What’s It Like to Own a Franchise? Who Controls What?

🕒 Estimated Reading Time: ~4 minutes

Choosing to become a franchisee is an excellent option for first-time entrepreneurs. A franchise is a part of a pre-existing (and already successful) business model. The franchisor owns the brand, including the name, the logos, the operational systems, and the product or service names. And franchisors have already taken their idea to market and proven its value. They expand their operations by selling the right to operate their brand to franchisees.

When you buy a franchise, you start your business with an established and recognizable brand. Customers already know the company name and have expectations about what you provide. Your job is to deliver the product or service to customers in the style that the franchisor determines is most likely for success.

<div class="_form_1"></div><script src="https://franchisedirect52345.activehosted.com/f/embed.php?id=1" type="text/javascript" charset="utf-8"></script>

What the Franchisor Controls

Your franchise agreement requires that you follow the franchisor’s model. That model includes several aspects of your business operation which are not subject to negation or change:

• Branding. This is a broad topic, but it covers everything that a customer sees, from the logo and corporate colors to the products and services. Consistency builds customer trust and recognition, and the franchisor guards them diligently.
• Advertising. Again, for consistency, national or regional promotions and ads are part of your franchise fees. The franchisor helps promote your franchise for you, which allows you to focus on driving revenue. Occasionally, franchisees can pay to promote locally with approval from the franchisor, but the franchisor will control the brand and messaging.
• Operational systems. The franchisor’s success is due partly to the systems they have fine-tuned for success. As a franchisee, that means that staff training programs, cleaning protocols, uniforms, and financial reporting methods follow a pre-established, proven system. You are running someone else’s business model, even if you own the actual business.
• Choice of franchisees. You can start your own business if you want, but a franchise requires approval from the franchisor. Why? Because you can be as risky as you want in your own enterprise, but a franchisor will evaluate your application to suit its growth plan. A franchisee represents the franchisor, so you must meet certain requirements to be approved.
• Franchise fees. These are pre-agreed, but you will pay various fees to operate a franchisor’s model. In exchange, you get assistance with opening, training, marketing, and operations.

What the Franchisee Controls

A franchisee plays by the franchisor’s rules as outlined in the franchise agreement. But don’t worry—you have myriad responsibilities to manage yourself.

• Hiring. You choose your employees. You recruit and hire to fit the needs of your specific franchise location.
• Sales and revenue. Once you set up your phone or location for business, building a customer base is up to you. With a franchise, you have the luxury of walk-in customers who know the name and will come to know you. But you can also develop your business by networking and selling your service or product. You will receive guidance from the franchisor and other owners, but you will do the legwork.
• Accounting and Finance. Some franchisors have built-in accounting systems to make your life easier (and to ensure their revenue-based fees are paid accurately). You still have to manage it and keep it up to date. Likewise, any business loans or operating capital comes from the franchisee.
• Payroll. Franchisees pay their employees directly, so you must manage cash along with wage and labor regulations in your area.
• Dedication. Hard work pays off, and it is no different for a franchisee. Your work ethics and dedication are two significant factors in success. A franchisee must have the drive to succeed along with loyalty to the franchisor brand.

Choosing a franchise is a wise way to approach business ownership. You will leverage the franchisor’s established and successful business model into a business asset of your own. Franchisees forfeit some control in exchange for brand recognition and operational support, but it is a combined business structure that thrives—for the franchisor and the franchisee.

Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.