(FS1) The Franchisor-Franchisee Relationship
Every franchisor-franchisee relationship is different, even within the same company or brand name. The relationship will be specific between you and the franchisor and set, even starting from the very first time you make contact. Then from the personal level of franchisor-franchisee, there are the contract and business related relationships. Franchisor-Franchisee relationships come in three terms recognized by most franchisors across the nation. These three relationships can be defined as franchisor as partner, franchisor as parent, and franchisor as dictator. The requirements and expectations from each vary vastly and you will want to understand your franchisor prior to signing any contract. You will also want to understand what each of these terms means in term of business together and what will be asked of you in each.
Franchisor as Partner
With the franchisor as a partner, you may not be treated equally in some cases. In most cases, the franchisor will provide the franchisee with a system while the franchisee provides the funds, labor, and day-to-day commitment to run and serve the brand. If the system is above average, partnering franchisors and franchisees will discuss and solve problems on an individual basis through one-on-one meetings and communal panels with advisors or peer guides. Despite this power and communication, franchisors are still the all-might of your brand and business.
As you begin a relationship with a franchisor, be wary of the word partner and what it implies. In no way will you legally be their partner and it will more often than anything, be used to show respect and trust in you as an individual and a franchisee, but no real power behind the brand.
Franchisor as Parent
Franchisors are like parents to their franchisees as they provide guidance, rules, and resources for the growth of a healthy franchise. Franchises provide franchisees with a safety net from having been there, done that, and not wanting to see their franchisees go through it as well. Most franchisors will offer a supportive service as hands-on guidance when a franchisee is opening their own location and even after the store has opened. Most franchisors will even offer advice, ideas, and wisdom as their franchisee grows. They want to see their franchisees grow for the benefit of the individual as much as for the benefit of themselves.
Franchisor as Dictator
Some franchisors can be very restricting. They may have so many locations that they have their operations for opening a business down to a formula and is completely inflexible. There will be little wiggle room and you may have to just do what you’re told on all accounts. It’s better that the more controlling franchisors be more up front with you. You should know what you’re looking for in a franchisor-franchisee relationship before approaching any of them to be sure you sign into a relationship that you will not only be able to maintain, but will be able to excel in.
Watch Out for Scams Against the Franchisee
Every industry has it’s scam artists. Franchising is no different. In fact, many companies can mislabel jobs in order to mislead franchisee hopefuls into a job that they never really wanted. The most common of these jobs are rack jobbers, supplier-dealer distributorships, and vending-machine routes. It’s important to remember that while not every franchise is a license, not every license is a franchise.
The definition of a franchise, as decided by the Federal Trade Commission is defined as having these elements:
- A Franchisee distributes products or services that are associated or identified by a franchisor’s trademarks or services.
- The franchisee must meet the franchisor’s set standard for service and product.
- The franchisor will have significant control over the business, but will also provide excellent assistance as needed by the franchisee.
- Franchisees will pay a minimum of $500 to the franchisor.
When you open a franchise store under your franchisee, the goal is, and should always be, to recreate the same service that is received at the other franchisee locations. That the quality of the service or product is kept up day in and day out, across the nation. This will bring consistency to not only you, but to the brand recognition.
If you ever have questions about changing things in your franchise, you will have to talk to your franchisor. If your franchisor says no, it’s not likely because he is trying to be a dictator, but because there is an established set of rules already in place and what you are requesting will break a major rule that’s set in all the stores or it may change how the brand is perceived. Remember, even if you own and run the business, you are still representing a name and brand that is not your own.
The Realities of Franchising in a Glance
Franchising shouldn’t be taken easily. It’s hard work just like any other job. However, as hard as it is, it can be just as rewarding. You can secure yourself financially and learn how to run a business through franchising. You can grow to the point of owning multiple franchises, purchasing your franchise to own it for real, or to start your own franchise altogether. With a method that’s proven to work from the franchisor, the only variable is you. Franchisees have to aggressively be involved in the development and success of their business and if you at all have a passive disposition, you may want to think about a different occupation.
