Here are Key Differences Between a Franchisee vs. Franchisor
What is the difference between a franchisor vs. franchisee? At the most basic level, the franchisee invests in the franchise, while the franchisor provides the working system, training manuals, and support to the investor in order to get products and services to the public.
They rely upon each other in order to form a successful business. The ideal franchisee-franchisor relationship includes collaboration, being community-driven, and having a growth mindset. With that in mind, both the franchisor and franchisee have different responsibilities.
Set Up a Proven Business Model
For any franchise to succeed, the franchisor must provide the franchisee with the proper training manuals, logos and branding, website, social media, operating system, and whatever else is necessary to make the business run. The franchisee must follow these instructions in order to ensure maximum efficiency and success.
Provide the Franchise Disclosure Document (FDD)
The FDD is a legal document that contains 23 sections with information about the franchise, any fees that will be charged, and information about the legal relationship between the franchisee and franchisor. Franchisors must give prospective franchise owners this document at least 14 days before they invest in the franchise.
Training and Ongoing Support
To ensure a smoothly run franchise business, all staff members must be trained to know how to make sure it operates properly. Franchisors provide initial training at their corporate headquarters before the grand opening of a location. Franchisees must follow the instructions provided to them by the franchisor and train their employees accordingly.
Establish Branding and the Trademark
The franchisor is responsible for creating the look and feel for the brand, which includes the logo, colors and corporate identity.
Identify and Establish Exclusive Suppliers/Proprietary Materials
What makes a brand its own is the exclusivity of its suppliers and products. An example of a franchise is 7-Eleven, and no other company distributes 7-Eleven coffee and products besides the convenience store chain. That’s what makes the brand special. To make the brand stand out from the rest, the franchisor works with suppliers to create proprietary products and services.
Provide Leadership, Especially During Times of Crisis
It is the responsibility of a good franchisor to be present and support franchisees during times of crisis and prosperity. To do this, the franchisor sets an example of being calm and communicating openly and honestly with any changes that have to be made.
Brand and Market on a National Level
If nobody hears about the business, nobody will patronize it. This is where social media and marketing come in. The franchisor is responsible for branding and marketing on a national level and providing marketing materials and campaigns to the franchisee to promote the business locally.
Create a Corporate Culture
A friendly and open corporate working environment is essential in any franchise system. To form this working environment, the franchisor can host annual conferences, provide opportunities to bring franchisees together, and more. This will make franchisees feel welcomed and a part of a “franchise family.”
Have Various Financial Responsibilities
Franchisors are responsible for collecting franchise fees from franchise owners to grow the business. Training, marketing tools, and other startup costs are covered by the total franchise cost.
Be an Effective Communicator
If there are changes to any part of the franchise business, such as a different product line up, or there is just a standard meeting, the franchisor will communicate that information to the franchisees in the system.