A franchisee is a person who pays fees to a business owner, called a franchisor, to operate the business under the franchise’s trademarked name and business systems.
Because they are working together, both the franchisee and the franchisor take on several responsibilities, risks and benefits. There are a few reasons why a positive relationship between the franchisee and the franchisor is necessary. Both parties will equally benefit from this relationship, achieving good communication and ensuring clear expectations, allowing the businesses to thrive. Building a good connection will also help to resolve problems quickly within the business. When both parties feel valued and respected, both businesses are more likely to succeed.
Franchisee Roles and Responsibilities
Upholding Brand Reputation
The actions of the franchisee directly reflect on the entire company, positively or negatively. If a customer has a poor experience, this could lead them to boycott the other company locations as well.
Hiring and Training Employees
The franchisee is responsible for putting out job postings, reviewing applications, holding interviews, and training new employees. However, the franchisor may provide things like an employee handbook or a guideline for onboarding new employees.
Following Rules and Guidelines
Although franchisees save time and money on fully developing a business from scratch, they must abide by the franchisor’s vision. This can include employee uniforms, specific inventory protocols, or advertising through provided signage. Franchisees must meet these expectations.
Finding and Leasing a Building
Although the franchisor may help the franchisee to find a good location, the franchisee is ultimately the one who chooses the location and pays the leasing fees. The franchisor may also provide necessary fixtures, furniture and store signage for the new location.
Manage Day-to-Day Activities and Performance
The franchisee is responsible for the daily activities that keep the franchise location operational. Although the franchisor takes on some risk if a new business fails, the success or failure of a specific franchise location relies on and heavily impacts the franchisee.
Pay Ongoing Fees to the Franchisor
Franchisees pay royalties to the franchisor each month. These royalties cover the cost of operations, and using an existing brand, business model, and operational systems.
Franchisor Roles and Responsibilities
Creating a Brand and Scalable Business Model
An established brand and a scalable, sustainable business model must be created before anyone can enter a franchise. The franchisor is responsible for putting in the financial and creative labor to do these things before the business can expand through franchising.
Managing the Brand and Its Products or Services
The franchisor is responsible for managing the brand image — from the tone of the brand messaging to the business systems, plus the products and services that the franchise offers. The franchisor may also create limited-time products that will be sold at each company location as well as standard offerings.
In exchange for the royalties paid by the franchisee each month, the franchisor should provide ongoing support and guidance. This support can consist of helping with inventory, new-hire training or advertising.
Creating Marketing Materials
Franchisors are responsible for national marketing. Although franchisees handle local marketing, franchisors offer materials and guidance to teach franchisees how to promote their business. For example, franchisors of major chains run TV commercials and provide signage to franchisees to hang in their window, or offer general guidelines for what to put on their outdoor sign displays.
Vetting and Training Franchisees
Having an in-depth, thorough interview process for potential franchisees is crucial for franchisors. Even if someone has the money necessary to start a franchise, they must also have the right attitude to work with the employees and customers. The brand is at potential risk with the wrong franchisees. It is important that the candidates for a franchise have experience running day-to-day operations and that they can grow and sustain the business with the support of the franchisor.
Planning for the Future
The franchisor is responsible for the overall success of their brand, so they must have a vision and an understanding of their desired future for the company. They must know how to continuously improve operations, expand the business model, and innovate products, services and upgrades to fulfill consumer needs.
While the franchisee manages the day-to-day activities of the company, the franchisor must look at the bigger picture and plan the future of the company based on all their franchises.
Tips for Franchisors
As a franchisor, the success of your franchises reflects your corporate business. Investing your resources and time into your franchises is necessary in running a successful business.
Build Repeatable Processes that Work for New Locations
Consistency is key. As a franchisor, when a successful process is implemented for one location, use the same process for the other locations. When you build a process that is repeatable, you are also building a process that is teachable. It is crucial to have each franchise business on the same page as your entire company.
Secure the Supply Chain for Growth and Support
A more sustainable supply chain strengthens your organization, but it also brings a stronger set of franchisee prospects. COVID-19 presented the economy with many challenges, but during this time of consolidation, steps were taken to make business more resilient. This includes strengthening and diversifying the supply chain. Rental costs for commercial buildings in some locations have also gone down for the first time in years. If you need a physical presence for your business, now is a good time to make that happen.
Build and Support the Brand at Every Level
It’s crucial to focus on building and supporting the brand at every level of the business, from a single location and employee to the franchisor. The long-term success and growth of the entire company and each franchise is dependent on the relationship between the two. The success or failure of the franchise is also a reflection of the entire company, so it’s equally as important as a franchisor to invest time and money into the franchise. By supporting the brand at every level, you can create a consistent, successful, unified brand.
Support Both the Corporate and Franchisee Websites
Supporting the corporate website as well as the franchisee website is crucial to maintaining a unified front for the brand. While the corporate website shares company-wide information and a consistent brand identity, the franchisee website offers personalized content, enabling localized engagement and allowing the content to cater to the specific preferences of the local community. Supporting both the corporate and franchisee websites allows for localized relevance while also maintaining consistency within the brand.
Have a Clear Idea of the Buyer You Are Targeting
As a franchisor or franchisee, it is necessary for you to understand your buyer and target audience. Based on this understanding, you will be able to create content that is suited to their needs. By directing the time and money spent on marketing efforts to those who are most likely to purchase your product, you are increasing your ROI.
Boosting Your Franchise Business
It is crucial for franchisors to invest time and money into all parts of their company, including franchisees. By knowing your targeted buyer, building repeatable and teachable processes, securing the supply chain, and focusing heavily on each franchise, you are setting your business up for success. Ultimately, a franchisor and franchisee need to be communicative, innovative, and aware of current trends to be able to grow and succeed together.
If you need support for your franchise business, whether through a digital marketing campaign, securing new suppliers or with strong brand messaging, then contact GO2 Partners today to discuss your needs and goals. We’re here to help.