Finding good franchisees is crucial for your franchise to grow and be successful. One way to do this is to provide attractive benefits for being a part of your franchise. In particular, this can play out in the kind of support you give your franchisees as the franchisor. This article will explain how much support you should offer your franchisees as a franchisor.
Your Relationship With Your Franchisees
As the franchisor, you recruit other people or businesses (your franchisees) to run different installations of your business in different locations. This relationship may be ongoing, with chances to renew your agreement, or for a finite length of time. Whatever your situation, the base concept of a franchising relationship is the same.
In particular, you provide support and resources for your franchisees to provide consistent services and promote success and growth that can benefit your brand reputation. In return, your franchisees pay you various fees, including a startup fee and ongoing franchise fees. They get the chance to make an income using an already successful brand and business model, while you can expand your business into new locations markets with the help of your franchisees. They provide the capital to start the business while you provide the brand strength and a time-tested professional system to run it.
As your franchise grows, so will the complexity of your system. Therefore, it is crucial to maintain good communication and relations with your franchisees. They want a competent franchisor that they know will lead them to success.
How Much Support Should I Offer?
Both the type of support and how much you offer as a franchisor depends on several things, including:
- the nature of the industry your franchise is in;
- the number of franchisees you have;
- how much control you give your franchisees;
- the type of franchise you want to run;
- what you promised your franchisees in your franchise agreement; and
- best commercial practices.
How you market your franchise for franchisees can affect how much support you offer. If you draw franchisees on the model that your business is more like a job, with a lower entry cost and less say on how to grow the business, they may have less control. As a result, you may have more involvement in the day to day marketing of the business and provide more support.
On the other hand, if you recruit franchisees as more of a standalone business, franchisees have more control over their growth. There is a higher entry cost for them, but you may play a lesser role in business decisions concerning that business’ operations.
This publication provides you with the fundamentals for franchising your New Zealand business, including set up, branding and management.
What Kind of Support Can I Offer?
The nature of support your franchise offers your franchisees can vary, depending on the kind of franchise you are running.
You will need to provide some kinds of support so that your franchisees can successfully run their operations. These can include:
- intellectual property licences or rights so that franchisees can use your branding;
- training programs for franchisees and their staff;
- trade secrets so that franchisees can run the business with the necessary tools that make it successful against its competitors;
- marketing strategies that align with your overall vision for the franchise;
- location choices, as you may have insight as to what locations are successful and which are not;
- education resources;
- ongoing administrative, technical, and legal support;
- training/operations manuals for franchisees and their staff to refer to;
- proper documentation, including appropriate contracts; and
- operating systems.
Sharing information with your franchisees is essential, as you want to improve their skills to better the franchise as a whole. Some franchises run regular seminars and workshops for their franchisees, focusing on strategies to promote business growth and success.
The Importance of Comprehensive Documentation
However you decide to support your franchisees, it is crucial that you outline both your and your franchisees’ obligations in an appropriate franchise agreement. This document sets out the contractual nature of your relationship, and you need to abide by what you promise to do in this document. In addition, your franchise agreement needs to be fair to both parties, and you should both receive legal advice before you sign.
Key Takeaways
The level of support you provide your franchisees is up to you. However, you must abide by your franchise agreement and follow up on any promises you make in that document regarding the support you provide.
If you need help with providing support to your franchisees, our experienced franchising lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.
Frequently Asked Questions
A franchise is a business model that you may use to grow your business. You, as the franchisor, allow other parties, the franchisees, to replicate your business operations to create their own success. In return, you grow your brand and receive various fees or royalties.
As a franchisor, you want to support your franchisees to promote success and growth. Therefore, you may provide resources such as training programmes, administrative support, and intellectual property rights.
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