What Is the Role of a Franchisee?
The learning curve for a franchisee is much lower than a startup founder.
Benefits abound. Just look at any McDonald’s franchise for confirmation of this fact.
But before you put an initial down payment on a particular business model, review this convenient roadmap.
It will help guide you to your final destination as a small business owner.
Let’s get started!
What Is a Franchisee and What Are Their Responsibilities?
A franchisee is someone who buys the rights to operate a business using the company’s name, brand name, and system standards. In return, the franchisor offers support in areas such as:
- Marketing materials
Approved products and services are then provided to customers while protecting the intellectual property of the franchisor.
Obligations to the Franchisor’s Brand
Your many duties extend beyond simply that of a small business owner. As such, any franchisee benefits from being extremely organized.
Project management software can streamline every aspect of the company.
Examples of operating assistance:
- Aiding in your site selection
- Recurring tasks for the royalty fee to the franchisor
- Tracking marketing campaigns
- Analysis of competing brands
The goal of the two parties is to increase brand recognition and sales for the products or services.
Ensure the brand standards are reinforced during any change to your marketing strategy. The franchise model grants you access to a loyal customer base, but you are responsible for strengthening the brand.
The Role of a Franchisee
The franchisee plays an important role in developing a successful business.
They are responsible for promoting and selling only approved products or services. A good franchisee will have a strong understanding of the market and be able to generate money.
Additionally, they should also be able to build relationships with customers and provide excellent customer service.
Marks of a Business Owner Who Finds Success
Maintain the same standards for the overall brand and day to day management.
Beyond the initial investment of your franchise fee, adopt the entrepreneurial mindset of a business owner with ongoing contributions.
Success will also come when a franchisee operates with a proactive approach to leadership.
Regular communication with other franchisees within the business system provides key takeaways to avoid common mistakes. Terms like “mastermind” and “mentorship” are thrown around in the marketplace, but many choose not to adopt them. Be different and take advantage of this major benefit for your venture.
The Process of Becoming a Franchisee
How does knowing yourself bolster the process of franchising?
A quick list of your strengths and weaknesses will reveal how realistic it is for you to purchase and run a location as a franchisee. Having completed this task, write down your number one goal should you acquire the business.
- Research relevant franchising openings
- Ask yourself, “Will I remain motivated in this particular industry?”
- Gain an understanding of the contractual agreement
You’ll find a directory of your possible options on The International Franchise Association’s website.
Pro-tip: Utilizing a franchise broker to highlight your interests and narrow down your list can save you time and effort.
Last Steps Before the Franchisee Pays
Assuming everything else is perfect, we still recommend holding off on signing the franchise agreement for the time being.
Separate from your initial research, verify the brand culture aligns with your internal values.
Finally, trade a risk-averse mindset in favor of one that takes estimated risks. Following the examples set by other franchisees, operate in a spirit of confidence even when circumstances are trying.
How To Find the Right Franchisor for You
There’s one final action to take when you’re in the market for proven business models like franchising.
- Obtain advice from established franchisees within your desired brand name
The final step involves conversations with businesses in the franchise system or even friends who understand the entire process.
Additional Ways To Discover the Ideal Franchisor
Engage the potential franchisor you like about their end goal for the business model.
Are they wanting to operate it until retirement or sell it to a trustworthy partner? Please know they aren’t under any obligation to provide this answer, but the right one just might.
Perhaps they’re worried about their intellectual property being compromised. In that case, the information may be available in the franchising disclosure document.
Recruit a franchise lawyer if you want an expert to review it with you.
The Importance of Due Diligence When Choosing a Franchisor
When you finally sit down with the head of the business on discovery day, they’ll be at one of the following stages:
- Brand new to franchising
- Well established in their business
The first situation isn’t ideal, because you can’t talk to other franchisees for insights. But it isn’t reason enough to trade in your hard work up to this point.
Prior to Signing a Franchising Agreement
Perhaps you find that the company hasn’t started offering services yet. No worries.
In this event, ask for a mock-up of what a location would look like. They don’t have it?
Don’t be afraid to leave and schedule a meeting with another business, even if it’s a competitor.
Why? You just witnessed a major red flag and shouldn’t invest in their hypothetical products and services.
Other warnings could be sloppy accounting or missing financial numbers.
On the other hand, if they have operating units, expect them to highlight the top performer. Even if it’s impressive, consider visiting other franchises for a better picture.
What To Do if Things Go Wrong With Your Franchise
One pillar of a solid franchise business is clear communication between the franchisor and yourself.
When this breaks down, all hope is not lost.
Opening up lines of communication that aren’t influenced by emotions is important for both parties.
Repairing the relationship starts with them creating a council to encourage your feedback. An alternate option may be a three person meeting with their attorney mediating.
Keeping the Contractual Relationship Strong
Maybe the issue is in a purely operational area. A way to extend the contractual agreement and mutual success between both parties is coaching.
Brand standards can be relayed by the franchisor in a friendly and teaching manner. This will ensure your business offers services to customers that go beyond a simple, “Thanks for coming in today.”
Franchises can become more resilient when adversity actually leads to a higher level of guidance from the franchisor.
Reidel Law Firm Counseling Franchisees
As experts in franchise law, we can help you handle the legal aspects of any franchisee issues.
In addition, our legal team can advise you on ways to shore up gaps in the following areas:
- Review FDD/FA
- Review personal guaranty and real estate control docs
- Franchisee formation, guidance, and asset protection
- Franchise operating compliance audit and coaching
By effectively managing risk and maximizing opportunities for businesses we answer the needs of our clients wherever and whenever they arise.