Tips for Strong Franchisee/Franchisor Relationship

The relationship between a franchisor and franchisee is a continuing, contractual business relationship governed by a Franchise Agreement.  This agreement expounds the framework and parameters of the relationship at the beginning, so both franchisor and franchisee know their rights and obligations to the relationship between them. The franchisor provides the franchisee with the operating system and support services to help grow the business while the franchisee is an independent small business owner leading the operations and management of their franchise location. The franchisee-franchisor relationship is a unique relationship in business. Many times, the relationship between the two is described as a parent/child relationship, wherein the franchisor (parent) offers guidance and direction, and wills the franchisee (child) to succeed.  However, such description of the relationship is also misleading to an extent for it categorizes the franchisee into a secondary role. When a franchisor provides a structure for the franchisees to follow, it’s up to the franchisee to take responsibility for his or her business growth and success. Each franchisee is an independent business owner and his/her efforts will ultimately determine if he/she succeeds or fails with the franchise. Here is the list of keys to a strong franchise/franchisor relationship:

  1. Research Well:

Doing your research is the foremost key to building a great franchisee/franchisor relationship. Good research would help you discover whether you’re manually a good fit to enter into a business partnership. A potential franchisee should research on two levels namely the business opportunity and the franchisor.

On the level of business opportunity, you should visit business site to take a note of the services, review the information memorandum carefully, consult the advisers such as business consultant/lawyer, consult the current franchisees to get their perspective and evaluate the digital network of the business. On the level of franchisor, you can begin with online research such as going through the franchisor’s websites to get the relevant information regarding press coverage and media coverage. In order to start the recruitment process, contact the franchisor to fill-in an expression of interest and be attentive to how the franchisor handles the entire process along with materials provided and head office communication. Investigate well about the training process, additional costs associated with the purchase of a franchised business such as franchisor fees, royalties and marketing/advertising fees and the support provided by head office to franchisees.

  1. Communication is Vital:

Strength of franchisee/franchisor relationship is directly proportional to the open communication and trust between the two. This includes sharing ideas, best practices, feedback and input. Franchisee’s feedback about what works and what not along with suggestions for improvement or new product innovations should be considered seriously. Also there are innumerable instances where some of the most successful campaigns or products came from within the network of franchisees. Newspapers, internal portals, meetings, webinars and seminars are good platforms for franchisors to communicate and herein all franchisees can also be encouraged to provide feedback. Like any other relationship, the present one also runs well and lasts longer when there is consistency in open and transparent communication.

  1. Understanding and Owning Responsibility and Accountability:

Understanding and owning responsibility and accountability on each side of the franchisee/franchisor equation is a key element to build a strong relationship between the two. Since the relationship is based on the respective responsibilities, it is better to understand them from the get-go. The franchisor is responsible for providing franchisees training, support, plans and necessary tools with recommendations to make a grade. While treating all franchisees equally and maintaining the quality standard across the system, it is the responsibility of franchisor to watch and adapt to new technologies, trends, customer satisfaction, products and services. The responsibilities of franchisee includes following the outlined system and training, hiring staff, determining employee pay structure, participating in advertising campaigns by honouring product or service promotions, reporting of sales to the franchisor and maintaining high product/service standards.

  1. Right Tools and Systems to Succeed.

In franchising, franchisees buy into a successful business model set by the brand. Hence, it’s important to ensure that tools the franchisor has designed help franchisees work more efficiently. This includes:

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