The Franchisee:

The Franchisee is ready to start a new business, but may not have enough experience in running a business to be comfortable starting one from other. Most new businesses have a fairly high failure rate—sometimes due to mistakes made by inexperienced business owners, other times due to unexpected conditions in the market. What the Franchisee is looking for is a leg-up in starting a business so they have an increased chance of success. This is exactly what purchasing the right to use an existing business system and brand name provides them.

What you need to keep in mind is that this is your business, but someone else’s brand. It’s your responsibility to find and negotiate your lease or building, but the Franchisor will usually provide guidance. You are responsible for hiring and training all employees, but again, the Franchisor can provide helpful tips for recruiting and employee development. You manage all of the pieces of the business yourself, tapping into the expertise of those from whom you’ve purchased this system whenever you need advice. You can also expect the franchise to provide training in the methods of running your business according to the system they licensed to you.

What is important for you as the Franchisee to understand from the beginning is that while you are part of an entire franchise system and will work as a partnership, you are not actually a partner. This doesn’t mean that you have no say in how the business is run, but it does mean that your say is limited. In more established franchises, there is usually a franchise group that represents the franchisees’ interests and works with the franchisor to present ideas and resolve business issues to the benefit of the franchise as a whole.

If not quite a partner, the franchisee still can expect from the franchise those things outlined above. So what can the franchisor expect from you?

• Well…money, of course. You can think of it as leasing their ideas. Each month you will report on your financials and a certain percentage of the profit you make goes to the franchisor. They use this money to fund things like advertising campaigns and research and development of new products, and to grow the value of the brand.
• You to run your business according to their standards regarding products and services. Consistency from store to store is what brings customers into franchise businesses. A customer should expect to get the same product or service from that brand name regardless of which building they walk into. If you don’t, other units suffer.

It’s important to note that the services listed above are somewhat standard to all franchise systems, but the extent to which they are applied varies greatly. Your Franchise Agreement will explicitly state the levels of support you will get in terms of advertising, training, and other areas. If it isn’t in writing (in your Franchise Agreement) then it’s not required. Keep this in mind during your conversations with any franchise organization.