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Differences Between Franchisor and Franchisee (Part 1)

Charles Internicola
National Business and Franchise Lawyer

"FRANCHISING" REQUIRES COLLABORATION BETWEEN FRANCHISOR AND FRANCHISEE

Learn about the differences between franchisor and franchisee and why they need one another.

In many respects the overall success of franchising in the United States economy has been and remains the collaborative combined efforts of both "franchisor" and "franchisee".  Franchisors contribute an established business, proven business systems, a recognized brand and know how.  Franchisees contribute capital investment, individual knowledge and experience and, most importantly, an entrepreneurial appoach to the establishment of his or her franchised business.  Franchising is not and should not be about "franchisor verses franchisee" or "franchisee verses franchisor".  Rather, it should be about their mutual collaborative efforts. Nevertheless it is important to understand the roles of both franchisor and franchisee.

Below we discuss both "the role of the franchisor" and "the role of the franchisee" - it is important to understand both.
 

Let's Start with an Understanding of the "ROLE OF A FRANCHISOR"

A Franchisor is, typically, a successful entrepreneur who has established a successful business with developed business systems, trademarks, products and services.  The assets and value that a "franchisor" brings to the "franchising table", includes or, at least, should include:

 

  • Proven Business Model - The primary value of a franchise system and the contributions of the franchisor must relate to a well established business that has been tested, is recognized by consumers and delivers a sought after product or service.  Franchisors contribute a proven business model that has worked for the franchisor.

  • Recognized Trademark and Brand - A core component to franchising relates to standardized trademarks, trade dress and brands that associated with the franchised business.  A primary contribution by franchisors relates to the licensing of the franchisor's trademarks, i.e. franchisees are granted a license to utilize the franchisor's recognized brand.

  • Established Business Systems -  Business systems are critically important and relate to successful and efficient methods developed or refined by the franchisor for the operation of the franchised business.  These systems should address all aspects of the franchised business from the greeting of customers and clients to the delivery of products and services.

  • Training and Support - A key feature and benefit of a franchise system must include and relate to extensive training and support.  Having established a successful business platform a key role for the franchisor is to train franchisees and to provide franchisees with on-going support respecting the franchisees business operations.

 

Do You Want to Learn More About "Franchising Your Business"?  
See, "How to Franchise Your Business" 
Get a Complimentary Copy of the "Franchise Formula" 


Next, Lets Discuss the "ROLE OF A FRANCHISEE"

In many ways - although not a direct comparison - "franchisees and franchisor are partners". That is they share a common interest as it relates to the franchisees new location or territory. The role of a franchisee is to duplicate the business model established by the franchisor and to successfully expand the franchised business.

To learn more about the role of a franchisee Read Part 2 of this Article: - THE ROLE OF A "FRANCHISEE"

 

Are Your Interested in "Buying a Franchise?

Read a complimentary Copy of "The Guide to Buying a Franchise"