Know your role! 5 steps to the perfect franchisee/franchisor relationship

By Nick Hall | 28 Feb 2019 View comments

The benefits of being associated with a franchise brand are numerous – from branding, to operations, to systems – but it is vital to know where the responsibilities lie between  franchisee and franchisor.

Buying into a franchise brand is effectively becoming a co-pilot in a business. Together, the franchisor and franchisee will navigate the business, but as in any team, each party has a role to play. What are these roles and how do they differ when it comes to the day-to-day running of a franchise?

1. Performance

Everyone wants their business to succeed. To achieve this success, it’s vital to have a clear business plan and regularly analyse sales and financial performance to stay on track – and adjust if required.

A franchisee should be undertaking a regular analysis of their bottom line, their sales and their profit-and-loss statement. A franchisor should be providing benchmarks to help the franchisee understand how they are performing against the network, as well as support, coaching and planning tools via business or field coaches.

Ultimately, a franchisee must be in control of the day-to-day performance of their business but should harness the support tools made available by the franchisor to identify weak spots and improve the bottom line.

2. People

A franchisor will recruit and train the franchisee. From there, the franchisee is responsible for recruiting, training and managing the team within that business. There are significant responsibilities in the area of human resources and industrial relations, such as those outlined in the Fair Work Act.

While a franchisor will often have tools and templates available, along with induction and training programs, it is vital that franchisees take control of matters pertaining to their staff to ensure that employment agreements are compliant and staff are inducted and trained. This may include seeking external human resources advice if the requirements are complex or identifying external training programs to best support the needs of the business.

3. Promotion

One of the most attractive selling points in becoming a franchisee is buying into a well-known and respected brand. However, when do the branding and marketing stop becoming the responsibility of the franchisor and start becoming the domain of the franchisee?

While the franchisor is responsible for the overall branding and strategy (such as logos) and brand-level marketing (such as a website), local area marketing falls to the franchisee.

It’s important for franchisees to plan out activities to promote their business within their local community via a social media presence, advertising in local newspapers, community sponsorships and letterboxing.

With an effective local area marketing strategy, combined with the power of a clear and consistent brand, a franchisee can harness the reputation of the business and gain loyal followers in the local community.

4. Product

The franchisor is responsible for the overall product or service offered through the franchise network. It’s up to them to consider trends, competition and consumer demand when developing products. It is then the responsibility of the franchisee to deliver and sell those products at a local level.

One of the key reasons customers love franchises is consistency – they know they can get the same product regardless of whether they walk into an outlet in Brisbane or Hobart.

It’s vital for franchisees to deliver this consistency to their customers. If it is an Italian restaurant, stick with the menu outlined by the franchisor rather than offering Mexican food on the side. This just causes confusion for customers and dilutes the power of the product at a brand level if different franchisees are serving completely different meals or selling diverse services.

Feedback is essential, and franchisees should tell the franchisor what is working, or not working, with customers. Customer and franchisee feedback is vital in product innovation and development to keep the entire brand cutting-edge and ahead of industry trends.

5. Premises

The safety and presentation of the business premises – be it a gym, restaurant or mobile van – is the responsibility of the franchisee. Keeping spaces clean, safe and on brand is essential for the overall look and feel of the business, but it is also important from an occupational health and safety perspective. Franchisees must also ensure that equipment is reliable and maintained to guarantee safety for employees and customers.

Franchisors should support this through the provision of guidelines and tools for franchisees to check equipment, as well as continually innovating and developing new technology and equipment. However, ultimately, day to day, franchisees need to ensure their business looks great and is safe for staff and customers.

A true partnership

Owning a franchise is being a partner in a business. However, like any partnership, there need to be clear roles and responsibilities to keep things on track. Together, the franchisor and franchisee can create a significant opportunity to deliver superior products and services to customers.

Corina Vucic heads up FC Business Solutions, and has been involved in franchising for more than 16 years. She is also a Certified Franchise Executive, a mentor, trainer and business coach.