(FS2) Area Representatives & Franchisor RetroFranchising

The area representative is unique in the franchise system. They are the person the salesperson for the franchise and generally make a commission off of each franchise they sell. They answer questions, provide support for the franchisees and may have other responsibilities. In many cases they will also pay a fee to the franchisor just like the master franchisee for the opportunity to develop an area. They will usually be giving a specific number of units that that need to be sold for said area.

 

The main difference in this relationship is that the area representative does not have any contractual relationship with the franchisees as the master franchisee does. This is because they are essentially just recruiting for the franchisor rather than working as a master franchisee.

 

RetroFranchising

 

Many people use retrofranchising and refranchising interchangeably. The truth is that these are very different. Retrofranchising is a term used for locations that were once owned by the company and have never been franchised. Refranchising is franchise locations that have been taken over by the franchisor. There are several reasons that a franchisor may choose to sell locations like this such as:

 

  • The company may no longer want to handle the operation of individual companies

    buying the right franchise

  • They may want to reduce the number of locations that they operate
  • They may be selling locations as a way to obtain more capital for opening markets in other areas.
  • It may be an effort to stimulate franchise growth in a region
  • It could be because the company is having financial problems and needs the capital
  • The company may feel that the franchisee will be better at running the business than the franchisor. It may be because the location is far from the headquarters or because they feel that the franchisor is a better fit for the location.

 

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