The Role and Responsibilities of a Franchisee, Defined The Yin to the Franchisor's Yang, franchisees are essential to the functionality of the business model.
By Jeff Cheatham Edited by Carl Stoffers
Key Takeaways
- Franchising infrastructure relies on strict adherence to mandated systems and operational controls.
- Franchisees must operate within the confines of the brand's business model.
- Franchisees are responsible for financing the purchase and operation of the franchise, including initial fees, ongoing costs, and royalty payments.
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The infrastructure of franchising is built upon strict adherence to mandated systems and operational controls, which include specific roles and responsibilities for franchisor and franchisee alike. Most simply: franchisors are the brand, and they grant licenses to franchisees to do business under their name and trademark. When a franchisee signs a franchise agreement, it's crucial that they abide by the roles and responsibilities expected of them to uphold the name and standards of the brand.
The role of the franchisee
The role of franchisee incorporates a high level of demands in owning and operating a licensed business, and not everyone is cut out for it. The role requires strict adherence to operating within the confines of the brand's proven business model for success, and to remain in compliance with the franchisor's recommended procedures – which extend to procedures, systems, presentation and protocols. In essence, the franchisee's job is to "color inside the lines," and failure to do so could jeopardize the joint franchise agreement. In the end, it's the franchisee's role to present the sale of a product or service according to the standards that provide the likelihood of remaining a financially viable and profitable enterprise.
A franchisee also assumes a role as the consumer-facing representative of the brand. It requires the franchisee to put in the requisite time and effort necessary to own and operate a successful business, with a constant focus on meeting sales goals, expansion and new opportunities. In franchising's tried and true "hub-and-spoke'' business model, the role of all franchisees requires them to report to the franchisor, as well as collaborate with the peer group of other franchisees in the system.
The responsibilities of the franchisee
First and foremost, franchisees are responsible for financing the purchase of a franchise. This includes the initial franchise fee, associated costs to elevate the business and ongoing capital to maintain the brand's recurring royalty payments. Franchisees are responsible for the comprehension and understanding of the franchise's business model, and how to operate the business in accordance with the franchisor's agreement and operations manual.
Franchisees are also expected to attend mandatory training sessions provided by the brand that provide the knowledge necessary to train others and ensure a comprehensive understanding of how the business functions. Franchisees may also be responsible for pooling money towards co-op advertising, marketing and promotions to fund outreach that attracts consumer interest in the brand's product or service.
When it comes to representing the brand, it is the responsibility of franchisees to continually protect and defend the brand's reputation, avoiding any behavior and activity that could potentially harm the franchisor's standing.
With the guidance and assistance of the franchisor, franchisees are responsible for attracting and building a customer base, while generating revenue in line with the brand's benchmarks for success. If required, franchisees are responsible for participating in validation sessions, as well as attending organizational meetings, conferences and annual corporate retreats.
Lastly, if required, it's the franchisee's responsibility to provide timely financial reporting on all business activities so the brand can track individual unit progress and profitability.
The roles and responsibilities of individual franchisees are designed to ensure their operations run smoothly and in accordance with the franchisor's proven business model. Though owners may come from different backgrounds and varying stages in life, the obligations, roles and responsibilities of the collaborative system of franchisees is designed to ensure the continued success of the franchise brand they represent.
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