Franchisor and Franchisee: A Manual for Building a Prosperous Partnership

McDonald’s ruled as the burger-selling king not just for their taste but for mastering the franchise network. They have 36,000 outlets worldwide , making them the world’s largest promoter of the franchisee model

The active symbiosis of franchisee and franchisor powers a strong marketplace of diversified growth and shared success. The franchise market is promising about its future growth. The global franchise market is forecasted to reach more than 4,450 billion at almost 10% of Compound annual growth rate.

Let’s explore the domain of the franchise network and the roles of franchisors and franchisees.

What is a franchisee?

A franchisee refers to a group or individual who runs a business using the trademark identity and business model of a franchisor. The franchisor, or the main business model owner, will charge a fee in the form of upfront costs and royalties

The business runs under mutual symbiosis between the franchisee and the franchisor. The franchisee takes advantage of starting its business with an established brand rather than building a fresh business from scratch.

For example, suppose a person wants to open a fast-food restaurant. In this case, the person is a franchisee. Instead of starting from scratch and spending money on marketing and customer acquisition, they would contact a franchisor like McDonald’s. McDonald’s would provide a license to open an outlet under their name, along with guidance, operational support, and marketing assistance.

Types of franchises

Not every franchise has a similar business model. The business model of a Ffranchise can be of various types, which may differ in their operational structure, approach, and characteristics. These types include:

Business format franchise: Under this business format, the franchisor offers full-fledged help to the franchise to retain the brand’s identity and services expectations. Along with the trademark, franchisees will receive training and proper operational guidelines. In order to maintain uniformity in the services, the franchisor takes care of the quality control systems, marketing, and operating procedures.

Single-operator franchise: In this format, the franchisor is less involved. Franchising includes small businesses and individual operators, with the franchisee handling most aspects while the franchisor offers the trademark.

Product distribution franchise: Product distribution franchises are straightforward since they mainly deal with products. The franchisor typically doesn’t meddle in the franchisee’s business model. Some great examples of this are franchises that sell vehicle parts and hardware equipment.

Job franchise: Job franchises operate under a business model where services are sold. They require less initial investment and offer a lower profit margin. These franchises can offer everyday services like daycare, house cleaning, or laundry.

Investment franchise: This franchise operates under an investment-intensive model. The primary roles of both the franchisee and the franchisor are passive and primarily focused on finances. Operational responsibilities are handled by experts and professionals specifically appointed for the task.

What is a franchisor?

A franchisor refers to the owner of the business or company who grants selling licenses to franchisees under a similar business model. They guide how the franchisee operates and uses their trademark, ensuring consistency and authenticity through training and support.

The primary goal of a franchisor is to grow the revenue of the company and expand as a business. The more the franchisees are tied up with a particular franchisor, the more the brand will increase its reach over various locations.

Some of the big brands, including Pizza Hut, Subway, Ace Hardware, and Anytime Fitness, expand .under the franchisee model. These franchisors draw most of their business from their vastly distributed outlets.

Roles and responsibilities: Franchisor vs franchisee

The franchisor and franchisee have roles and responsibilities toward each other that help to retain and maintain the business model. As the business grows and achieves operational success under a shared stronger brand identity, they both have to play their roles efficiently.

Both parties have to ensure that the roles assigned in the agreement work for mutual growth and development. Let us check how their roles are different yet interdependent on each other

How does digital signage play a consistent role in franchisee and franchisor?

The marketing investment for franchisees becomes tedious as they have to keep many things in mind, from managing social media and printing ads to buying traditional billboards. However, to beat the competition and secure a significant position, marketing strategies should be streamlined, fast, and automated

Streamlining marketing means having franchise digital signage, which is a one-time investment that serves as your promotion board.

Our digital signage software solutions make this task much easier, as you can operate the multipurpose signage remotely. Additionally, Pickcel offers a wide range of templates that you can choose from, and you can also create your own design directly from our centralized CMS. Check out Pickcel to learn more about its features and what else you can do for your franchisees with our digital signage.

In a nutshell

The franchisee and franchisor equally contribute to the growth of a business. If any of these two elements fails to maintain its role, it will significantly affect the brand’s reputation and revenue. The live example is Blockbuster . The company had over 9,000 stores that went extinct within a decade. What went wrong? The company must consider innovation and consumer preferences and learn from the active feedback of the franchisees who are dealing with the audience directly.