Franchisor – Franchisee Relationship


The franchisor franchisee relationship relies on the franchisor providing the system, trademarks and support and the franchisee providing the work at a localized level to build the brand. Whilst it is the franchisors role to build and improve the system many innovative products have been introduced to the franchisor at the suggestion of a franchisee within the system. The McDonalds Filet O Fish Burger was first developed by a franchisee before being introduced system wide through all its franchisees by McDonalds.

The point is that franchisors should encourage an open communication with their franchisees and it should be an important aspect of franchisee selection that the both the franchisor and the franchisee select their partner based also on their ability to work together particularly in effective communication.

In the franchisor franchisee relationship the franchisor continues to own the system of the doing business and the trademarks that it is done under. The franchisor is responsible for continually developing the brand and improving the systems whilst the franchisee provides the lifeblood of that growth in the form of their initial and ongoing payments to the franchisor. It is a synergistic relationship with each party relying on the other.

It is essential that the standards systemized in the franchisors operations manual be adhered to as a recalcitrant franchisee does not only damage his own business but has the potential of damaging the brand and therefore all franchisees. There is a third party in this relationship and that is the customer. If the customer cannot rely on the uniformity of the expected experience offered across the brand then the franchise may not enjoy his ongoing patronage The success of the franchise depends on the franchisor being able to ensure that the same standard of service is provided from all the franchisees giving the customers the knowledge that no matter which franchisee they deal with their experience will be of the same high quality standard.

Franchisees depend on the franchisees to enforce the standards expected of every franchisee in the system and thus franchisees that deviate from these must be supported to comply as required or be terminated. Most of the time that field consultants spend on franchisees should be on assisting them to grow their business and profit from systems improved or designed by the Franchisor with only a smaller percentage as required on ensuring that system procedures are being adhered to.

For this reason it is essential that the correct franchisees are recruited into the system, those that are keen to take advantage of the opportunities provided by the franchisor and at the same time feel comfortable in their role that they can suggest ideas for improvement to the franchisor. Obviously the franchisor would have final say after researching new concepts before deciding whether to test the product in a trial site or sites and whether to then roll out that product system wide. Franchisors need to be selected based on honesty, aptitude, work commitment, and other specialized skills required to promote the brand and it is important that these attributes and any suggestions by franchisees are respectfully treated by the franchisor. Franchisees who go beyond their own outlet and promote the brand for the good of all should be recognized and rewarded.