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Franchisor Management: Organization and Administrative Policy

The document discusses the organization and administration of franchisors. It covers the characteristics of successful franchisors, franchisor development, the management process, franchisor policies, the ten commandments of franchising, and franchise advisory councils.

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RICARDO JIMENEZ
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756 views17 pages

Franchisor Management: Organization and Administrative Policy

The document discusses the organization and administration of franchisors. It covers the characteristics of successful franchisors, franchisor development, the management process, franchisor policies, the ten commandments of franchising, and franchise advisory councils.

Uploaded by

RICARDO JIMENEZ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CHAPTER 4

FRANCHISOR MANAGEMENT: ORGANIZATION


AND ADMINISTRATIVE POLICY
LEARNING OUTCOMES

 Learn the way of being a successful franchisor


 Understand franchisor development and their importance to a
franchisor.
 Understand and Apply The process of management in a
franchise business.
 To identify the Franchisor Policies in a franchise business
 Understand the Ten Commandments of a successful franchise
business
CHARACTERISTICS OF A SUCCESSFUL
FRANCHISOR:
1. Personal factors:
 Motivation; Abilities, and Attitudes

2. Environmental factors:
Governmental Regulation
Financial Accessibility
Genuine Business Opportunity

3. Organizational factors:
Strategic Plans
Policies to Franchisees

4. Hard-working
FRANCHISOR DEVELOPMENT

1. Strategic Development
 ◦Vision ◦Products and Services provided

2. Administrative Development
 ◦Organization ◦Finances ◦Human Resource

3. Operations Development
 ◦Advertising◦ Accounting ◦Management
◦Production ◦Training ◦Distribution
PROCESS OF MANAGEMENT

1. Planning 
 means defining performance goals for the
organization and determining what actions
and resources are needed to achieve the
goals.

 2. Organizing
 Once plans are made, decisions must be
made about how to best implement the plans.
 The organizing function involves deciding how
the organization will be structured (by
departments, matrix teams, job
responsibilities, etc.).
PROCESS OF MANAGEMENT

3. Leading
 consists of motivating employees
and influencing their behavior to
achieve organizational objectives.

4. Controlling
 the process of monitoring activities,
measuring performance, comparing
results to objectives, and making
modifications and corrections when
needed.
FRANCHISOR POLICIES

1. Payment of fees
 Franchisees pay regular fees to the franchisor for the right to operate
the business.

2. Operations
 A big part of the franchising business model is the requirement to
follow a very specific set of operational directions in running the
business. These directions are set out in a comprehensive resource
usually called the operations manual. This manual may cover:

 site selection;
 use of branding (trade marks);
 employee management; and
 service procedures.
FRANCHISOR POLICIES

3. Franchisor approved supplier list


 Franchisors can require franchisees to purchase stock and
equipment from a list of “approved” suppliers as a way of
maintaining standards throughout the business.

4. Employment obligations
 Franchisees who hire employees must comply with workplace
legislation.
FRANCHISOR POLICIES

5. Premises License and territory provisions


 The franchise agreement often restricts franchisees from
operating only within a specific location or geographic
territory. Franchisees accepting jobs and servicing customers
outside of their territory can quickly find themselves facing
breach notices.

6. Renewal provisions and transfer provisions


 When the franchise agreement ends, franchisees are
generally required to comply with the franchisor’s particular
directions. If the franchisee wants to renew the franchise
agreement for another term, they will need to resolve any
breaches and pay a renewal fee.
TEN COMMANDMENTS OF A SUCCESSFUL
FRANCHISE BUSINESS

1.Align your trade mark portfolio with your franchise strategy


 A franchise system’s trade mark is a key intellectual property
right and creates value in the franchise system. Investing in a
registered trade mark should therefore be a priority.

2. Check that you own it before you license it


 In addition to trade marks, franchise systems will comprise of
a number of other intellectual property rights, such as
copyright, design rights, patents and database rights.
TEN COMMANDMENTS OF A SUCCESSFUL
FRANCHISE BUSINESS
3. Learn to walk before your run
 Operating a successful corporate business and running a
franchised business require different skill sets and are
different business models. It is therefore advisable to “road
test” your franchise model before rolling it out.

 4. Know your franchisee


 It is important to make sure you know who your prospective
franchisee is, the identity of their owners and their business
interests before entering into the franchise agreement.
TEN COMMANDMENTS OF A SUCCESSFUL
FRANCHISE BUSINESS
5. Make sure the franchisee knows you
 it is a legal requirement for a franchisor to issue a disclosure
document, or make “adequate disclosure,” about a franchise
system before the franchise agreement is signed.

6. Don’t throw in the kitchen sink


 If a franchisor is offering a territory based franchise, it should
only give the minimum and impose performance targets, to
ensure it is fully exploited and that the franchisee has the
capability of utilize it fully.
TEN COMMANDMENTS OF A SUCCESSFUL
FRANCHISE BUSINESS
7. Ensure you can evolve the system
 Franchise agreements are often long term commercial
contracts which are set in stone on the day they are signed.
The operational manual is a living and breathing document
which will evolve over time as the system changes.

8. Manage your credit


 In most franchise systems, the franchisor will supply products
to its franchisees. As the network grows, it becomes
increasingly important for franchisors to manage the supply
chain in a standardized way and to ensure that the credit risk
exposure is kept under control.
TEN COMMANDMENTS OF A SUCCESSFUL
FRANCHISE BUSINESS
9. Polish the network
 A common complaint amongst franchisees is that the
franchise agreement is one-sided and drafted heavily in favor
of the franchisor.

10. Know your exit strategy


 Franchisor’s should plan for an exit that is smooth, causes the
least disruption to the network and maximizes the value.
FRANCHISE ADVISORY COUNCIL

 A Franchise Advisory Council (FAC) is a committee of


franchisees who, together, provide the franchisor with input
as well as insight on how to improve the system.

 Generally, a group of franchisees, which are those that


operate a location under the franchise agreement, come
together to create this type of panel. It provides outstanding
advice and guidance to the franchising company about the on-
the-ground needs of the franchisee as well as the day-to-day
operational needs.
FRANCHISE ADVISORY COUNCIL

 In order to be beneficial, the FAC must be designed


effectively. It must meet all franchise law requirements and it
must be created in such a way as to benefit all parties
involved.
END OF PRESENTATION
THANK YOU!

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