Accurate ranging and positioning systems encounter several practical limitations. Crystal oscillator (XO) tolerance is a major challenge that impairs the accuracy of these systems. Two-way ranging with frequency modulated continues wave (FMCW) radars in particular are more influenced by XO tolerance as compared to primary FMCW radars. So this work focuses on the measurement and compensation of the relative frequency offsets between the different XOs in FMCW radar systems in order to improve their ranging accuracy. With a two-way ranging synchronization protocol, a ±1 part per million (ppm) relative XO frequency offset may translate to ranging errors in the range of ±1.2 m. In this work, a three-way ranging synchronization protocol is proposed to compensate for the relative XO offset. The approach was tested in a practical ranging setup. Compared to the conventional two-way ranging synchronization protocol, the precision was enhanced by a factor of around 2.