Understanding the Roles & Responsibilities Within a Franchise System
The relationship between the Franchisor and their Franchise Partners is unique and often complex. Crucial to the evaluation of any franchise concept is a thorough understanding of the roles of each, the Franchisor and the Franchisee.
The following is a general overview of the roles and responsibilities of both sides.
Key responsibilities and role of a Franchisor includes:
- Proven Operating System: Providing the Franchise Partner with a proven operating systems and on-going support to help their businesses grow effectively, efficiently and profitably. This includes creating comprehensive initial and on-going training programs as well as documented “day-to-day” operations.
- On-going Innovation: Evolving the franchise system through research, innovation, and the development of new products and services is important to maintaining relevancy. The Franchisor needs to be a subject matter expert in their field and be able to identify any trends within their industry and ultimately how they can implement and adapt their system accordingly.
- Brand Awareness: Brand awareness marketing falls under the Franchisor’s responsibilities and is focused on increasing the general awareness and recognition of the brand by customers. The focus of brand awareness identifies what differentiates the brand from competing good and services. Brand awareness often includes managing the digital brand and reputation as well as incorporating new branding opportunities within the organization.
- Brand Asset Management: Protecting and managing the brand and its trademarks while ensuring consistency and quality standards are maintained by all Franchise Partners in the system. It may also include providing tools to manage compliance and adherence to standards of the brand within each unit.
- On-Going Performance Improvement: Provide initial and ongoing training and support which demonstrates the franchisor’s commitment the success of the Franchise Partner. Programs designed to manage and improve unit performance could be included in this area.
The key responsibilities and role of a Franchise Partner includes:
- Follow the System: Commit to following the franchisor’s standard of operations, methods, procedures, techniques and specifications to ensure consistency during each customer interaction. Adhering to the Franchisor’s proven operating system is often crucial for success and is often why someone might opt for a franchise versus starting their own business from the ground up.
- Fee Remittance: On a regularly scheduled basis, the Franchise Partner remits a fee (i.e. initial Franchise fee and ongoing royalties) to the franchisor for the right to use the franchisor’s trademarks (brand) and business system.
- Manage Local Operations: Taking care of the day to day business operations is the role of the Franchise Partner. This includes accounting, local marketing, staffing and the other administrative aspects of operating a business. Keep in mind that the Franchisor has often provided tools and resources as part of their operating system.
- Committed to OWN Success: Franchise Partners must be ready to invest and commit their time and efforts to their franchise business, particularly during the start-up phase and this often includes working hands-on in their business, in order to fully understand the operational side of the franchise.
- Engage in Local Marketing: Marketing the brand in the local vicinity/territory is generally the responsibility of the Franchise Partner. The Franchisor often provides guidance in this area and approval of marketing material may be required, however local execution is the role of the Franchise Partner.
The underlying success of any franchise organization depends upon the ability to manage expectations of both the Franchisor and their respective Franchise Partners. An understanding of “who does what” is an important part of the due diligence process; make sure you have a clear understanding before you sign on the dotted line.
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