In this blog, I'll get back to the basics and define the roles and responsibilities of the franchisor and the franchisee within the franchising system. We'll cover the franchisor's role in providing a proven business model as well as the franchisee's part in operating their business under an established brand and how they work together in the world of franchising.
The franchisor is the owner of the brand; they typically have developed the original concept from the initial foundational unit and location. The franchisor develops the systems, the training, the marketing, and the financial components of the franchised brand. Franchisors are the ones that own the brand and license the trademarks to the franchisees who they recruit to own and operate the individual units following the franchise model.
The franchisee is the owner of the unit-level business in their local market. They are investing entrepreneurs who buy the franchise opportunity, including the license for the trademarks. Franchisees are expected to follow a specified franchise model and implement their local unit-level business in a way that duplicates the original operational systems. Franchisees are owners of their location or locations of the business. Franchisees are responsible for signing the lease with the landlord, hiring the staff, buying the equipment and inventory, and executing and operating that business on a day-to-day basis.
The franchisor is in charge of managing and protecting the brand overall for the benefit of the entire system. Their job is to ensure only qualified candidates buy the franchise, and from there, their main job is to support those franchisees in executing that model to the best of their abilities. The franchisor is responsible for providing extensive start up and ongoing training and support for their franchisees. They're responsible for choosing and working with professional vendors and suppliers for the brand and system. They provide communication systems so franchisees can learn, share and grow. The franchisor might offer an annual conference for all its franchisees to come together and benefit from that collective wisdom and knowledge inside the brand.
The franchisor is typically in charge of innovation and improving that model over time. Their greatest opportunity to achieve this is implementing the most successful ideas and best practices they see from their own franchisees. From there, franchisors will integrate these methods into the improved business model and roll out across the entire brand.
The franchisee is responsible for the unit-level operation's success and prevention of failure. Their business is local, and it's up to them to be successful. They put in the money, time and hard work. The franchisor is not responsible for their success or failure but only for providing everything they've agreed to in the franchise agreement.
If you're interested in franchising and becoming a franchisor, I suggest you carefully and thoroughly develop your franchise plan and brand concept. You should build one, two, then three units before trying to sell a franchise. Often emerging brands start too early; therefore, preparing for the commitment required to be a successful franchisor is crucial.
If you're interested in becoming a franchisee, you should also be cautious in the undertaking and do your homework; it's essential to understand if the brand and concept you're considering have all that is needed to succeed in your local marketplace. You need to be able to do the work and execute consistently to have success as a franchisee.
If you would like to know more about franchising and discuss the possibilities and opportunities, contact me today. Whether you are a franchisor or a franchisee, I'm glad to share ideas and help point you to other resources to succeed in your business.
John Francis of Johnny Franchise is an enthusiastic, engaging, and entertaining public speaker, advisor and franchise coach; he speaks from experience and the heart. He is the creator of the successful Franchise Lifecycle Program that will take your franchise to the next level. Franchising is in his blood, and his parents were true pioneers in the industry, turning their family haircutting business into a 1,000-salon franchise empire. He has been a franchisee and a franchisor and has a deep understanding of the issues both face. Connect with John, and you and your franchisees will learn how to look at your business in new, positive, and profitable ways.