The Key Obligations of Franchisors and Franchisees
The franchisor and franchisee relationship is a significant part of a successful franchise business. Both parties have important responsibilities they must handle to keep the business running properly. While the exact responsibilities of franchisees and franchisors may vary slightly by business, some key obligations are commonly found in most franchise agreements:
A franchisor is responsible for developing, implementing and maintaining support and training systems so that franchisees can develop and keep a profitable and efficient location that provides quality services or products. Franchisors have an obligation to improve their systems over time through the use of research and technological advancements. Outdated systems will unnecessarily frustrate and hinder franchisees.
Brand advertising is generally the responsibility of the franchisor, who must take steps to protect the brand and any associated trademarks. Protecting the brand isn't just limited to preventing unauthorized parties from using the name. A franchisor must have a quality control system in place to identify franchisees that are not providing the level of service or quality of product associated with the brand. A poor franchisee can damage the brand's reputation, which impacts the entire business and all other franchisees.
Franchisees must pay any fees related to the use of the franchise system and brand. Fees are not just limited to upfront costs. All franchisees have an obligation to follow the franchiser's system, rules and standards, as well as taking care of individual location duties, such as local accounting and sales force hiring.
A franchisee location owner must understand all aspects of the franchise business in order to meet their other responsibilities, so they must be prepared to put in a lot of time when they start out. Putting in time is an ongoing obligation of a franchisee in general, as they must work to develop the business with the help of the franchiser.
Maintaining open communication with the franchiser is another important franchisee obligation, as they will need the support to make their location a success. Any franchisee or prospective franchisee with questions should contact the franchise business for information or help.
Agreeing on what your responsibilities are and the responsibilities of your franchisor helps to keep both parties accountable. In the end, accountability reduces conflict and ensures that both parties benefit from the partnership.
If you feel that franchise ownership is right for you, please visit our franchise directory to begin researching opportunities expanding in your area.