The Franchisor And Franchisee Relationships In 2021
By Richard Pakey, Regional Director, Lime Licensing Group.
Tired of the uncertainly of 2020 and keen to do something by yourself and start your very own business? Maybe you have even heard of franchising as one way to do this, but know very little about it? There are many areas that you need to be aware of, here is just one of them for you to think about that might help you make your decisions.
Franchising can certainly be one way to get going much quicker than you probably would be able to alone, however, it is also fair to say that franchising is not for everyone! (Now, that might seem a strange statement coming from a franchising consultant don’t you think?)
Franchising Is A Great System, But NOT For Everyone!
When all the elements are right in franchising, there should be a high value relationship between the franchisee (you) and the franchisor (the person or company that sold you your franchise) because over time the two of you will definitely become interdependent, but, when this fails it goes horribly wrong for both parties and everyone loses, I want to be really clear with you, that nobody wins when things go wrong, and they sometimes do! However it is a great place to be when the successes can be shared and a great position to be in which will help to drive the business forwards.
There Are Franchisor and Franchisee Roles That All Must Undertake
You will be buying into a proven concept with a system to operate as a franchisee, direct from the franchisor who has a right to sell what you are paying your hard earned cash for, be sure that what is being described to you is worthy of the investment, I’ve often asked myself what it would cost me to replicate what is being offered as the franchise offering and too many times see the initial investment as minimal compared to going alone, again, a clear advantage of buying a franchise verses going alone, the franchisor does not win on a single sale but then hopes to sell that same principle multiple times across the UK, and often beyond…
You Will Not ‘Own’ The Brand As A Franchisee
Get used to some restrictions as a franchisee, for example, there will be marketing restrictions (as the franchisor will ensure that the brand is protected at all times) you might also have territory restrictions as this is what helps the franchisor be in a position to sell additional territories across the UK, however, it is fair to say that you will accept and purchase an area, or territory that the franchisor confirms is equal to, or better than their own areas or pilots, and you should feel confident that there should be enough business for you to replicate their earlier successes.
You Will Have Some Control As A Franchisee!
A franchise will still be your business, so you can expect to be in control of cashflow for example, maybe operating minimum levels of marketing and advertising, often with no maximum levels, but be guided by the franchisor here who will be able to demonstrate what decent levels of spend activity levels look like for revenue, often referred to as R.O.I.
Do not just run off with your own ideas either, there will be strict guidelines on what you can do with any marketing and advertising, see it as a good thing as there will be a consistent message as the brand grows, and when done correctly, you will even benefit from the entire franchisor set-up and everyone playing their own part in awareness campaigns. A franchisor should however be receptive to your ideas or new methodology, but I would advise that you first get the basics under your belt to ensure you have at least followed the system that you have purchased by the letter and are showing growth as a result of doing so
You Must Work Together!
All franchisors and franchisees are not only duty, but also contractually bound to work together, whether is contract law written or simply ‘best practice’ It is only when these parts break-down that it can all go wrong, as a franchisee, you are not simply at risk of losing any capital you may have invested, the implications of failure (at least from your part) can sometimes be more far-reaching than that (but maybe too extensive for this short article) and are mostly part of any franchise agreement that you will sign on exchange of contacts, but also for the franchisor there are damaging effects as they will not want to be part of a failed network, it will impact on their growth plans moving forwards and then at the end of the day, work together, and do you know what…everyone just goes on to make a little bit of money and everyone just sleeps that little bit better at night…now, that is the sort of business I am more than happy to play my part in!
Happy New Year to you all, I look forward to writing more monthly articles and assisting you in what will be a very busy year in franchising, we will see many more franchisors and franchisees than at any other point in UK history this year, it is a great place to be in when done right!
Richard Pakey is a franchising expert and Regional Director for the award-winning Lime Licensing Group and can be contacted in the following ways:
Mobile/text/whatsapp: 07904 697591