Role of the Franchisor
Six major responsibilities of the franchisor:
1. Selecting qualified franchisees who understand the franchise’s concept and are committed to operating the system according to the established standards.
2. Protect the brand and reputation by enforcing system standards in all company-owned and franchised locations.
3. To make changes to the system’s product and/or services mix when necessary to meet consumer demand.
4. To enhance and improve the operating system.
5. To provide franchisees with training for use with their teams to ensure that all unit staff understand their role in the franchised operation and have the skills to be effective in performing their job responsibilities and duties.
6. To develop and enforce advertising, promotion, and merchandising standards, as appropriate, that reinforce the franchise’s brand image and increase customer traffic.
Role of the Franchisee
Four major responsibilities of the franchisee
1. To protect the franchised brand by operating the franchise in strict compliance with system operating standards.
2. To build a strong and loyal customer base by offering only approved products and services and by providing superior customer service.
3. To ensure that all employees are properly trained and the franchise is properly staffed at all times.
4. To advertise and promote the franchise and its approved products and services according to the guidelines provided by the franchisor.
Franchising is a method of distributing products or services. At least two levels of people are involved in a franchise system: (1) the franchisor, who establishes the brand’s trademark or trade name and a business system; and (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system.
Franchising is a team effort. For any franchisor to succeed, the vast majority of its franchisees (all, ideally) must operate profitable individual franchise units over the long term. A brand’s success depends on an ongoing partnership between franchisor and franchisee. One of the most common sayings in franchising is: “Franchising means working for yourself, but not by yourself.”
For many, franchising’s greatest appeal is the opportunity for an individual to control their destiny and secure their future.
The Franchisor
The franchisor provides the franchisee with business support, while also exercising control over some elements of the franchisee’s operations as needed, to protect its intellectual property and ensure that the franchisee adheres to its brand guidelines.
In exchange for the use of the intellectual property and the business support, the franchisee usually pays the franchisor a one-time initial franchise fee and a continuing royalty, covering the use of the franchisor’s trade name and operating methods.
The Franchisee
A franchisee is a person or company that is granted a license to do business under the franchisor’s trademark, trade name, and business model, by the franchisor.
The franchisee must follow certain rules and guidelines already established by the franchisor.
Attributes of a successful franchisee:
- Be willing and able to learn new skills.
- Be able and willing to follow system standards.
- Be ready to move from big business to small business.