Franchisor Versus Franchisee: Roles and Responsibilities

Feb 19, 2017 | General

Before you buy a franchise, it’s important to know the responsibilities that come with it. In today’s post, we break down the roles of franchisee and franchisor, outlining the different responsibilities involved with each.

Roles and Responsibilities of the Franchisee

Once you buy a franchise, you become a franchisee. Though your priorities will be to build your business and generate a rewarding return on your investment, system-specific responsibilities will be required. The franchise agreement will outline specific franchisee responsibilities, but commonalities exist. If you want to buy a franchise, be prepared to carry out the following five franchisee responsibilities:

  1. Following the system. As a franchisee, it is your job to follow the standards, methods, procedures, techniques, and practices outlined by your franchisor. In doing so, you help maintain the consistency that people look for when patronizing a franchise.
  2. Paying your dues. Franchisees need to pay fees. Fee structures vary from system to system, but most operate by collecting a one-time “franchise fee” up front, then having franchisees pay ongoing royalties as a kind of “rental fee” for the right to use the system.
  3. Handling local-level finances and marketing. Franchisors will push your brand name on a national scale, but it’s usually up to the franchisee to promote their site locally. Additionally, franchisees are usually responsible for their accounting and administration. That said, most franchisors provide training and support for these purposes.
  4. Learning the ropes. Once you buy a franchise, you need to learn the system inside-out. This means investing the time early on, working hands-on in the business to develop a complete understanding of its operational side.
  5. Cooperating and communicating with the franchisor. All franchisees need to work in partnership with their franchise family, which usually boils down to making the effort to ensure that effective, two-way communication is always maintained with the franchisor.

Roles and Responsibilities of the Franchisor

Since franchising usually involves following a set of rules and operational processes laid out by the franchisor, newcomers often think that they’re “above the law,” at least within the confines of the franchise family. In reality, though, the power and obligations of the franchisor are limited to what is written in the franchise agreement. Though these roles and responsibilities vary from contract to contract, there are some general guidelines that apply to most Canadian franchisors.

In Canada, a franchisor’s responsibilities include:

  1. Providing cost-effective business processes. Franchisors should provide franchisees with systems for startup, training, marketing, and daily operation that contribute to the growth of their business. Quality franchisors will have refined these systems to eliminate guesswork, wastage, and inefficiencies, streamlining the business process for franchisees.
  2. Continually striving to evolve the franchise system. Savvy entrepreneurs will steer clear of franchisors happy to rest on their laurels. Quality franchisors work hard to evolve the franchise system through perpetual research and development processes.
  3. Generating business and building the brand with national marketing efforts. Generally speaking, franchisors should take the reins of all brand advertising. They will also typically give franchisees assistance with their own local promotional efforts.
  4. Protect the brand and trademarks. Franchisors are responsible for protecting their brand, ensuring consistency between locations, and upholding quality standards throughout the franchise system.
  5. Provide initial training and ongoing support. Franchisors are responsible for bringing new franchisees up to speed on daily operations, and also for providing coaching, consultation, and troubleshooting services for any problems that arise.

 

Ready to learn more about how to buy a franchise? Visit http://www.frannet.ca to speak with an objective adviser and browse free learning resources.

 

About FranNet Canada

FranNet is a 29-year-old company with roots in the U.S. Its purpose being to nurture every entrepreneur’s dream of business ownership. We actively employ a specific profiling and consultation method. This method is geared to each investor with a specific business model and based on franchise trends typically found in TorontoOntarioVancouverBritish Columbia, or CalgaryAlberta. The most lucrative Canadian franchise opportunities are waiting for you. For more details visit – http://frannet.ca/buy-a-franchise/canada-franchise-buying-process/