• Cole Gorman

What do franchisers provide to franchisees?

Franchising is a popular way for people to operate a business without having to face the same risk and responsibilities of starting one from scratch. However, operating a franchise does come with challenges and obstacles that can jeopardize the business.

To minimize the risk of failure, franchisers typically provide various tools and solutions to franchisees.

  1. Business support-Franchisers can support franchisees by providing business models as well as guidance on employment matters, supplier relationships and technical support.

  2. Marketing and advertising guidelines-A franchiser will typically have guidelines for how franchisees appear to consumers in the interest of uniformity. Franchisers may control advertising strategies, employee attire, location color scheme, signage and branding.

  3. Training-Franchisers commonly provide training materials, also in the interest of uniformity. Ensuring all locations follow the same rules and use the same processes can be vital to the success of a franchise.

  4. Assistance in identifying a location-Franchisers often have at least some control over site selection and sales territories. They may not specifically select a location, but they usually retain the power to approve or deny proposed sites.

Why these provisions are critical

The franchise model depends on the franchiser providing the tools for a successful company to a franchisee in exchange for franchising fees. These tools should be confirmed in a contract so both parties know what to expect. Should a franchiser fail to provide these or other elements, a franchise could suffer and fail, despite the efforts of the franchisee.

It is also possible that a franchiser could face a lawsuit. Recently, for instance, a lawsuit was filed against Tim Hortons citing failure to approve franchise locations and new partners as well as failure to provide proper advertising and branding materials.

Whether you are a franchiser or a franchisee, it is important that you understand your obligations and permissions. Discussing these with an attorney can be a good way to protect yourself and your business.

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