A franchisor is usually the person that started a business and, because of its success, they allow other people to replicate the system in exchange for a fee and agreeing to certain conditions.
A franchisor will provide a licence to the individuals looking to operate their own business under the franchisor’s brand, allowing the franchisee to utilise the brand’s products or services, intellectual property and expertise.
Over time a franchisor will seek to expand its brand and recruit additional franchisees into the network, ensuring that they operate within the parameters set out in the franchise agreement and by paying an ongoing franchise fee. The franchise agreement is a legal document that sets out and provides clarity around the roles and responsibilities of both the franchisor and franchisee.
Roles and Responsibilities of a Franchisor
A franchisor’s primary responsibility is to support the operations of its franchisees to continuously develop and monitor the business systems.
Once a franchisee comes onboard, the franchisor is responsible for providing all of the elements as set out in the franchise agreement. At Home Instead, we provide our franchisees with a tried and tested business model that has been established in the UK since 2005.
We pride ourselves on the support we provide to our franchisees from day one in order for them to make their business a success. From training to operational support, as well as marketing and PR resources, by providing the tools to work with that align to our business model and framework, we can support our franchisees whilst ensuring that they are operating within our brand standards.
The Franchisor’s Role in the Franchise Agreement
The franchise agreement forms the foundations for the business relationship between a franchisor and franchisee. The franchisor’s role in the franchise agreement is to clearly set out their expectations of the franchisee, outlining their rights and responsibilities, covering areas such as intellectual property rights, operational guidelines, training, financial obligations and the duration of the franchising relationship.
The franchise agreement helps the franchisor protect themselves, ensuring transparency in the business relationship and ensuring the franchisee maintains brand consistency, quality control and operational procedures.
At Home Instead our franchise agreements have been written by a franchise industry leading lawyer and offer a 5-year term with rights to renew after this period.
It is important that our franchisees are fully understanding and aligned with our franchise agreement prior to commencing their franchise journey with Home Instead. This has allowed us to grow a network of over 255 franchisees.
Benefits of Being a Franchisor
There are various benefits of being a franchisor such as a predictable and reliable income and streamlining of processes. One of the main advantages of being a franchisor is that it’s an efficient growth model. Allowing an increase in brand awareness and for Home Instead, allowing us to reach more people who require our care services in more locations across the UK.
Another benefit of being a franchisor is it allows you to grow your brand without having to provide constant supervision over a franchisee. Once a franchisee is established, they will generally run their business autonomously, responsible for employing and managing their own staff and driving the growth of their business. Home Instead franchisees benefit from both the autonomy of running their own business for a franchisor who trusts them, but also knowing they have our ongoing support as and when they need it.
Challenges and Considerations
The franchising business model is popular as it is a proven way to grow a successful business, by providing the infrastructure and support needed for franchisees to succeed. However, like with all business opportunities, there are challenges and considerations to take into account.
The biggest challenge for franchisors can be around franchise recruitment. Finding individuals with the right mix of experience, knowledge and an entrepreneurial mindset can be challenging. At Home Instead, we are a management home care franchise, therefore experience isn’t necessary, however having a genuine passion and desire to help others certainly is.
Selecting franchisees to come onboard who are the right fit is also crucial as it can damage brand reputation. At Home Instead that is finding individuals who are passionate about helping others and making a difference, but who also have a growth mindset, so that they are aligned with our values and goals as a business.
Another challenge for a franchisor is understanding that whilst your franchisees must work within the guidelines as set out in the franchise agreement, they are not employees, therefore you will not have managerial control over them. Therefore, it’s crucial to establish from the start of any relationship what the expectations are from both sides, and have that as part of your franchise agreement.