Understanding the Difference between a Franchisor and a Franchisee
Starting a business from the ground up requires an incredible amount of effort. First, you need a good idea. Then you must do a great deal of research to ensure that your idea is worth pursuing. Is there a market for it? How much will it cost to implement? What vendors and suppliers will you use? What’s the best way to advertise? And, finally, is it worth the financial risk? For many entrepreneurs, the answer to that last question is a definitive “no.” There is, however, an easier way to start your own business — invest in a franchise.
What is franchising?
If you’ve bought coffee at Dunkin’ or hired Merry Maids to clean your house, you’ve used the services of a franchise. Franchising is a business arrangement in which a businessperson (the franchisor) comes up with a concept and does all the groundwork for creating a profitable business. They build the brand name, establish strong connections with vendors, and develop customer relationship systems. When the franchisor is ready to expand the business, they offer other entrepreneurs the opportunity to license the company’s name, logo, operations system, etc. In exchange, the entrepreneurs (franchisees) pay an initial franchise fee and regular royalty payments.
What’s the difference between franchisor and franchisee?
The franchisor is the company that owns the brand. The franchisor creates and administers the business model and sets the terms for licensing the brand to franchisees.
The franchisee purchases a license to operate a business under the franchisor’s brand name and agrees to run the day-to-day operations at their location(s) within the guidelines set down by the franchisor.
Now that you know the difference between franchisor and franchisee, let’s look at the roles of each.
What are the roles of a franchisor?
Franchisors provide much more than a brand name to franchisees. If you’re considering purchasing a franchise, you should look for a franchisor that supports you in every stage of business development. A good franchisor plays the following roles:
- Brand Developer – The franchisor develops and builds a brand and a business model proven to be successful. This includes creating logos, trademarks, advertising slogans, etc. Over time, the franchisor continues to refine and strengthen the business model and brand name.
- Trainer – The franchisor provides initial and ongoing training and support for franchisees and their employees.
- Marketer – The franchisor offers a strong marketing and advertising campaign to help franchisees attract clients and sales and customer service support to help the franchisee keep those clients.
- Vendor Coordinator – The franchisor seeks out quality vendors and suppliers and develops relationships with them in order to secure the best prices and service for all franchisees.
- Researcher – The franchisor continues to research and develop new products and services. Additionally, the franchisor stays informed about the latest industry technology and implements it when appropriate.
What are the roles of a franchisee?
The franchisee owns the business, and though they agree to follow the franchisor’s guidelines, they still have the responsibilities that come with operating a business. If you want to be a successful franchisee, you’ll need to accept the following roles:
- Property Manager – Whether you lease or buy your office, you’ll be responsible for paying the rent and maintaining the property and any equipment you need to run your business.
- Employer – The operations of most franchises will require you to have at least one employee. You’ll be responsible for hiring, training, and managing them.
- Financial Manager – You’ll be in charge of all financial decisions. It’s up to you to pay bills, meet payroll, and manage inventory.
- Salesperson – While the franchisor will help you with marketing and advertising, you’ll still need to implement those tools at the local level. You may also be required to work directly with customers to sell them your products and services.
- Networker – If you want your business to grow, you have to network with local business people and find other opportunities to promote your company in the community.
- Customer Service Representative – Ultimately, you are responsible for quality control and ensuring that your customers receive the product or service they were promised.
<h2>Why should I choose an Allegra Franchise?
Whether you’re looking to start your first business or seeking to grow your existing one, the benefits of franchising are numerous, especially if you go with a strong partner like Allegra Marketing-Print-Mail. The Allegra brand is recognized and respected as a leader in the multi-billion dollar print industry. At Allegra, we understand that our success is dependent upon the success of our Franchise Members, so we offer exceptional support and guidance from day one. If you’d like to learn more about all the benefits an Allegra franchise has to offer, contact us today.