Indirectly, due to the actions of employees or franchisees.
• Tangentially, through third parties like suppliers, vendors, partners and even past employees.
Reputational risk is an often underestimated threat that can jeopardize even the biggest corporations. For franchise networks, the stakes are even higher.
Franchises operate under a shared brand name, but each location is independently owned and managed. While Corporate sets the standards, franchisees manage the day-to-day operations.
However, for those outside this bubble, the brand is viewed as a single entity. The failure of one location becomes the failure of the entire network. This interconnectedness makes it especially difficult to contain reputational damage and often leads to:
• Loss of customer trust, affecting all locations, even those not involved in the issue.
• Revenue declines as customers avoid the brand entirely.
• Negative media coverage can amplify the problem and reach a wider audience.
• Decreased market value, especially if the reputational damage leads to financial losses or reduced investor confidence.
• Leadership changes at the highest levels as companies work to restore trust and recover their reputation.
Proactive reputation risk management is key to preventing small problems from escalating into full-blown crises. But what is crisis management, anyway?
What Is Crisis Management?
Crisis management is preparing for, responding to and recovering from unexpected events that can negatively impact a business’s reputation, operations or financial stability. It involves planning and coordinating actions to minimize damage and restore normalcy.
Effective crisis management includes identifying potential risks, developing a clear response plan and ensuring all team members know their roles during a crisis.
Being prepared allows businesses to respond quickly and confidently, safeguarding their brand and keeping customer trust even during tough times.
Common Reputational Risks for Franchise Businesses
Understanding the reputational risks associated with running a business will help you plan better for the future. Here are the risks that franchise businesses face:
Poor Reviews and Bad Press
Over 99.9% of customers read reviews when shopping online, and 96% actively seek negative reviews before purchasing (PowerReviews).
In the age of the Internet, businesses must be prepared for negative feedback in the form of online reviews, news or comments.
Negative reviews carry a lot of weight: 94% of consumers say a bad review made them avoid a business. However, 45% are more likely to visit a business that responds to negative feedback. Sadly, 63% of consumers have never received a response from at least one company they reviewed, highlighting a missed opportunity for engagement.
Review Gating
Review gating is when companies selectively solicit positive reviews while purposefully discouraging or filtering out negative ones. While this may seem like a strategy to protect your brand’s image, it is against the Federal Trade Commission (FTC) and Google’s guidelines.
Non-compliance can result in penalties, such as fines or the forced removal of reviews, including genuine ones that might appear questionable.
Data Breaches
For franchise businesses, a data breach at one location can jeopardize the entire brand’s reputation. A single breach at one location can break trust, harm customer relationships and generate negative publicity for the entire brand.
Protecting your franchise requires strong security measures and internal controls to safeguard sensitive customer data and maintain confidence across all locations.
Operational Risk
Operational risk in a franchise refers to the potential for losses due to failures in internal processes, people, systems or external events that disrupt the day-to-day operations of franchisees or the franchise network.
Examples of operational risks:
• Inconsistent Service Quality: Customer service or product quality variations across franchise locations.
• Supply Chain Disruptions: Delays or issues with suppliers that affect product availability.
• Employee Turnover: High staff turnover can lead to training gaps, service inconsistency and operational inefficiency.
• Regulatory Non-Compliance: Failure to meet local laws, health codes or other regulations.
• IT System Failures: Technology outages or system crashes interrupting operations or sales processes.
Social Responsibility Issues
Consumers today expect businesses to take a stand on social and environmental causes. According to recent surveys, 91% of consumers say they are likely to switch to a brand that supports a good cause, given similar price and quality.
Additionally, 86% believe companies should actively take a stand on social issues, and 64% of consumers choose, switch, avoid or even boycott a brand based on its stance on societal matters.
Any shortcomings in the following areas can lead to significant reputational harm:
• Eco-friendliness
• Ethical sourcing and Fair Trade
• Fair labor practices and employee well-being
• Community engagement
• Diversity and inclusion
• Corporate governance and transparency
• Responsible marketing and advertising
Customers expect businesses to do more than pay lip service to these values. They need to make it a core part of their business operations.
Authentic actions speak louder than words, and integrating these values into everyday operations truly resonates with today’s socially conscious consumers.
Competitor Actions
The actions of competitors can impact your business’s reputation, particularly when they engage in unethical behavior or are involved in public scandals. Even if your franchise maintains high ethical standards, customers may associate your brand with negative industry trends simply because it operates in the same space.
To protect your reputation from the fallout of competitors, it’s important to:
• Uphold Strong Ethical Standards: Always operate with integrity, ensuring your business stands out for the right reasons.
• Be Transparent: Openness and honesty build trust, especially when others in the industry are under fire.
• Deliver Great Customer Service: Prioritizing customer care can strengthen loyalty and set your business apart.
Weak Internal Coordination
Poor coordination between departments is a major source of reputation risk for franchises. When one team makes promises that another team can’t deliver on, the brand’s reputation suffers.
For example, suppose the marketing department promotes a new service before operations are fully prepared to support it. In that case, the business faces a tough decision: release a subpar product or delay the launch, either of which can damage customer trust and credibility.
Ensuring that all teams are aligned is essential to avoiding these reputational pitfalls.
Franchise Reputation Management: How To Mitigate Reputational Risk
Responding to a crisis after the fact often leads to rushed, poorly planned decisions. Investing time in creating a proactive reputation risk management plan ensures that your agency and clients can respond confidently if a negative incident occurs.
Here’s how you can prevent a worse scenario and effectively mitigate a reputational risk:
• Identify potential reputational risks your SMB clients face in their operations.
• Create a plan to address and mitigate each identified risk.
• Establish monitoring methods to evaluate the effectiveness of your risk management strategies.
More about these in the next sections.
1. Identify Key Stakeholders
Start by identifying all key stakeholders involved with your client’s business. This includes:
• Customers (existing and prospective)
• Employees, contractors and freelancers working with the business
• Suppliers and vendors
• Regulators and professional organizations
Once stakeholders are identified, determine what each group expects from your company. What do they value most about the business? Why do they choose it over competitors? Understanding these expectations will help in assessing risks effectively.
2. Conduct a Risk Assessment
The next step is to conduct a thorough risk assessment to pinpoint factors that could harm your reputation. This assessment should cover internal and external risks that impact public perception.
Start by assessing the company’s reputation. Establishing a baseline helps you track changes and spot potential risks before they become bigger issues.
Here’s a good way to go about it:
• Talk to Stakeholders: Meet with key stakeholders to understand their concerns and potential reputational risks.
• Check Online Mentions: Search to see what people say about the company online — this will give you a sense of how the brand is perceived.
• Monitor Social Media and News: Monitor social media posts and recent news articles to spot trends or issues that could harm the company’s image.
3. Form a Crisis Team
For a franchise business, it’s crucial to select crisis team members who can manage challenges across corporate and local levels. You’ll want a mix of people from communications, legal, human resources, IT and operations to ensure all business areas are covered.
Bringing together a diverse team is key to effective crisis management. Different perspectives lead to better problem-solving, especially in franchises, where issues can vary across locations. This ensures that solutions are tailored to specific challenges while protecting the overall brand.
4. Use Social Listening Tools
Social listening involves tracking and analyzing mentions of your brand, competitors and relevant topics across social media platforms. This process helps you stay informed about conversations that could affect your brand’s reputation.
Using tools like Sprout Social or Hootsuite, you can identify emerging risks before they escalate, such as negative feedback or trending topics that could harm your brand.
Beyond that, social listening allows you to:
• Track competitor activities to stay ahead of the competition.
• Monitor trending content and topics relevant to your industry.
• Conduct sentiment analysis to gauge customer opinions and feelings.
This will allow you to make smarter, data-driven decisions that protect your reputation and improve customer engagement and business strategy.
5. Develop a Crisis Management Plan
A solid crisis management plan is key to effectively handling potential threats and crises. This plan will guide how your organization responds when things go wrong. Here’s what it should include:
• Designated Spokespersons: Assign specific people who will speak on behalf of the business during a crisis.
• Clear Communication Strategies: Outline how you’ll communicate with stakeholders, customers and the media, using messaging tailored to the situation.
• Contingency Plans for Different Scenarios: Prepare action steps for various types of crises, such as data breaches, product failures and supply chain issues.
Review and update your crisis management plan regularly to keep it relevant. Running crisis simulations and drills will also help your team prepare for unexpected situations.
6. Encourage Transparency
Some companies shy away from full transparency, believing it safeguards their reputation. In truth, honesty fosters trust and credibility. Being open demonstrates that you have nothing to hide, which strengthens your relationships with stakeholders and reinforces your brand’s integrity.
Here’s how you can encourage transparency:
• Discuss your company’s goals, strategies and progress with stakeholders.
• Encourage employees to voice their concerns and provide feedback freely.
• Create open channels for communication to ensure transparency and clear messaging.
• Demonstrate accountability by owning mistakes and taking responsibility.
• Be responsive to stakeholder feedback and show that you value their input.
By practicing these, you build trust and help protect your reputation over the long term.
7. Prioritize Ethics and Compliance
Keeping your business ethical and compliant with laws is critical to maintaining a good reputation. Misconduct or illegal activity can seriously damage your brand, so it’s important to show a strong commitment to doing the right thing.
Here’s how to ensure ethics and compliance:
• Set clear ethics guidelines for employees and leadership to follow.
• Offer regular training to keep everyone informed about proper practices and legal requirements.
• Create a safe way for employees to report concerns without fear of retaliation.
Prioritizing ethics helps protect your reputation and builds trust with customers, employees and partners, ensuring long-term success.
8. Conduct Internal Compliance Training
Even if some reputation risk management measures appear to be common sense, it’s important for all employees — and, if feasible, contractors — to complete compliance training. This training should include your company’s policies on social media use, handling interactions with the press and public speaking about the organization.
Here are a few ways to effectively train your team:
• Provide tools and guidance so employees can identify and report potential risks early.
• Offer training sessions and workshops to help them understand the impact of reputation and how to manage it.
• Teach best practices for communication, social media use and customer interactions.
• Empower employees to be brand ambassadors, promoting a positive image and preventing reputational damage.
9. Invest in Crisis Management PR
When all other efforts to manage reputational risk have been exhausted, and your company still finds itself in trouble with the public, it’s time to turn to public relations.
Crisis management PR and marketing can help rebuild your brand’s image and regain the trust of customers, employees and other stakeholders who may have been put off by recent events.
Crisis management PR can help with:
• Addressing concerns directly and offering transparency to rebuild trust.
• Communicating positive changes your company is making in response to the situation.
• Re-engaging stakeholders to show you’re listening and taking action.
• Shifting the narrative by highlighting new, positive initiatives or improvements.
• Monitoring the external environment to stay ahead of trends and issues that could impact your brand.
10. Standardize Feedback and Review Collection
For franchise businesses managing multiple locations and teams, evaluating customer satisfaction efficiently can be challenging without a consistent process. A standardized feedback and review collection system simplifies the process and ensures all locations are assessed using the same criteria.
Standardizing feedback helps to:
• Compare performance across locations through consistent customer satisfaction surveys and Net Promoter Scores.
• Ensure compliance with brand guidelines and confirm that all franchises are meeting high standards.
• Identify areas for improvement based on clear, data-driven insights from customer feedback.
This approach allows franchises to maintain high customer satisfaction and make informed decisions across the entire business.
11. Respond to Online Reviews
Negative reviews can be tough to manage, but they offer a chance to show that your franchise values feedback and is dedicated to improvement. Thoughtful and genuine responses to complaints can turn negative experiences into opportunities to build trust.
Research shows that 44.6% of consumers are more likely to visit a business that responds to negative reviews, yet only 36.7% of customers receive a response. Taking the time to respond shows customers you care about their experience and are actively working to improve it.
Responding to positive reviews is just as important:
“Focus on publishing positive content online, like positive reviews and testimonials. Also, the leaders could be featured on 3rd party sites with positive interviews and positive stories,” said Tim Clark, Thrive’s Senior Reputation Manager.
12. Claim and Update Business Listings
Claiming and updating your franchise’s business listings on platforms like Google Business Profile (GBP), Yelp and Facebook ensures that customers have access to accurate, up-to-date information. This makes it easier for potential customers to find your locations and trust the information they see online.
By maintaining these listings, you:
• Ensure consistent, accurate information such as hours, services and contact details.
• Boost local SEO, improving your search rankings and visibility across locations.
• Engage directly with customers by responding to reviews and feedback and managing your reputation at both local and corporate levels.
Having control over your business listings lets you maintain a strong, trustworthy presence in your local markets while optimizing customer engagement.
Build a Positive Brand Reputation Across Locations With Thrive Local
Maintaining a good reputation for one location can be challenging enough. You have to ensure consistent service, coordinate marketing efforts and manage customer relationships. Now, imagine doing all of this for multiple locations at once.
With Thrive Local, you can streamline your reputation management across all your franchise locations. Here’s how we make magic happen:
“We are a fully managed service, handling setup and support. It’s a great fit for busy clients who don’t want to be hands-on with the process,” Clarke said.
Our ORM experts keep you informed about your brand across multiple platforms while supporting franchisee-level targets. We automate your online reputation campaigns to ensure the success of your multi-location marketing efforts.
Our franchise reputation management services include:
• Reputation Management Software: Centralize your feedback management and monitor your online reputation from one platform.
• Online Reputation Repair: Address and rectify negative feedback or reviews to restore your brand’s image.
• Franchise Reputation Management: Manage and promote your brand’s reputation across all franchise locations to ensure consistent messaging and quality.
• Social Media Reputation Management: Monitor and engage with customers on social media to maintain a positive presence and respond to feedback effectively.
Build and maintain a favorable brand image — speak to our ORM experts today.
