Advisory Oct, 23 2009

Freedom for the franchisee

The franchisor has already done the work of establishing the business, and has ironed out the wrinkles to make it easier for the franchisee. Most franchise contracts have explicit standards, allowing little or no alterations or additions to the brand, all

By Abha Garyali
Sub Editor
Freedom for the franchisee

Maintaining an outlet not only deals with the interiors of the store, but also the stock used by the franchisee, local marketing done for making the outlet popular etc. All these points have to be taken care by the franchisee in running the store. There is a famous saying ‘Every coin has two sides’ which is apt for the franchising model. On one hand the franchisee gets the benefit of getting a well established business and on the other hand he has a few restrictions especially when he has to do it ‘their’ way. Once the deal is done the franchisee has to find a good location for the outlet and has to design it just like the original one. But sometimes a franchisee has his own innovative ideas for his store and may want to design it in his own way, can this raise a problem? Maybe the franchisor does not want the franchisee to add or make any changes in the original design. In some cases the franchisors ask the franchisee to get the stock from the same vendor and do the local marketing their way. It can be an added pressure on the franchisee as it may increase his expenses. And also maybe the franchisee has different ideas of doing marketing. All these issues can raise resentment within the franchisee.

The franchisor may be wise in not allowing any change as the business is already a proven one and sometimes customers may not appreciate the changes in the new outlet. They may not get the feel of the original brand and that can hamper the franchisor’s success also. Franchisees also feel more secure in using the same interiors as there is less risk involved. As seen in the leading coffee chain outlets of Café Coffee Day, the interiors are a look alike giving the patrons the comfort of the original outlet.

In some businesses the franchisor provides a freedom to the franchisee to use his innovative ideas and handle the business according to his wishes. But if the outlet does not do well than the franchisor may want the changes done according to the original store. According to Sadashiva Bhat, Director, Sagar Ratna, “We just guide the franchisees towards the right path but they are at a liberty to do their own interiors. The franchisees have to get their designs approved by us. The prime concern is regarding the quality of food as we do not compromise in the quality of the products used.” He also informed that the franchisees are free to get the stocks from any vendor but have to maintain a standard for food and interiors.  Manish Goel, a franchisee, Sagar Ratna informed, “The designs and interiors are done as per the site. I have used my own designs for the restaurant.”

As mentioned in the beginning there are pros and cons of every business. Though the franchisees should get some freedom in running their outlet, but they should not change the original designs or products in their outlet. The franchisee can incorporate his ideas without hampering the authenticity of the brand.

Related: What formula to apply for idea funding?

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