Expected outcomes

• Increased compliance rates. A structured communication plan encourages franchisees to resolve non-compliance early, reducing the need for legal action or penalties.
• Lower risk of uninsured incidents. By focusing on critical gaps, such as lapsed policies, the brand reduces its exposure to legal and financial risk.
• Greater accountability and brand protection. Clear consequences, like fines or restricted resources, hold franchisees accountable and help protect the brand's reputation.

1. Define "Non-Compliance" and prioritize critical cases

• Monitoring: Once franchisees have moved beyond "Not Verified," use the RMS to focus on those marked Non-Compliant. Open Franchisees, click the Compliance filter and choose Non-Compliant.
• Prioritize: Start with the most severe gaps: lapsed policies and missing critical coverage.
  • Click Policy Status and choose Lapsed to see the locations with a required policy past its expiration date.
  • Click a location's name, then choose Compliance. The Compliance Ledger has one row per required coverage, and the Key Issues column says what is wrong in plain words, for example a missing endorsement or a limit below your requirement.

For the step-by-step, see How do I know what's wrong with a franchisee's insurance?

2. Multi-tiered communication plan

Here's a phased approach similar to how other brands have handled non-compliance:

• Initial communication: Automated reminder emails from the RMS explain the compliance issue and give the franchisee a button to upload a corrected certificate.
  • Allow the RMS to do the heavy lifting.
  • Set a point past the expiration date, like 30 days, where you get involved.
  • Do the same for non-compliant franchisees.
• Escalated communication: A formal letter from the franchisor, explaining the potential business risks and consequences of continued non-compliance.
• Legal communication: If the franchisee remains non-compliant, the final communication could be a letter from the franchisor's attorney, signaling the seriousness of the issue.

Example from other brands: Brands Rikor has worked with have successfully used this multi-step approach. If a franchisee still does not comply after five communications, the franchisor takes further action, such as a formal legal notice from their attorney. In some cases, if this doesn't resolve the issue, the franchisee is fined monthly until they comply with the insurance requirements.

Note: We are not attorneys and cannot provide legal advice. This case study is for reference only. Always consult legal counsel before taking punitive actions.

3. Consequences of continued non-compliance

• Fines: After the final attorney communication, consider a recurring fine, monthly or quarterly, until compliance is met.
• Restricted operations: Another possible consequence is operational limits (for example, withholding franchise resources or support) until the issue is resolved.
• Brand reputation: Remind franchisees that continued non-compliance puts both their business and the brand's reputation at risk, which can have long-term financial consequences for everyone involved.

How this protects your brand

Monitoring shows you where a franchisee's insurance falls short. The way to close those gaps for good is to have franchisees insured right from the start. Franchisees insured through Rikor get coverage built to your brand's requirements by a dedicated Rikor consultant, and with monitoring on they're 93.3% compliant, against 48% for franchisees insured elsewhere. Make sure your brand's Rikor link is in your franchisee onboarding: Add Rikor to your franchisee onboarding.

Related: Phase 1: Eliminating "Not Verified" policy statuses · Phase 3: Continuous monitoring and reporting · Statuses explained