Hotline: 1800 102 2007
Hotline: 1800 102 2007
Search Business Opportunities
franchise business 2019-05-14

Why Franchisors Should Check For Unauthorised Suppliers in Their Franchise System

A part of the reason behind the success of a brand and its reputation depends on a franchisors’ commitment to specific vendors and suppliers across its entire system

By Content Writer
Why Franchisors Should Check For Unauthorised Suppliers in Their Franchise System

The franchise industry offers unique business opportunities to aspiring entrepreneurs. The franchise system offers a well-established business model and a reputed brand name. Part of the reason behind the success of a brand and its reputation depends on a franchisor’s commitment to specific vendors and suppliers across its entire system.

By using unauthorised products and/or suppliers in providing the products and services at the franchised business, franchisees will start to break away from the uniform system standards set by the franchisor, which will then lead to significant problems. Consumers of a franchised business expect the same customer experience that includes receiving uniform products and services from any franchised location. Here are the reasons why you should check for unauthorised suppliers in your franchise system.

Tarnishing Brand Image

Many franchisors spend years building up the goodwill associated with their system and trademarks only to have their franchisees ruin it by following their own rules while operating under the franchisor’s brand. If franchisees veer off the course set by franchisors by, for example, selling an unauthorised product at their franchised business, then it is more likely that the franchise brand’s image will be tarnished or at least disassociated with the system. 

Many food franchises such as KFC and McDonald's have had to shut down their franchises, as the quality wasn’t up to brand’s reputation owing to the use of unauthorised suppliers.

Violation of Rights 

When franchisees start using unauthorised suppliers without any action against them for a long tie, it may give them the impression that the franchisor finds his/her action acceptable. It gives them a wrong impression that the franchisor has waived its right to enforce its system standards. This leads to franchisees taking more steps outside the set boundaries mentioned in the franchise disclosure document. As a result, violating the franchise rights entitled to them. Without the ability to enforce its own standards, the franchisor may face additional problems beyond a franchisee making unauthorised purchases, such as losing control over their own franchise.

Decreased Revenue

Uniformity can be one of the major issues in operating a franchise, which might result in losing your customer base and reputation and thus decreased revenue. Loss of control is not the only issue with unauthorised purchases. Franchisors may also lose money when franchisees choose outside vendors. While many assume that franchisors only earn money through royalty payments from franchisees, there are many franchisors that earn money in an additional way, which is through the required purchases of franchisees. 

Lack of Traceability

Another problem caused by franchisees purchasing fake or low-quality products from unauthorised suppliers is that the franchisor is deprived of its ability to assure quality and safety. The franchisor won’t be able to track the issue and get to the root cause associated with the problematic franchisees’ purchases; this issue is easily seen within the restaurant industry. The knowledge of authorised vendors means that the franchisor and franchise system can quickly resolve an issue.

Comment
image
image
image
image
Related opportunities
  • Casual dine Restaurants
    About Us: Launched in 2010, Mamagoto is a fusian pan aisian..
    Locations looking for expansion Delhi
    Establishment year 2010
    Franchising Launch Date 2018
    Investment size Rs. 2 Cr. - 5 Cr
    Space required 1500
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater New delhi Delhi
  • Departmental/Unisex
    About Us: Tailorz was launched in 2015 with a vision to..
    Locations looking for expansion Maharashtra
    Establishment year 2015
    Franchising Launch Date 2018
    Investment size Rs. 10lac - 20lac
    Space required 500
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Mumbai Maharashtra
  • Juices / Smoothies / Dairy parlors
    About Us: At Lassi Corner, we strive to help people transform..
    Locations looking for expansion Karnataka
    Establishment year 2016
    Franchising Launch Date 2017
    Investment size Rs. 5lac - 10lac
    Space required 125
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Bangalore Karnataka
  • Extra Curriculum Activities
    About Us: Eduisfun’s franchise provides a platform for enhanced gamified learning..
    Locations looking for expansion Maharashtra
    Establishment year 2015
    Franchising Launch Date 2017
    Investment size Rs. 2lac - 5lac
    Space required -NA-
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Mumbai Maharashtra
Insta-Subscribe to
The Franchising World
Magazine
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
OR Click here to Subscribe Online
Daily Updates
Submit your email address to receive the latest updates on news & host of opportunities
More Stories

Free Advice - Ask Our Experts