How does one become a franchisor?
A franchisor becomes such when they legally change the structure of an existing business to a franchising business. The franchisor will have all the intellectual property and proprietary systems in place to support a network of franchisees to become successful when running their own businesses. As a result, a franchisor needs to have patience and confidence, have the ability to offer ongoing training and support and overall be a go-to for any issues a franchisee may have. Find out more about how to become a franchisor here.
What are the franchisor’s responsibilities?
There are several responsibilities of a franchisor and despite their varied nature, they are all generally performed in tandem with each other. For starters, a franchisor must provide franchisees with a stable business model and be willing to constantly seek to expand their franchise operations. The business processes themselves need to be cost effective and easy to replicate. Further to this, a franchisor is responsible for generating business and evolving the brand through nationwide marketing campaigns to help their network of franchisees. The franchisor is also required to help protect the parent brand and all associated intellectual property. And lastly, they will be expected to offer franchisees with ongoing training and support to ensure that the business thrives.
What is the relationship between a franchisor and a franchisee?
The franchisor and franchisee relationship is a very particular and specific business relationship. As a result, the franchisor-franchisee relationship must be governed by trust and confidence in each other. As a franchisee, you will need to keep a good relationship with your franchisor by ensuring open and clear lines of communication, following the systems and processes established by the franchisor and ensuring that the business is run in terms of the conditions as set out in the franchise agreement or franchise operations manual. Franchisors should ensure that they provide initial training and ongoing support to their franchisees, adhere to the franchise agreement, creating channels for clear communication, ensuring that dispute resolution mechanisms are in place and others.
What help does a franchisor provide to franchisees?
Many people who are embarking on the world of franchising for the first time wonder what does a franchisor provide in terms of support and assistance? The answer is varied and will depend on every individual franchisor. However, some common points of support include marketing and advertising help, help in running the business through advice and business guidance, evaluation of the business’ performance through studying the financial performance of the franchisee, training and ongoing support etc.
Other more industry-specific support includes providing financial assistance to the franchisee to begin operations or, if premises-based, the franchisor will help the franchisee to secure a location, negotiate lease agreements, help with shop fit-out, the grand opening, negotiate better terms with suppliers, and more. In addition to this, a franchisor can help with staffing requirements and training, opening stock, equipment and others.
What makes a good franchisor?
If you are a franchisor and you want to optimise your business offering, you may have wondered how to be a good franchisor. There is no single answer to this question and it will depend on a variety of factors. A good franchisor has to have a clear vision and understanding of their business to help others grow it.. Moreover, a franchisor should be a strong communicator who always keeps channels of communication open. Finally, you should be willing and able to offer ongoing training and support. It’s also important to have a passion for the business, alongside clarity, commitment, adaptability, pragmatism, dedication and the ability to balance competing interests.
How does a franchisor make a profit?
Another important question that often arises in franchising is how a franchisor makes money. A franchisor makes money by utilising a multi-pronged strategy. The first aspect of this strategy is the initial franchise fee which is charged for the sale of each franchise unit to a franchisee. Once the sale has gone through, the franchisor charges franchisees royalties, which can be paid in a fixed sum or as a percentage of a financial metric stipulated in the franchise agreement. Therefore a franchisor doesn’t only earn from the sale of products or services. They also earn from their franchisees.
Another part of the franchisor’s income stream is a common marketing and advertising fund, which is pooled together from all franchisees for a unified marketing approach. Apart from these, there are also franchisee renewal fees, fees for subletting rental spaces, selling supplies and equipment and the cost of training fees that are typically covered by the franchisee.
Who is a master franchisor?
A master franchisor is the owner of the franchise brand. This person then grants a master franchisee the rights to expand the franchise into new locations. These often include expansion into a new country where the master franchisee then recruits new franchisees and replicates the franchisor-franchisee relationship. This is done in terms of unit expansion and sales as well as royalties earned from these franchisees.
How long does it take to become a franchisor?
The time frame for becoming a franchisor can range anywhere from three to four months, although it could be longer, depending on the complexity of your franchise business.
In order to become a franchisor, you need to be highly organised and ensure that you are ready for the steps that will need to be taken to franchise your business. These will include registering your brand, trademarks and intellectual property, converting your business into a franchise business legally, ensuring that your accounts and finances are in order as well as getting ready to market your franchise opportunity to new prospective franchisees so that your network expands.
