Franchise Basics

Franchise Basics: Who makes what decisions in a franchise?

A common myth about franchising is that franchisees don’t have any freedom in their business. While they may have less freedom than an independent business owner, there is still room for innovation within a franchise system, and any restrictions in place are usually for the benefit of the franchisee. 

Emerging franchises typically offer more flexibility in how you operate your business, whereas mature franchise systems may have specific requirements for every little detail. Let’s highlight some of the business decisions you’ll likely need to make in a franchise and how much control you may or may not have.

Approved Suppliers and Products

The products and suppliers you use are typically restricted to a list that has been vetted by the franchisor. This means they’ve tested it to make sure it’s the best possible product or vendor, and hopefully been able to create economies of scale for better pricing than the average business owner using the same product. 

With emerging franchises, your most important suppliers will probably be from an approved list, but the less significant items like your cleaning supplies may be totally up to you. Because emerging franchises are still learning and growing with you, they may be open to adding approved suppliers and products that you identify (i.e. you own a yoga studio and find a yoga mat supplier that you believe is better and cheaper). There’s typically a process for submitting an additional or alternative option, which the franchisor may approve or not at their discretion.

More mature systems have usually worked out the best and cheapest options on behalf of the many franchisees that are out there, so it will be more difficult for you to get alternative suppliers or products approved. 

Marketing Materials, Advertising, and Promotions

Any marketing materials you want to use to promote your business are likely subject to approval by the franchisor. The good news is that if you’ve bought into a great franchise system, they probably have everything you’ll ever need already created for you to use. But even in that case, you may have ideas from time to time, and those will need to be approved by the franchisor before you create the new materials. 

Advertising and promotions are another area where you’ll need approval. In this case, this is very much to your advantage. The franchisor has run phenomenal promotional campaigns over the years but it’s a near certainty that they also threw some money down the drain on advertising/promotions that simply didn’t work. By getting your ideas approved, you’re likely to avoid the same pitfalls. The franchisor can tell you how they ran a similar campaign and why it didn’t work.

All of the successful advertising and promotional campaigns will be at your disposal to leverage so it’s best to stick with what has been proven to work. But if you’ve got the next big idea, it’s still worth sharing it with the franchisor to see what they think. If it’s something they haven’t tried, they may give you the green light, track your results with you, and then share with the entire system if it’s successful. An emerging franchise may not have tried everything so it’s more likely your marketing and advertising ideas will be given the green light. 

Hiring and Training

The most important decisions you make as a business owner may very well be the people that you hire. The good news is that you are the sole decision maker here. Franchisors don’t get involved in hiring decisions. Further good news here is that franchisors will typically provide guidelines for you in what to look for in a manager, line cook, etc. So you’ll know exactly what you’re looking for before you make the big decision to hire.

Training methods and materials are also typically provided to you so you know how to get your manager and other employees trained up effectively. However, it is your responsibility to execute on the training and make it the best program possible for your business. 

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Obviously there are many other areas of your business where the franchisor will be involved to varying degrees (real estate, pricing, etc), but hopefully you get the picture. If you’re someone who needs to be in total control, franchises probably aren’t right for you. If you like following systems but want creativity within the system, an emerging franchise is probably your best bet. And if you simply want to follow a precise system exactly as prescribed, you’ll want to take a look at more mature systems. 

Joe Sexton is the Senior Director of Development at Oakscale, where he focuses on implementing marketing and sales strategies to drive growth for the portfolio of franchise brands.
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