The fourth and final phase of the franchisee/franchisor relationship centers around the decline or disillusion of the franchise business. When this occurs the franchisee generally seeks termination and asks to be relieved of any contractual obligations.

During the declining stage, the franchisee generally starts to relax their compliance with the rules, regulations, and standards which have been established by the franchisor. Franchisees who have become disenchanted with the franchisor often seek to terminate the franchise. If the franchisor does not allow that, then the franchisee, generally, begins to run down the business and to destroy the image and name of the franchise organization.

Alternately, the franchisor may realize the problem and seek to provide remedies as solutions. The franchisor may improve the communication and may be able to provide greater services and more value to the franchisee. The franchisor may develop additional promotional, marketing, and advertising programs which enhances the franchisee's opportunity for success. The franchisor then has the opportunity to turn around the franchise business and to instill within the franchisee, once again, the desire for mutual success and prosperity.