Business advice
Business advice // Stephen Sidkin Building a franchise empire
With franchising on the rise in the KBB industry, Stephen Sidkin, commercial law partner at Fox Williams LLP, outlines what franchisees need from their franchisors, and vice versa
A
franchise operates on what is effectively a hub and spoke system. The hub represents the business and goodwill which is represented in the brand. The franchises are the spokes. There is a mutual dependence between hub and spokes. If
a spoke fails, it could imperil other spokes and ultimately the hub itself. It follows that the key component in this respect is the putting in place of a comprehensive franchise agreement which is legally enforceable. The franchise agreement not only sets the terms for the franchisor-
franchisee relationship but also acts as the foundation for the consistent operation of franchise units in alignment with the franchisor’s standards. A well-drafted agreement will specify the rights granted to the franchisee, including the use of the franchisor’s trademarks, other intellectual property rights, and proprietary business systems. It will also outline the fees involved, such as the initial franchise fee, ongoing royalties, and marketing contributions. Equally important are the operational standards and procedures defined within the agreement, which are essential for maintaining brand consistency across the franchise network. The provision of training and ongoing support to franchisees should also be documented, ensuring that franchisees are suitably equipped to uphold the franchisor’s quality and service standards. It is critical that the franchise agreement addresses termination conditions expressly.
Brand integrity Maintaining suitable and consistent marketing efforts and brand
management across all franchise locations is critical for preserving brand integrity. Franchisors often establish a national marketing fund contributed to by franchisees, which finances broader advertising campaigns. Clear brand guidelines are also crucial for ensuring consistency in all marketing materials and communications. Regular compliance inspections and audits help assess franchisee
adherence to operational standards. Implementing performance metrics provides benchmarks for evaluating franchisee performance, identifying areas requiring improvement, and recognising outstanding operations. Establishing feedback mechanisms where franchisees can communicate concerns or suggestions can also help achieve a collaborative and supportive
relationship, ultimately contributing to the network’s overall health and, in turn, the integrity of the brand. Constructing a strong sense of community among franchisees is equally important for nurturing a cohesive network. Regular meetings and annual conferences provide platforms for sharing successes, tackling challenges, and promoting best practices. Recruiting and selecting the right franchisees forms another important element of a successful franchising strategy. This process should be aligned with the franchisor’s values and business objectives. Potential franchisees’ business acumen, financial stability, and personal alignment with the brand all need to be assessed in order to mitigate future risks.
Surviving & thriving Training and operational support usually play a key part in a franchisee’s
success and, subsequently, the franchise. Comprehensive initial training programmes should cover all business aspects, from operations and financial management to marketing and customer service. An exhaustive operations manual can serve as a handy daily reference
guide for franchisees, reinforcing the procedures and standards outlined initially. Franchising from a franchisor’s perspective
involves navigating a complex web of commercial law issues. Each step requires careful legal and strategic consideration. By addressing
these
commercial issues proactively, franchisors can build a sustainable and thriving franchise network that will undoubtedly remain compliant, consistent, and competitive
in the modern marketplace.
Do you have some sage business advice you want to share with the industry? Email
editor@kbbreview.com
May 2025
kbbreview
49
iStock.com/maystra
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64
