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franchising aspects 2010-07-14

Outsource rightly to franchise perfectly

Outsourcing is a cost-effective and time saving model to manage various departments of a business organisation. This is especially applicable to the franchise industry. Explore further

By Sub Editor
Outsource rightly to franchise perfectly

Hiring an external resource to carry out certain functions or services by any business organisation is what we call outsourcing. The trend of outsourcing is getting quite popular among aspirants with low investment budget and space constraints.

Large number of start ups and new franchisees prefer outsourcing model to carry out narrow functions, like payroll, billing, and data entry as these processes can be more efficiently done in a cost-effective manner by other companies with specialised tools and trained personnel. Outsourcing also saves time and brings out better results as compared to the in-house resources. In certain cases when franchisees have launched the franchised store or outlet in a short duration of time, then outsourcing is of great help.

Efficiency of the outsourced functions
The success of services that are outsourced depends upon the following factors:

  • Support provided by the in-house executives for the outsourcing mission
  • Efficiency in communication
  • Franchise owner’s ability to manage service providers

Avenues outsourced in franchising

Having exclusive departments or experts may not be feasible for franchisors and franchisees due to various restraints pertaining to finances, time, efficient manpower, space etc. Therefore, outsourcing some of the specialised services is a favourable option in franchise businesses.

Planning services: A successful business needs a well-developed business plan. Instead of employing planning experts, the franchisor or franchisee can outsource planning services to a consultant who can guide the business owner in selecting the right franchise business, location, investment and a module for training and support to the franchisees.

HR services: One of the hardest jobs of any business owner is employing the right employees and delegating the right task to them. Outsourcing HR tasks such as payroll, recruiting, training, employee manuals and handbooks, and compliance can surely lift a heavy burden from the franchisor’s or franchisee’s shoulders.

Legal services: Both the franchisors and franchisees require a lot of legal help in setting up a franchise business. Both the parties can face lot of trouble in making and following the various clauses inculcated in the franchise agreement. Therefore, legal assistance is a must for franchise success. However, hiring exclusive services or keeping an attorney team for their business may not be practicable for all these owners. Therefore, outsourcing the legal services to franchise lawyers can be the best option in the present times.

Account services: Most of the franchise businesses have an account department, but if the franchisor or franchisee does not find it practical to employ a team of accountants, they can outsource the account responsibilities to the concerned firm. The account firms can regularly maintain and up date their accounts and can keep the owners informed about their profit margins.

Franchise sales services: The most recent outsourcing trend emerging in the franchise industry is the franchise sales outsourcing firms, which can handle every aspect of the franchise sales processes. These include tasks like franchise marketing input, initial lead handling, database input and maintenance, materials distribution, trade show attendance, preliminary lead qualification, disclosure, document management/preparation and pre and post franchise sales support.

Advertising services: With the up coming of the various advertising companies, it has become much easier for franchisors and franchisees to outsource their advertising services to these firms. Therefore, it is always advisable to outsource the advertising tasks if the franchisor or franchisee cannot afford an advertising team.

Word of caution

No doubt, outsourcing is an efficient manner for carrying out various functions in a franchised business but there are also some risk attached to it. There can be a risk in quality of work and service, risk in making external resource, understanding the nature of the business, risk of fraud, security etc. The franchisees are responsible to the franchisor for the brand value, which must be taken care of. The franchisees should always consult the franchisor before hiring any outside sources.


Outsourcing can efficiently assist in cost-cutting and time saving techniques of a franchisor and franchisee. Therefore, it would be apt to conclude by saying that outsourcing your work is most feasible option for gaining success.

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