Before buying a franchise, it’s crucial to understand your roles as a franchisee. Here’s a guide explaining the roles & responsibilities of franchisor and franchisee
When you buy a franchise, you enter into a business relationship with a franchisor. The terms are often spelled out in a franchise agreement and financial disclosure document (FDD). It’s crucial that you get to know the ins and outs of this relationship. Being familiar with your roles and responsibilities and those of the franchisor will help you work as a machine.
Let’s get started, shall we?
The Roles and Responsibilities of the Franchisor
Franchisor is the glue that holds the entire franchise network together. As the custodian of the brand’s image, credibility, and goodwill, the franchisor is often tasked with taking care of the big picture for the whole franchise family. The responsibilities of a franchisor run the gamut from marketing to training and more roles in between:
(1) Financial Responsibilities
There are a ton of financial responsibilities that rest on the shoulder of the franchisor. The corporate company has to round up funds from franchisees for supporting their units and defraying admin expenses. As well as setup costs, training, marketing resources, and retail space lease/rental agreements.
(2) Marketing and Branding
Marketing responsibilities for the franchisor include:
- TV and print advertising
- Social media campaigns and management
- Nationwide promos and offers
- Outdoor advertising
- Local store marketing support
- PR support and campaigns
- Design and create brochures, flyers, and other marketing materials
The list goes on and on. If it’s anything to do with franchise marketing, the chances are that the franchisor will take care of it.
(3) Managing the Brand’s Services and Product
Besides marketing, perhaps the most crucial responsibility for a franchisor is to establish strategies that focus on promoting the franchise brand. This includes establishing quality standards for their services/products, and safeguarding the trademarks of the franchise.
(4) Staff Training
It’s the job the franchisor to offer training and education opportunities for the franchisee and the staff.
(5) Ongoing Support
Depending on the provisions of the franchise agreement, it’s often the responsibility of the franchisor to provide the franchisee with ongoing support, including day-to-day, customer service, technical, and sometimes financial support.
(6) Create a Robust Business Model, Trademarks and Proprietary Products
The franchisor has to provide a tried-and-true business blueprint that franchisee have to follow, which may include brand name, products, services, and trademarks.
If there’s a meeting, changes to product lineup, and so on, it’s the franchisor who’ll do all the communications.
The Roles and Responsibilities of the Franchisee
(1) Commit Resources and Time
As a franchisee, you’re the boss and the business owner at your unit. You are supposed to be present at the location especially during your business formative days. You have to invest some resources, time, and effort to see to it that it takes off the ground.
(2) Financial Responsibilities
Franchisees are expected to bear the burden of supporting the franchise units financially. They have to provide or source funds for start-up costs, cater to the lease space agreement, and pay staff, as well as remit ongoing fees to the franchisor.
(3) Leadership Role
Again, you’re the boss of your business as a franchisee. That’s why it is your responsibility to inspire and lead all the employees by a good example.
(4) Communicating with Franchisor or Franchise Corporate
In order for the franchise business to operate smoothly, the franchisee has to communicate all the concerns, issues and needs with the franchisor. On top of that, the franchisee has to provide regular expense and profit reporting. Whenever corporate makes any change in services or products, it’s the job of franchisee to test out the changes and report back to the franchisor.
(5) Maintain Franchise Ethics and Standards
Of more importance to the success of the entire franchise network is that the franchisee has to maintain the ethics and quality standards mandated by the franchisor. In fact, if a franchisee fails to honor and maintain the national set standards and professionalism, he or she can be disenfranchised. What does this mean? It implies that the franchisees have to preserve franchise branding, including the color palette, the logo, the trademarks, and the final product.