FRANCHISE: Franchisor’s role in franchising

By the very nature of franchising, the franchisor, having spent considerable time and money developing the franchise network has an upper hand in the alliance. At the same time the franchisor seeks to attract and retain worthwhile franchisees seeking to fulfill their personal and financial goals through the franchisor’s system. To maintain this balance, the franchisor must play low and prepare a franchise agreement that achieves this position. The roles of each party must be clearly defined and those of the franchisor broadly include the following.

It is the franchisor’s role to provide brand power. Reaching the franchisability threshold requires a business to have undertaken significant steps in branding, thereby placing the brand strategically in the minds of consumers. A brand is a name, term, design, symbol, or other feature that distinguishes an organiation or product from its rivals in the eyes of the customer. It is proprietary to the business. Brand power therefore are the tried, tested and trusted marketing programs developed over time to build and enhance brand image, grow brand equity and attract customers consistently. Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors aiming to create a lasting impression in the minds of customers. Key components forming a brand’s toolbox include a brand’s identity, brand communication -such as by logos and trademarks-, brand awareness, brand loyalty and various brand management strategies. It is these marketing and communication systems that the franchisor deploys to the franchisee in order to further grow the brand. Since you cannot grant what is not legally yours, a logical starting point before franchising is to legally protect your brand through registration of trade or service marks, patents, copyrights, designs and know how, (collectively known as intellectual property) with relevant registration authorities in all markets you wish to enter prior to seeking any franchisees.

The franchisor also places the operating systems at the full disposal of the franchisee. Before franchising, a business perfects, documents and copyrights its operating systems such that they are easily trainable to other users without the risk of being misused. Such systems should always be tuned to consistently deliver the brand promise in order to retain customers and build repeat business from them, while at the same time attracting new customers, thereby keeping the franchise network alive at all times.

The franchisor gives continuous and ongoing support to franchisees. Remember franchising replicates the franchisor’s success formula, hence the franchisor is obliged to help the franchisees in all aspects of replicating the business. In offering this support, a franchise field consultant is the franchisor’s single-most important resource as the link with the franchisees. The consultant visits franchisees regularly to assess compliance with franchisor standards and offer help whenever a franchisee deviates from the set standards. Other support may include occasional training, recruitment, book keeping, IT, legal and reporting support, all which the franchisee pays for.

The writer is a franchise consultant helping indigenous East African brands to franchise, multinational brands to settle in the region and governments to create a franchise- friendly business environment.