Franchisor Responsibilities

Before "starting a franchise" or "franchising your business" it is critical to

evaluate and understand the role and responsibilities that you will be
undertaking as a franchisor.
A franchise owner has responsibilities similar to a small business owner. The
big difference is that the franchise owner has to operate under standards set
by the franchisor. It is important to remember that not every business should
be franchised. Not every business is successful, nor is every business
person. Successful franchisors have made mistakes, and have survived
them.

MORE INFORMATION

 What Does it Mean to Become a Franchisor?

 The Differences Between Franchisor and Franchisee
 The Basics of Franchisor Vicarious Liability

The Role Of A Franchisor

As a franchisor, basically, you will be taking what works and what has worked
in your business and formalizing these systems and procedures so that they
may be taught to and implemented by your future franchisees. Your
"franchise agreement" will serve as the primary contract by which you grant
third party franchisees the license and right to establish and operate your
franchised business. Your role as a franchisor will include:
 Franchised Expansion. The expansion of your business, business
systems, trademarks and trade dress through "franchised expansion"
that will occur through third party franchisees.
 Formalizing Your Systems. To achieve your "franchised expansion"
you will be formalizing and documenting what works in your business
and the steps that franchisees will be required to follow. These
formalized systems will be identified in the following legal documents
which will be prepared by your franchise lawyer: FDD (Franchise
Disclosure Document) and Franchise Agreement.
The Responsibilities Of A Franchisor
Before going into the franchise business, you should consider the ongoing
responsibilities you'll have to take on. You'll need to have a great
understanding of what your business requires to succeed.
As a "franchisor" your primary responsibility will be to support the operations
of your franchisees and to continuously develop and monitor the business
systems, products and/or services that have made your business a success.
As such, your franchisor responsibilities will include:
 Finances. The number responsibility you will have is to financially
support the franchise. This includes set-up costs to buy the franchise,
retail space lease agreements, and marketing materials. A person
buying a franchise will need to be able to show they can meet these
financial responsibilities.
 Marketing. As a franchisor one of your primary responsibilities will
relate to establishing a marketing foundation focused on promoting
your brand, legally protecting your trademarks and establishing quality
standards for your products and/or services.
 Managing the Products and Services of the Brand. As franchisor,
to promote your brand and goodwill you will be required to establish
and maintain performance standards respecting the quality of the
goods and/or services provided by your franchisees.
 Managing the Market Area and Territory of Franchised Locations.
As franchisor, you will strategically identify territories that will be
targeted for franchise expansion. Initially expansion must be focused
on geographic territories that can be properly managed and
supported.
 Proprietary Products. Identifying and establishing exclusive
suppliers who will produce and/or distribute your "propriety" products
to your franchisees.
 Your Time. When you buy a franchise, you're a business person.
You're the boss. That means you're expected to be there, especially
when you're starting out. A successful franchisor will take an assertive
role in running day to day operations. It's your business—you should
run it.
 Partnering with Corporate. There's a reason you bought a franchise
instead of starting from scratch with your business. The national brand
should be all over your business. You don't only represent them, they
are your partner.
 Employee Training. You're the boss. That means every person
working at your franchise follows your rules. They also follow your
 example. The corporate franchise has training sessions for
management to take back to your franchises. Take a course from
headquarters, it can be an invaluable help.
 Providing On-going Support. Most franchise agreements require
franchisors to provide ongoing support to franchisees. Support
includes technical and day-to-day operating advice. Part of this
franchisor responsibility helps to oversee the entire operations of the
franchise network. For example, if a franchisee needs financial
assistance, it is the responsibility of the franchisor to connect them
with the correct professional help.
 Brand Building. Your brand is what makes your franchise stand out.
By operating a successful franchise, you're helping the national brand.
If the brand suffers, the entire franchise system can suffer.
 Providing Leadership. Don't ever forget that you're now the boss. It's
up to you to set examples of the type of working environment and
mentality you want in your staff and business. It might be a bad
comparison, but you're the captain of the ship. How it gets steered is
up to you.
 Communication. This is THE most important part of your business.
Do you communicate good business ideas? Are you able to express
what you want your business to do in a way people can follow?
Communication goes hand in hand with customer service—they're
very similar skills. Having good skills communicating with your
employees and customers will help keep your business going.
These are just some of the ongoing responsibilities that a franchisor may
have.
For additional information about the roles and respo