franchising aspects Nov, 15 2010

Team Work: Key To Franchise Success

Franchising is the most successful mode of business expansion and brings in quick revenues for both franchisors and franchisees. However, success is ensured only when franchisors guide their franchisees strategically. Read on...

By Abha Garyali
Sub Editor
Team Work: Key To Franchise Success

Franchisees are the channel partners of a franchise business. Entrepreneurs running a successful business adopt the franchise model as it offers them a rapid expansion of their business. However, establishing a franchising business is not an easy job and requires constant supervision of the franchisor. The franchisor plays a vital role in creating a good brand image of his franchise concept. Moreover, in addition he also has to provide his franchisees with all necessary help and support as the success of his brand depends upon the success of his franchisees. Thus, in developing a successful business, franchisor must co-ordinate with his franchisees.

Recognising franchisees’ as pillars of succes

Success of a franchisor depends on the success of his franchisees. Once a businessman becomes a franchisor, he partners with his franchisees who take the rights of his brand. A franchisor should always keep in mind that the success of his franchise concept depends on his franchisees and he needs to follow certain obligations to maintain his brand image. Rimy Oberoi, Founder, Oyster Learning says, “It is right to say that franchisor’s success depends on his franchisees as his brand can be made or destroyed by his franchisees. As at the end of the day the brand is more visible through the franchisees. ” As informed by Amit Roy, CEO, Homegenie, “Franchising is a win-win situation for both the franchisor and franchisee. Franchisor cannot even think of his success if his franchisees have been unsuccessful.”

Role and obligations of a franchisor

An entrepreneur after developing a strong business network looks for various options to expand his business. Expanding business through company owned route is bit risky as the business owner cannot be present everywhere. He hires staffs to operate his outlets far and wide. However, the salaried staffs are not responsible for the success of the company directly whereas in case of franchising, franchisees are the direct investors and are more responsible for the brand’s success. Thus, it is in the franchisor’s best interest to support his franchisees for gaining success. MRK Menon, Founder and Chief Consultant, Aero-Sports shared, “First of all franchisor has to be available to his franchisees whenever the latter are in any difficulty. Franchisors should always be available on phone calls or e-mails so that franchisees do not feel avoided.” Other things on the list are:

National marketing and advertising: It is the franchisor’s duty to launch marketing and advertising campaign for his brand at the national level. The franchisees can carry on their local marketing at their level but the over-all marketing strategy of the brand is done by the franchisor. As informed by Roy, “Franchisor has to give support in terms of providing marketing support to his franchisees. Franchisees are novices and may not know how to promote the business.”

Launch of new products and services: The franchise owner has to continuously strive for launching new products and services of his business. Moreover he is also responsible for managing his products as a whole.

Territorial rights to franchisees: Franchisors have to provide territorial rights to each of his franchisees. It is the franchisor’s role to offer a protected territory from other in-brand units to new franchisees. Franchisor has to manage the proximity between two franchisees so that they both enjoy enough territory for good market coverage and generate revenues from their individual business.

Sharing vendors with all franchisees: As franchisees are mostly novices and may not have much experience in buying large amount of stocks from vendors, therefore it is the franchisor’s responsibility to share his vendor’s contact to his franchisees. This would make it easier for a group of franchisees to negotiate at lower prices as compared to buying from separate vendors at higher rates.

Option of multi unit franchisee: It is the franchisor who can offer opportunities to his franchisees for growing and becoming multi-unit franchisees. Franchisors should encourage the ability of his franchisees to own more than one unit.

Building a franchise family: Any business does much better if it runs smoothly and all partners enjoy a good relation with each other. The only person to accomplish this in a franchise business is the franchisor. He should run and treat his business as a big family and involve all his franchisees in meeting each other. In this regard Oberoi said, “It is the franchisor who can share the contacts of all his franchisees. Franchisees learn through trial and error so if old franchisees have gained experience it would be better that they share this with the new ones in the network.”

As most of the franchisors fail to fulfill all of their promises, in this regard Oberoi states, “Most of the franchisors talk of sharing all kind of information with franchisees and developing local strategies to increase footfall in franchised outlets but seldom do they ever implement these. It would be more beneficial if franchisors implement all the promises they had made initially.”  Thus, it’s the franchisor that lays the foundation of success for his franchisees. Success for any franchising business beckons only when franchisees co-ordinate well with his franchisors.

Related: Judging The Financial Health Of Franchisors

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